TSX posts steepest daily decline in three months as bond yields jump

Gains for energy .SPTTEN helped limit the TSX's decline, with the sector adding 0.5%.

The price of oil CLc1 settled 1.8% higher at $92.16 a barrel after Iranian President Masoud Pezeshkian said that Tehran would never surrender to the U.S.

• "A lot of it is pass through of some of the macro cross-currents that are playing out," said Bipan Rai, head of ETF and alternatives strategy at BMO Global Asset Management.
• Macro cross-currents include "higher rates and what that means for long-duration assets, including equities," Rai said, adding "that's important for some of the more cyclical sectors within the TSX, including financials and tech."
• The U.S. benchmark 10-year yield moved back above 5% and hit its highest level since 2007 as oil prices rose and strong economic data boosted bets the Federal Reserve would hike interest rates next month, while the Canadian 10-year was up 12 basis points at 3.95%.
• Heavily weighted financials .SPTTFS fell 1.9%, with declines for major banks, including Canadian Imperial Bank of Commerce CM.TO, which ended 2.8% lower.
• "Valuations for a lot of Canadian banks are at the extremes. Those sort of pressures tend to become acute whenever we're seeing broad risk-off tones reverberate," Rai said.
• The materials sector .GSPTTMT, which includes metal mining shares, ended 3.7% lower. Gold lost 1.6% as the U.S. dollar benefited from rising rate hike expectations.