The global bond selloff began to stabilize as oil prices snapped a two-day surge, offering investors some respite after a bruising period for debt markets. The 10-year Treasury yield slipped one basis point to 5.19% after jumping over 20 basis points in the prior two sessions, while the rate-sensitive two-year yield declined two basis points to 4.91%. This stabilization in bond markets provided support for stocks, with US equity-index futures paring earlier losses.
Providing a key factor for this stabilization was a drop in Brent crude oil, falling 0.9% to about $105.60 a barrel. This followed a more than 7% surge in the previous two sessions. The relief came as US and Iranian negotiators explored a phased deal that would involve Tehran reopening the Strait of Hormuz and Washington lifting its blockade of Iranian ports. Gold also held steady around $4,270 an ounce, and the dollar stabilized after five consecutive days of gains.
Despite the immediate respite, oil prices and bond yields are expected to remain significant drivers for markets. Elevated energy costs continue to fuel inflation pressures, reinforcing expectations for further Federal Reserve tightening. Swaps markets are fully pricing in three additional quarter-point hikes over the next year. This prospect has pushed long-term Treasury yields to multi-decade highs, increasing pressure on equity valuations. Analysts, like Rajeev De Mello of Gama Asset Management, suggest that after such a rapid rise in bond yields, the market is likely due for a period of consolidation.
Several companies were also in the news amidst these market movements. Anthropic PBC signed an $11.6 billion, seven-year contract with Akamai Technologies Inc. for computing power. Oracle Corp. reportedly declared force majeure on a major AI data center project in New Mexico, citing power delays, causing its shares to fall more than 5% on Thursday evening. Conversely, Meta Platforms saw its shares surge 4.5% after unveiling new AI-powered smart glasses.
