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Rate Hikes And Bond Yields Rise

Markets Energy prices are fueling inflation concerns, pushing interest rates higher and stocks lowering. This pattern was established the da...

Markets
Energy prices are fueling inflation concerns, pushing interest rates higher and stocks lowering. This pattern was established the day before in Europe and is expected to continue after the opening of the US market. ADP will release its US private-sector hiring report two days ahead of the main official labor market report for September. Constellation Brands (NYSE: STZ ) will report earnings and Warby Parker Inc (NYSE: WRBY ) has a lot to go through after a strong debut. Here's what you need to know about the financial market on Wednesday, October 6th.

1. Concerns about inflation in Europe lead to higher bond yields and lower stocks

Concerns about stagflation swept the bond and equity markets in Europe yesterday as natural gas and electricity prices hit new highs. The yield on Germany's 10-year benchmark bonds rose to -0.16%, the highest level since May, while the yield on UK bonds rose to 1.13%, the highest in more than 2 years.

Prices for natural gas in the UK reached a new record high of 330 pence per therm, equivalent to about 97 euros per megawatt-hour, because the fight for the supply of energy at the beginning of the heating season in the northern hemisphere shows no signs of abating.

Meanwhile, the economy is showing signs of a sharp slowdown, with German manufacturing orders in August declining 7.7% month-on-month, mainly driven by the key automotive sector. Russia, still awaiting approval from European regulators to launch gas through the new Nord Stream 2 gas pipeline, continues to play a tough game, with a Kremlin spokesman again blaming European politicians for gas shortages.

2. ADP report - "warm-up" before the main employment report

US Treasury yields also rose amid continuing uncertainty over the debt ceiling debate and fears that higher global energy prices would also affect US inflation through natural gas transmission channels. LNG export demand in Europe and China continues to push down base gas prices in the US, which rose another 0.9% overnight to $ 6.369 per Btu. Over the past year, they have more than tripled. Later, the focus will be on the ADP's private sector employment report, which is expected to show an increase in hiring to 428,000 last month after 374,000 in August.

3. The American market will lose its gains on Tuesday

Stocks in the US will fall again on the open under new pressure from rising energy prices. The yield on 10-year Treasury bonds rose to 1.57% the day before, after which it stabilized somewhat at 1.54% by 06:15 am ET (10:15 GMT).

The Dow Jones futures fell 349 points, or 1.0%, which caused the monetary index to lose all gains on Tuesday and more at the opening time. S&P 500 futures also fell 1.2%, canceling all gains from the previous session, while Nasdaq 100 futuresfell 1.4%.

The stock likely to be in the spotlight is Facebook (NASDAQ: FB ), which remains under pressure following critical comments from congressmen - both men and women - on Tuesday in response to testimony from whistleblower Francis Hogen. Also in the spotlight will be Warby Parker (NYSE: WRBY), which rallied strongly after its market debut on Tuesday. Brewer Constellation Brands will report income.

4. Growth of interest rates around the world

The cycle of global monetary tightening continued the day before, when the Reserve Bank of New Zealand raised its key rate by 25 basis points to 0.5%, citing inflationary pressures. Iceland followed suit by raising its base rate from 1.25% to 1.50%.

For now, Poland remains , whose national bank is also under pressure to raise rates for the first time since the pandemic, when the bank's monetary policy council meets later today for a meeting. Hungary , the Czech Republic and Romania have tightened their monetary policies in recent days, while the Polish zloty rose 0.7% against the euro amid expectations that the NBP will follow suit despite its apparent reluctance. In the field of cryptocurrencies, bitcoin held above the $ 50K mark, but altcoins were again under pressure.

5. Oil has reached new highs, the focus of the EIA data

Crude oil prices have hit new highs and are still supported by views that OPEC and its allies have left the world without fuel for the next couple of months by refusing to accelerate production growth.

This view holds true despite the second weekly rise in US oil inventories, albeit a small one, less than 1 million barrels, according to the American Petroleum Institute (API). Government figures will be released as usual at 10:30 am ET (14:30 GMT).

By 06:30 am ET (10:30 GMT), WTI crude oil prices were at $ 78.55 a barrel, while Brent crude futures rose 1.2% to $ 82.23 a barrel.

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