Oil Rises, US Yields Surge, and Middle East Risks Loom Again
Oil prices strengthened during Tuesday's trading (August 18) as prospects for peace in the Middle East dimmed further. WTI rose approximately 0.6% to US$85.04 per barrel, while Brent had previously closed above US$90. Sentiment soured after President Donald Trump refused to extend the deal with Iran and conflict in Lebanon escalated once more.
Rising oil prices have reignited inflation concerns, even though prior US inflation data indicated relatively contained price pressures. Energy-related risks are a focal point, as a prolonged US-Iran conflict could keep oil costs high and complicate the Federal Reserve's interest rate policy decisions.
Pressure is also stemming from the US bond market. The 30-year Treasury yield climbed to its highest level since 2007, while the 10-year yield reached approximately 4.72%. Investors are growing increasingly concerned about heavy government spending, increased long-term debt issuance, and inflation remaining above the Fed's target.
Wall Street also faced pressure. The S&P 500 fell about 0.5% and the Nasdaq 100 weakened 0.2%, although semiconductor stocks continued to find support in optimism surrounding the artificial intelligence sector. Asian stock futures also pointed lower, signaling that investors are becoming more cautious amid the combination of rising yields and geopolitical risks.
Meanwhile, the US dollar weakened to its lowest level since May as expectations for Federal Reserve interest rate hikes continued to decline. This environment helped gold hold steady around US$4,415 per troy ounce following gains over the past two weeks. Attention now turns to the minutes from the Fed's meeting and earnings reports from Walmart, Home Depot, and Target for the latest insights into US consumer spending. Newsmaker Analysis: Global markets are currently facing a complex mix of factors: oil prices are rising due to geopolitical risks and bond yields are climbing on fiscal and inflation concerns, while the dollar is weakening as expectations for Federal Reserve rate hikes recede. If oil prices continue to rise and yields remain elevated, pressure on equities could intensify. Conversely, gold retains the potential to benefit from the weaker dollar and rising demand for safe-haven assets. (asd)*
Source: Newsmaker.id
