Brent crude at 16-month high
Brent crude futures surged to a 16-month high yesterday on the heels of Opec’s agreement a day earlier to cut output, while Treasury yields continued to climb following the weakest monthly performance for global bonds in almost 13 years.
The benchmark 10-year US Treasury yield jumped to its highest since July 2015 to start the month, after Bank of America Merrill Lynch’s Global Broad Market Index fell 1.76 per cent in November. That was its steepest monthly percentage drop since a 2.06 per cent fall in July 2003.
Bets on faster inflation in the United States, on the back of higher oil prices and the expected policies of the incoming Trump administration, have sent Treasury yields soaring.
The 10-year US Treasury yield hit a session high at 2.468 per cent. Benchmark 10-year notes last fell 26/32 in price to yield 2.4608 per cent.
Yields were also pressured higher after data showed US factory activity accelerated to a five-month high in November amid a pickup in new orders and production. That offered more evidence that the economy gained further momentum early in the fourth quarter.
The dollar index, which closed its second consecutive month of gains above three per cent, slipped 0.32 per cent. The British pound strengthened against the greenback for the seventh time in nine sessions.
The euro rose 0.43 per cent to $1.0631.
On Wall Street, declines in technology shares weighed on the Nasdaq Composite index but the benchmark S&P 500 was little changed and not far from a record intraday high set Wednesday.
The Dow Jones industrial average rose 69.31 points, or 0.36 per cent, to 19,192.89, the S&P 500 lost 2.47 points, or 0.11 per cent, to 2,196.34 and the Nasdaq Composite dropped 52.83 points, or 0.99 per cent, to 5,270.85.
The pan-European FTSEurofirst 300 index fell 0.69 per cent, while MSCI’s gauge of stocks across the globe fell 0.04 per cent.
Emerging market stocks fell 0.3 per cent.
The Organisation of the Petroleum Exporting Countries on Wednesday agreed to its first output cut since 2008, finally taking action after global oil prices fell by more than half over the last two years.
Non-Opec member Russia will also join output reductions for the first time in 15 years.
US crude last rose 4.5 per cent to $51.66 a barrel and Brent traded at $54.39, up 4.9 per cent on the day.
Spot gold sank to its lowest in nearly 10 months.