Bonds set for bruising September, but stocks remain resilient
SPY•Global bonds were set for their worst month in years as borrowing costs climbed, while stocks remained broadly resilient. The 10-year U.S. Treasury yield was 5.209%, near its highest level since June 2007, and on track for a monthly rise of more than 45 basis points.
1. Bonds face monthly losses
Global bonds were set for their worst month in years, pressured by deteriorating government finances, heavy debt issuance and rising inflation as the war on Iran kept energy costs elevated. The 10-year U.S. Treasury yield stood at 5.209%, near its highest level since June 2007, and was poised to rise more than 45 basis points this month. German and French 10-year yields reached 17-year and 18-year highs this week.
2. Stocks remain resilient
Stocks held up despite the rise in borrowing costs, supported by earnings growth, strength in the global economy and enthusiasm for artificial intelligence. The STOXX 600 rose 0.6% and was broadly unchanged for the quarter, while Nasdaq futures gained 0.2% and S&P 500 futures added nearly 0.3%. South Korea’s Kospi was headed for a 19% quarterly decline.
3. Dollar and commodities
The dollar was on track for a monthly gain of roughly 2%, while the euro was headed for a 2.3% monthly loss. U.S. crude was unchanged at $89.41 a barrel and Brent eased 0.1% to $102.47; both were set for monthly gains amid concerns about prolonged supply disruptions.
