Both interest rates and crude oil are retreating – a bit – after big recent moves. That’s helping stocks bounce. Ditto for Bitcoin, gold, and silver. The dollar is flat.
While bonds are taking a breather today, the unrelenting selloff of the past several weeks has left the yield on the 10-Year Treasury Note within a whisker of a big, round number – 5%. After hitting the highest since October 2023, a push to and through 5% would leave the benchmark government bond yield at its highest since 2007.
Stocks have taken the rise in stride overall. But as I note in my Chart of the Day column here, that could change given the magnitude and speed of the move. Rate-sensitive sectors of the stock market have already been some of the worst performers over the last few months, with the State Street Utilities Select Sector SPDR ETF (XLU) down 3.4% in the last three months and the State Street Real Estate Select Sector SPDR ETF (XLRE) down 4.8%. That compares to a 3.6% rise in the SPDR S&P 500 ETF (SPY).
SPY (Red), XLU (Blue), XLRE (Green) – 3-Month % Change
Source: TradingView
For its part, crude oil is dipping after its own big run. One catalyst: Reports suggest a half-dozen members of the Gulf Cooperation Council could meet with Iran to discuss a diplomatic way forward. Fresh International Energy Agency (IEA) data suggesting higher prices may result in demand destruction also weighed on prices.
That said, WTI futures remain 27% higher in just the past month. The price of diesel at US pumps also just topped $6 a gallon for the first time ever, according to AAA. In high-cost states like California, it’s going for almost $8. A small number of stations have reportedly even maxed out their equipment, charging the highest-possible $9.999 price they can display for the fuel used by truckers, farmers, and others.
Lastly, warnings about the dangers of AI are growing louder. A top Anthropic researcher quit this week, warning that “out of control” model advances could threaten humanity. Legislators on both sides of the aisle in Congress are increasingly paying attention, exploring ways to regulate the industry without unnecessarily hampering it. Whether anything comes out of the discussions – or if so, anytime soon – remains to be seen.
