U.S. 10-year Treasury yields hit their highest since 2023 on Wednesday as world crude and natural gas prices climbed. At 4.8%, the 10-year yield is fast approaching a 5% level seen as a major challenge to equities for mixed asset portfolio managers.
But with interest rate rises now odds-on at the Federal Reserve, European Central Bank, and Bank of Japan this month, there's a nervous couple of weeks ahead.
Centrist Fed board member Michael Barr indicated on Tuesday that he felt a rate rise in September may now be necessary, while Fed Chair Kevin Warsh laid out the case for a hike last week.
New Zealand's Reserve Bank became the first central bank to pull the trigger this month with its second consecutive rate rise on Wednesday. Even though another hike there is still in the mix, more dovish noises about what happens after that knocked back the kiwi dollar.
The fresh jump in energy prices, meantime, is adding to the budgetary and political pressures for many governments as the winter season approaches with no sign of an end to the Iran conflict.
Britain and France have critical annual budgets coming up, Germany has three important state elections in September, and the U.S. midterm elections are just two months away now.
Elsewhere, attention will now drift to the U.S. labor market data this week, although that's considered to be a secondary influence on the Fed at the moment, behind the issue of above-target inflation.
And there were more signs of the AI boom extending on Tuesday, as earnings from Dell and Palo Alto Networks overnight beat estimates. Broadcom is due up later today.
With that, onto today's column.
