Brent crude hits $107 as yields peak at 5.36 percent
Global equity markets fell as Brent crude surged past $107 and 30-year US Treasury yields reached a multi-year high of 5.36 percent.
Brent crude rose 6.3 percent to close at $107.63 per barrel on Thursday. The price jumped after Yemeni Houthi forces seized the Red Sea port of Mocha. This move threatens the flow of crude supplies through the Bab al-Mandab strait. West Texas Intermediate oil climbed 6.7 percent to $102.48. The benchmark hit its highest level since May.
US stock indices ended the session lower across the board. The S&P 500 dropped 0.6 percent to 7,591.70. This marked the fourth consecutive daily decline for the index. The Dow Jones Industrial Average fell 0.6 percent to 52,064.10. The Nasdaq Composite decreased 0.6 percent to 26,081.72. European markets also closed in the red. The DAX index lost 0.8 percent while the FTSE 100 declined 0.6 percent.
Long-term yields hit 2007 peak
The yield on the 30-year US Treasury bond reached 5.36 percent. This is the highest level recorded since 2007. The rise followed the release of producer price data. The index showed a 5.4 percent increase in August. July’s figure had been 4.8 percent. Energy costs drove the acceleration in wholesale inflation. Analysts note that the speed of rate increases is a key concern.
Strait flows drop sharply
Crude oil flows through the Strait of Hormuz have collapsed. Weekly volumes fell from eight million barrels to under two million barrels per day. Some estimates place the current flow near 1.5 million barrels per day. This sharp reduction reflects increased attacks on shipping. The disruption threatens global energy supplies entering the winter season. Saudi Arabia is shifting exports toward the Red Sea route.
ECB hike meets market caution
The European Central Bank raised its benchmark rate to 2.5 percent. The bank warned that inflation will remain above target for an extended period. Investors interpreted this as a signal for further tightening. The euro weakened against the dollar despite the rate increase. Traders are waiting for Friday’s US consumer price index data. This report may change expectations for Federal Reserve policy next week. GN auto markets/bonds: bond yields data confirms the multi-year high in long-term debt costs.
