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FOREX Dollar gains as rising bond yields and oil prices fuel inflation fears
The dollar gained on Tuesday, as renewed U.S. - Iran hostilities?sent the oil prices higher and fueled inflation fears?and sparked a global bond saleoff. Tuesday, the U.S. launched a 'new air strike on Iranian targets' which pushed oil prices over 4% higher. The dollar index (which measures the greenback versus a basket including the yen, the euro and other currencies) rose by 0.27%, to 99.68. Meanwhile, the euro fell 0.23%, to $1.1589. The yield on the 10-year Treasury note reached its highest level since January 2025. Investors are urged to buy safer assets such as the U.S. Dollar by higher yields, while riskier assets such as equities are undermined. Karl Schamotta is the chief market strategist for Corpay. He said that the rout on global bond markets was intensifying, while the dollar is rising. The outbreak of hostilities in the U.S.-Iran conflict has rekindled inflation fears, increased the likelihood of rate hikes and made safe havens even more attractive. Fed funds futures traders now price in 68% odds that a rate hike will occur in September, up from 35% prior to Federal Reserve Chairman Kevin Warsh’s hawkish remarks on monetary policies at the Jackson Hole Symposium on Friday. He stated that the Fed would "have to work" if inflation did not cool down, which was his strongest hint to date that additional rate increases could be required to control price pressures. The Fed's decision to hike rates next month may hinge on the August jobs and inflation data. According to economists polled, the median estimate for Friday's employment report is that employers added 56,000 new jobs in January. Fed Governor Michael Barr stated on Tuesday that it is time to raise interest rates if inflation doesn't cool down quickly. U.S. Treasury secretary Scott Bessent said that U.S. Bond yields show that inflation expectations have slowed down and are now "flat or even lower". The dollar fell 0.26%, to $1.3511. The Yen WEAKENS The Japanese yen dropped 0.3% to 160.19 dollars. On Monday, the Japanese yen was'supported' after Besent said that he thought Japan's central bank and government would take actions to strengthen it. Treasury Department reported on Tuesday that Bessent had urged Bank of Japan governor Kazuo Ueda, to use monetary policies to anchor inflation expectations and avoid excessive volatility of the yen. The dollar is currently favored by the large gap between rates in the U.S. Joel Kruger is a market strategist at LMAX Group, London. He said that investors are still focused on Japan's unfavorable interest rate differential with the United States. They also have doubts about how aggressively Bank of Japan will tighten its policy. The rare joint intervention by the U.S., Japan and other countries at the end July brought the yen back from its 40-year-low of 163,99, but it has since lost around half of what was gained.
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Mexican soldiers kill suspected leader of cartel as anti-crime campaigns escalate
The Mexican defense ministry announced a Tuesday that a suspected leader of the Los Reyes cartel was killed by Mexican soldiers in western Mexico. Mexico is continuing to intensify its war against organized crime and cartels. The U.S. offered a reward of $3 million for information that led to the arrest of Luis Enrique Barragan Chavez. U.S. authorities had identified him as a top hitman of a faction within the Carteles Unidos criminal group, known as "the Los Reyes" cartel. A statement from Mexico's Defense Ministry claims that soldiers shot and killed Barragan in Tocumbo, Michoacan state during a conflict in which the authorities claim the soldiers were under fire. In addition to Barragan and another suspected cartel member, another person was also killed during the operation. Barragan was also indicted on charges of drug conspiracy and firearms in the United States. Michoacan is a region that has been plagued for years by cartel violence and extortion, which targets avocado producers who supply the United States as its main market.
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Stocks fall as bond yields increase due to inflation fears fueled by oil prices
The global bond yields rose again on Tuesday, as oil prices surged and fueled fears about inflation. The 10-year Japanese benchmark yield has risen to 3%, the highest since 1996. This is pushing up government borrowing costs. The yields on U.S. Treasury notes have fallen from their previous highs following the release of U.S. Economic data. The yield on the 10-year Treasury note was up 1.2 basis point at 4.77%, after climbing to 4,798%. Its highest level since Jan 14, 2025. Prices and yields are inversely related. Jake Dollarhide is the chief executive officer at Longbow Asset Management, located in Tulsa. "Potentially, it's rate increases across the board." He said that this is bad for all companies, including tech. Rates increase the cost of borrowing for both businesses and consumers. The oil prices have risen by more than 2% since the U.S.-Iran conflict resumed and fears about supply disruptions in the Middle East were renewed. ?U.S. Last week, crude rose 2.8% to $88.16 per barrel. Brent was up 2.32% at $92.59 a barrel. Scott Bessent, U.S. Treasury secretary, said that Washington would likely announce bank sanctions this week against Iran. This will be a step up in an effort to "economically suffocate" Iran's leaders after six months of conflict. Tehran was defiant and warned that it would stop oil from being exported out of the Gulf. The European Central Bank is expected to raise rates in September, according to data released on Tuesday. This was due to the fact that energy prices rose. Federal Reserve Chair Kevin Warsh delivered a speech that led traders to bet on rate increases in the United States this year. Fed Governor Michael Barr stated on Tuesday that, if inflation doesn't cool down quickly, then it is time for U.S. Central Bank to increase interest rates. Fed funds?futures trader now price in 68% odds that a rate hike will occur in September, up from 35% prior to Warsh's Friday comments. Wall Street's main stock indexes and a global index both fell. The Dow Jones Industrial Average fell 208.81 pts, or 0.39% to 52,977.92. The S&P 500 dropped 28.96 pts, or 0.38% to 7,657.18. And the Nasdaq Composite declined 161.21 pts, or 0.61% to 26,210.06. The MSCI index of global stocks fell 4,07 points or 0.35% to 1,145.15. The pan-European STOXX 600 fell by 0.62%. Hong Kong's Hang Seng dropped 1%. The dollar has strengthened in the face of inflation concerns. The dollar index (which measures the greenback in relation to a basket of currencies, including the yen, the euro and the yen) rose by 0.23%, while the euro fell by 0.22%, at $1.1591. The dollar gained 0.21% against the Japanese yen to 160.07. The Fed's meeting on September 15-16 will be largely determined by the U.S. jobs and inflation data for August. According to economists polled, the median estimate for Friday's employment report is that employers added 56,000 new jobs in January. Spot gold dropped 1.86%, to $4365.37 per ounce.
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NHC: Edouard could reach hurricane-force before reaching the northwest Gulf Coast
The U.S. National hurricane 'Center' said in its latest update that Tropical Storm Edouard will likely strengthen and could reach hurricane strength by the time it reaches the Northwest U.S. Gulf coast on Tuesday. The storm was located approximately 50 miles (80 kilometers) southeast of Port Arthur in Texas. Maximum sustained winds were 50 mph (85km/h). The NHC said that "Air Force Hurricane hunters found Edouard strengthening. Continued intensification is expected before Edouard hits the northwestern Gulf Coast today." The Miami-based forecaster stated that a 'Storm Surge Warning' is in place from High Island in Texas to the Vermilion/Cameron parish line. A Hurricane Watch is also in place from High Island in Texas to Cameron in Louisiana. NHC said that a Tropical Storm Warning was in effect from Port Bolivar, Texas to the Vermilion/Iberia Parish line. People familiar with the plant operations reported on Monday that Motiva Enterprises, Exxon Mobil, and others were preparing to face the storm at their East Texas refineries. The NHC warned that the combination?of storm surge and tide?would cause normally dry areas along the coast to become flooded as water?moved inland from shoreline. The NHC stated that Edouard will likely produce rainfall totals of 3 to 6 inches (7.5-15 cm), with maximum totals as high as 9 inches (22.5cm) for parts of the upper Texas coastline inland through east central Texas. It added that "this rainfall is likely to cause flash flooding, especially in low-lying areas and urban areas."
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Carney, Canada's Carney, says the US must be serious about trade negotiations before they can resume.
Mark Carney, Prime Minister of Canada, told reporters that the U.S. must be serious and stop trying to be hard before negotiations on a potential trade agreement with Canada can resume. Canada withdrew from an agreement on August 21 to avoid additional U.S. Tariffs, saying that the American side made inacceptable last-minute requests. Since then, U.S. president Donald Trump has repeatedly claimed that Canada has been ripping off the U.S., called Canada's leaders "the worst" that he has ever dealt with, and renamed Lake Ontario Lake America. He also posted a meme created by AI showing Canadian geese sporting Trump's distinct hairstyle, marching under the U.S. Flag. Carney said that there is still time to strike a mutually-beneficial trade deal which respects Canadian sovereignty. Carney added that the recent U.S. action was "not constructive." U.S. officials have questioned a part of the Canadian narrative about why the talks failed, stating that there was a "good deal" on the table. Carney stated that Ottawa had "never" felt the terms proposed would be adequate. This was especially true when it came to auto industry, which is highly integrated. He said that "the attitude of the United States... was a one where the core Canadian industries would either be subsidiaries of the United States' industries or (Washington would) put in place terms?where these industries would be?gradually wound down and wiped out in Canada," he stated. "Of Course, we won't accept those terms."
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Sibanye continues to move forward with its first copper project, as profits for the half-year triple.
Sibanye-Stillwater announced on Tuesday that its Australian copper project has been?approved'. This comes after the company reported a rise in profit for the first half of this year due to higher prices for gold and platinum group (PGM). Johannesburg-based miner, Johannesburg-based miner, said that the Mt Lyell Copper-Gold Project execution will commence in the first six months of 2027 with the first production expected to begin in early 2029. Mt.?Lyell is Sibanye's first experience in copper mining. It is estimated that the annual output of copper will be?26,000 tons by 2032. Sibanye said that the total cost of this project will be around $340 million. Richard Stewart, CEO of Sibanye, said that the copper mine, idled since 2014, met Sibanye's investment criteria. Stewart said: "That should be within certain jurisdictions in which we operate and certain metals that have a future-facing outlook." "Copper is a metal that's?future-facing." LITHIUM VENTURE Sibanye also diversified into battery metals via its Keliber Lithium project in Finland to gain exposure to the growing demand for electric cars. Keliber, Europe's largest lithium mining and processing company, is looking for concessions from the European Union in order to protect it from price volatility. Stewart stated that the talks with the EU have been constructive. There's been much discussion about what the models might look like, and how they could be implemented, as well as whether or not there should be?local content. "We haven't yet seen any sort of hard?decisions" coming from the EU in this regard," he continued. Earnings Rise Sibanye’s headline earnings per share tripled from 1.90 rand to 6.01 Rand ($0.3721) during the six months ending June 30 compared to the same period last year. The company said that it would pay an interim dividend per share of 2.01 rand, which is 5.7 billion Rands to shareholders. Sibanye has reported an increase of 67% and 70% in the average realized prices for its PGMs respectively in Southern Africa and the United States. Gold prices also increased by 35% during this period.
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US construction spending falls to a nearly three-year low.
U.S. Construction spending fell unexpectedly in July. It reached the lowest level in almost three years, as mortgage rates increased. Census Bureau of the Commerce Department?said Tuesday that construction spending dropped by 0.5%, to $2.158 trillion. This is the lowest level since October 20, 2023. The June data was revised to reflect that construction spending remained unchanged, not falling 0.1% as reported previously. The economists surveyed by predicted that construction spending in July would remain unchanged. In July, construction spending fell 3.8% year-over-year. Private construction spending fell 0.5% in July after falling?0.1% a month earlier. Residential construction investment fell by 1.3%. The spending on single-family homes fell?3.2%. In July, the number of housing projects fell 6.5% on an annual basis. The glut of unsold single family houses is also putting pressure on the homebuilding industry. Mortgage finance agency Freddie Mac reported that the average rate for a popular 30-year fixed-rate'mortgage' is near a year-high of 6.66%. The rate has risen by 70 basis points in the last month since the U.S. and Israel war against Iran began. The spending on multi-family units, which make up a tiny part of the housing market, increased by 0.2% in July. In July, investment in non-residential private structures such as factories and power plants increased by 0.4%. Spending on power plants increased by 0.5%. Outlays for factory projects fell 0.8% in July and 21.7% year-over-year as the CHIPS and Science Act of 2022 fades. This fading momentum has more or less offset the boost from an artificial-intelligence buildout. The second quarter saw a decline in investment in non-residential structures, the 10th consecutive quarterly decline. After a 0.1% increase in June, investment in public construction projects dropped?0.2%. The state and local governments' construction expenditures were unchanged while federal government spending declined by 3.5%.
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FOREX Dollar gains as oil and yield increases raise inflation fears
The dollar gained on Tuesday, as renewed U.S. - Iran hostilities sent the oil prices higher. This fueled?inflation fears and sparked a global 'bond saleoff. After the first direct attack in a week, U.S. president Donald Trump has threatened to strike again against?Iran?. This has pushed oil prices over 2% higher. The yield on the 10-year Treasury note reached its highest level since January 2025. Karl Schamotta is the chief market strategist for Corpay. He said that the dollar was rising as a result of the hostilities between Iran and the U.S., which increased inflation risks and raised the possibility of rate hikes. Federal Reserve Chairman Kevin Warsh had been seen as adopting a hawkish tone in his monetary policy. Warsh's first speech at the Jackson Hole Symposium was his strongest hint to date that more rate hikes may be necessary to control price pressures. Fed funds futures trader now price in 68% odds that a rate hike will occur this September, up from 35% prior to Warsh's Friday comments. The Fed's meeting on September 15-16 will be largely determined by the August jobs and inflation data. Central bank increases next month. According to economists polled, the median estimate for Friday's employment report is that employers added 56,000 new jobs in January. Fed Governor Michael Barr stated on Tuesday that the U.S. Central Bank will have to raise interest rates if inflation doesn't cool down quickly. U.S. Treasury secretary Scott Bessent said, on the other hand, that U.S. Bond yields show that inflation expectations have "flattened to down", and that they reflect an accelerating U.S. economic growth. The dollar index (which measures the greenback against a basket including the yen, the euro and other currencies) rose by 0.16%, to 99.57. Meanwhile, the euro fell 0.15%, to $1.1599. The dollar fell 0.07%, to $1.3538. The Yen WEAKENS The Japanese yen dropped 0.22%, to 160.08 dollars. Bessent, who believes that the Japanese government and central banks will take actions to make the yen stronger, said on Monday that he would support the Japanese currency. Bessent's remarks could effectively lock in the BOJ to raise rates this September. The dollar is still favored by the large?interest rate difference between the U.S. Joel Kruger is a market strategist with LMAX Group, London. He said that investors are still focused on Japan's "still-unfavorable" rate differential with the United States. They also have doubts about how aggressively Bank of Japan policy will be tightened. The rare joint 'intervention' by the U.S., Japan and other countries at the end of July was a short-lived boost for the fragile yen. It pushed it away from its 40-year-low of 163,99, but since then, the currency has lost around half of what it gained from this joint action. When asked by journalists about the increase in bond yields, Japanese Finance Minister Satsuki Catayama stated that the government would continue to have a close dialogue with the markets.
Oil prices soar on renewed US-Iran strikes, global bonds continue to fall
On Tuesday, global bond yields increased, continuing a sell-off of government debt fueled by inflation fears. Meanwhile, oil prices surged to a five-week high after a fresh round of U.S. The strikes on Iran have refocused the attention of Middle Eastern?conflict.
The yield of the benchmark 10-year Treasury bill in the United States rose by 3.4 basis points, to 4,792%. It had previously reached 4.798% at its highest level since January 2025. The 10-year yield is up for five consecutive sessions, the longest streak since March.
Prior to this, Japan's benchmark 10-year yield reached 3% for first time since 1996. British and Euro zone yields also hit record highs. Prices and yields are inversely related.
The expectation of interest rate increases has also risen.
Jake Dollarhide is the chief executive officer at Longbow Asset Management in Tulsa.
"Potentially it could be rate increases across the board." "That's bad for all companies, including tech," said he. Rates that are higher increase borrowing costs, both for consumers and businesses.
The inflation fears are exacerbated by higher?oil costs. The new air strikes against Iranian targets have sparked fears of an expansion of hostilities during the six-month conflict. The world's oil reserves have been depleted since the joint U.S. and Israeli strikes on Iran in February. This is due to the closing of the Strait of Hormuz.
Oil reached a five-week high. Brent futures increased $4.16 or 4.6% to $94.65 per barrel. U.S. West Texas Intermediate crude (WTI), which is the U.S. equivalent of WTI, rose by $4.46 or 5.2% to $90.22. Brent closed at its highest level since July 24, and U.S. crude reached its highest level since July 23. Since July 23, crude oil has been at its highest level since Brent.
The European Central Bank is expected to raise rates in September after the euro zone inflation rate rose to?over 3% due higher energy prices.
Investors also believe that the U.S. Federal Reserve will raise interest rates during its meeting in just two weeks. Fed Governor Michael Barr, who spoke on Tuesday after Warsh's hawkish remarks on the outlook for inflation, said that if the inflation rate does not drop quickly, the Fed will have to increase rates.
According to CME Group’s FedWatch Tool (formerly known as FedWatch), the expectation of a Fed hike of 25 basis points or more at their September 15-16?meeting is now 66.2%. This is up from 39.6% one week ago.
Wall Street's main stock indexes and a global equity indicator both fell.
The Dow Jones Industrial Average dropped 419.02 or 0.8% to 52,766.88. The S&P 500?fell 54.67 or 0.7% to 7,631.47. And the Nasdaq Composite declined 271.11 or 1% to 26,099.77.
Investor?sentiment could be affected by seasonal weakness. Fisher Investments, citing Finaeon data, says that September is the only one of 1926's months to have a negative return on average.
The MSCI index of global stocks fell by 6.49 points or 0.56% to 1,142.73. The pan-European STOXX 600 fell by 0.56%.
The dollar has strengthened against major currencies. Investors are attracted to safe haven currencies such as the U.S. Dollar by higher yields.
The dollar index (which measures the greenback versus a basket of currencies, including the yen, and the euro) rose by 0.27%, to 99.68. Meanwhile, the euro fell 0.23%, to $1.1589. The Japanese yen dropped 0.3%, to 160.19 dollars.
The Fed may be more likely to raise rates next month if it receives the August U.S. jobs data and the consumer price inflation figures, both of which are due before its next meeting.
According to economists polled, the median estimate for Friday's employment report is that employers added 56,000 new jobs in January.
The gold price fell to its lowest level in two weeks amid rising Treasury yields and a stronger dollar. Spot gold dropped 2.69%, to $4328.60 per ounce.
(source: Reuters)