Global Markets Trend Negative Amid Hawkish Fed Steps and Inflation Concerns
High oil prices, growing inflation concerns, and expectations that the U.S. Federal Reserve may continue its hawkish policies have led to a decline in global markets.
Global markets are maintaining a negative trend for the week due to persistently high oil prices, mounting inflation concerns, and expectations that the U.S. Federal Reserve (Fed) may continue its hawkish measures.
Diplomatic Developments and Oil Prices
The failure of expectations to materialize from the UN 81st General Assembly contacts in New York led markets to adopt a cautious stance.
Due to geopolitical tensions between the U.S. and Iran, the barrel of Brent crude oil climbed back above the $100 level.
Strong Data in the U.S. Economy and Fed Expectations
The manufacturing PMI in the U.S. came in at 57 in September, reaching its highest level in 52 months.
The services sector PMI also hit 58.7, its highest value in 59 months, signaling that economic activity is heating up.
Pricing in money markets shows the probability of the Fed raising its policy rate by 25 basis points next month has risen to 70 percent.
Historic Rise in Bond Yields
Driven by inflation concerns and weak demand for the bond auction, the yield on the U.S. 10-year Treasury note hit 5.135 percent, its highest level since July 2007.
The U.S. 2-year Treasury yield also climbed to 4.947 percent, reaching its highest level since May 2024.
China Contacts on the Trade Front
Chinese President Xi Jinping made an official visit to the U.S. after an 11-year hiatus.
U.S. Treasury Secretary Scott Bessent stated that they agreed to extend the Busan consensus with China until January 10.
Latest Status in Stock Exchanges and Precious Metals
The S&P 500 index lost 0.75 percent, the Nasdaq index 1.13 percent, and the Dow Jones index 0.68 percent.
The ounce price of gold trades at $4,293 amid easing trade risks and a slight softening in the dollar.
Inflation Pressure in European Markets
In the Eurozone, the composite PMI reached 53.1 in September, the highest level in the last 41 months.
Fears of inflation stemming from energy costs have heightened expectations for tightening by central banks in the region.