U.S. equity futures were largely unchanged early Thursday following a sharp rise in Treasury yields that sparked a sell‑off across major indexes. The S&P 500 futures slipped 0.31% while the Nasdaq‑100 futures fell 0.34%, reflecting investor concern that higher borrowing costs could linger.
Treasure Yields Reach Multi‑Year Highs
The benchmark 10‑year Treasury note yield jumped to 5.135%, the highest level recorded since July 2007. The two‑year note also climbed, reaching 4.947%, a peak not seen since May 2024. The surge in yields has intensified market expectations that the Federal Reserve will raise its policy rate again in October. According to the CME FedWatch tool, Fed funds futures now imply a greater than 68% probability of an October hike, up from roughly 49% just a week earlier.
Higher yields translate into steeper mortgage rates and increased borrowing costs for consumers, a pressure that coincides with rising fuel prices. Analysts note that the combination of tighter credit conditions and elevated energy costs could strain household finances.
Equity Markets React Across Regions
During the regular trading session, the S&P 500 index fell 0.8% and the Nasdaq Composite dropped 1.1%, ending a four‑day winning streak for the tech‑heavy benchmark. In the Asia‑Pacific region, market reactions were mixed. Japan’s Nikkei 225 rose 1% after three consecutive holiday days, while the broader Topix slipped 0.09%. Australia’s S&P/ASX 200 fell 0.76%, and Hong Kong’s Hang Seng index declined 0.52%. Mainland China’s CSI 300 posted a larger loss of 1.29%. South Korea’s markets were closed for a holiday.
Commodities, Economic Data and Upcoming Catalysts
Oil prices rebounded on Wednesday, with Brent crude futures climbing about 3.9% to close at $103.08 a barrel and West Texas Intermediate rising 1.8% to $92.16. The bounce came amid reports that U.S. manufacturers and service providers continued to expand, as indicated by S&P Global’s purchasing managers’ indexes.
BMO Capital Markets highlighted that, despite the strong PMI readings, “severe supply chain bottlenecks” and higher fuel and transport costs could keep inflationary pressures alive. Vail Hartman, a U.S. rates strategist at BMO, said, “Overall, it was a much stronger‑than‑expected read on US business activity that implies ample latitude for both policy rates and Treasury yields to push higher in the near‑term.” He added that the data “reinforces the risk of a renewed acceleration in demand‑driven inflation even if supply‑side inflation subsides.”
Traders will be watching weekly jobless claims for further clues on labor market strength, while corporate earnings are set to provide additional market direction. Darden Restaurants, the parent of Olive Garden, is scheduled to release its quarterly results in the morning, followed by big‑box retailer Costco Wholesale later in the afternoon.
Helene Elliott is the Lead Science & Space Reporter at News Raise. She reports on aerospace missions, astrophysics discoveries, quantum research, and environmental technology.
