Fed Hike Odds at 68 Percent as Yields Soar, Oil Tops USD109
Hopes that the 81st session of the UN General Assembly could help defuse geopolitical tensions had lifted global markets last week. Those hopes faded after Trump's rejection, and November-delivery Brent crude climbed 2.5% to $109.6 a barrel as traders dropped bets on a near-term US-Iran ceasefire.
Bond markets felt the strain too. The US 10-year Treasury yield reached 5.23% on Sept. 25, its highest since 2007, and settled at 5.21% on Monday. The 30-year yield touched 5.53% on Sept. 25, a level not seen since 2004, and steadied at 5.51% on Monday. The two-year yield gained four basis points to 4.91%.
Climbing yields are raising borrowing costs for tech companies racing to finance multibillion-dollar artificial intelligence (AI) projects. Analysts say the bond selloff could persist until there are clear signs that financial conditions have tightened enough.
The US Dollar Index was up 0.1% at 101.1 on Monday, while gold fell 2.1% to $4,196 per ounce amid the US-Iran standoff. Money market estimates put the odds of a Fed rate hike in October at 68%.
On trade, the White House said that following Chinese President Xi Jinping's visit to the US on Sept. 23-25, the two countries agreed to cut tariffs on $30 billion of non-sensitive goods in both directions.
Investors now want clearer signals on the inflation path and US economic activity, with growth, nonfarm payrolls, and personal consumption data due this week.
Wall Street
The New York Stock Exchange closed higher on Sept. 25, helped by hopes of a Middle East deal that would ease energy supply worries and by gains in AI stocks. Microsoft shares jumped 3.6% after the company rolled out new features for its Copilot chatbot, including a coding tool and an autonomous AI agent, “Autopilot.” Akamai Technologies rose 3.2% after announcing an $11.6 billion multi-year agreement with Anthropic.
On the data front, the University of Michigan's consumer sentiment index was revised up to 48.1 for September. US durable goods orders were unchanged, beating forecasts of a decline.
The Dow Jones Industrial Average gained 0.93%, the S&P 500 rose 0.51%, and the Nasdaq added 0.48% on Sept. 25. All three opened lower on Monday.
Europe
European equities finished mostly higher on Sept. 25, led by banking, mining, and tech shares. Germany's DAX 40 rose 0.56%, Italy's FTSE MIB 30 gained 0.63%, and the UK's FTSE 100 edged up 0.14%. France's CAC 40 slipped 0.04%.
Asia
Asian equities sold off toward the close on Monday. China's industrial profits rose just 4.2% in August, the slowest monthly gain this year. Japan's Nikkei 225 fell 0.1%, South Korea's Kospi dropped 2.1%, and China's Shanghai Composite lost 1.7%, while Hong Kong's Hang Seng gained 0.6%.
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