2 weeks ago
US stock futures fall amid surging oil and bond yields
Tuesday started with bad news for people who invest in stocks.
Big stock market trackers like the S&P 500 and Nasdaq were expected to go down.
That is because oil and borrowing costs are getting more expensive.
The United States government is spending more money than it takes in, and it has a very large debt.
Paying interest on that debt costs about $1.2 trillion this year.
Because of that, the government has to pay higher interest on its bonds, and a key 30-year bond yield reached 5.33%.
Oil prices also jumped because the United States and Iran could not agree to keep their peace deal going.
The old deal ended on Monday, and President Trump said he would not extend it.
He even said he might bomb Oman if it blocked US ships stopping Iranian oil tankers.
Investors are now waiting to hear from the Federal Reserve about what comes next.
S&P 500 futures fell 0.4%, Nasdaq-100 futures dropped 1.1%, and Dow Jones Industrial Average futures slipped 0.1% on Tuesday.
The 30-year Treasury yield climbed to 5.33%, nearing its highest level since 2002 amid fiscal and inflation concerns.
The US fiscal deficit reached $432.3 billion in July, its highest monthly total since March 2021, with a year-to-date shortfall of nearly $1.8 trillion.
Brent crude futures jumped to $92 per barrel and US crude topped $85 after the 60-day US-Iran interim peace deal expired on Monday without extension.
President Donald Trump threatened to bomb Oman if it obstructed the US blockade of Iranian ships in the Strait of Hormuz, while Nvidia Corp dropped 1.9%.
- Who
- Stock investors, President Donald Trump, Federal Reserve Chairman Kevin Warsh, and technology companies such as Nvidia Corp.
- What
- US stock futures fell while Treasury yields and oil prices surged amid fiscal deficit worries and fresh US-Iran tensions.
- Where
- US financial markets, along with the Persian Gulf region including the Strait of Hormuz and Oman.
- When
- Tuesday, after the 60-day US-Iran interim peace deal expired on Monday.
- Why
- Rising oil prices, a record US fiscal deficit, higher bond yields, and the failure to extend the US-Iran peace deal fueled market declines.
Iran's stance
US stance
Strait of Hormuz blockade and peace deal
Iran's stance
Iran strengthened its grip on the Strait of Hormuz and said it could step back only if its conditions are agreed to by the United States.
US stance
President Trump said he was not interested in extending the 60-day interim peace deal and threatened to bomb Oman if it interfered with the US blockade of Iranian ships.
Inflation and monetary policy
Iran's stance
Recent inflation readings for June and July showed relatively low levels of overall price increases, suggesting some pressure may be easing.
US stance
The annual inflation rate remains well above the Federal Reserve's 2% target, and higher oil prices reinforce expectations that central banks may need to keep a tighter monetary policy.
Key facts
- S&P 500 futures
- Down 0.4%
- Nasdaq-100 futures
- Down 1.1%
- 30-year Treasury yield
- 5.33%, near highest since 2002
- July US fiscal deficit
- $432.3 billion, highest since March 2021
- Year-to-date budget shortfall
- Nearly $1.8 trillion
- Brent crude
- $92 per barrel
- US crude
- Above $85 per barrel
- Nvidia Corp stock
- Down 1.9%
Sources
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