Treasuries Rise Due to Growth Concerns as Brent Reaches $115 – Europe Market Wrap
Treasuries gained as speculators reduced their bets on increased interest rates, fearing that the war in the Middle East would cause a significant economic slowdown. Brent reached $115 per barrel, and US stock futures rebounded.
US rates fell across the curve as money markets reduced the likelihood of a Fed rate hike in 2026 to approximately 25%, down from around 35% on Friday. The rate on two-year Treasuries fell 3 bps to 3.89%. S&P 500 futures rose 0.4% after the benchmark fell to an August low at the end of last week. The Dollar remained quite stable.
The moves came as US and Israeli forces continued their strikes on Iran, while the Islamic Republic launched missiles over the Persian Gulf, with little sign of an imminent peace treaty. Energy exports across the Strait of Hormuz have remained at a trickle as Tehran maintains tight control over the waterway.
In Europe, the Stoxx 600 advanced as much as 0.5% before retreating as statistics from some of Germany’s major states indicated that inflation had risen to its highest level in more than a year. Government bonds struggled to find direction.
The Yen surged against all of its Group-of-10 counterparts after Japan’s Currency Chief Mimura warned the country may take strong action in the foreign exchange market. Aluminium rose 3.9% following Iran’s weekend strikes on Middle Eastern smelters. Gold posted its first weekly rise since the war began.
