Americas Markets Wrap: Oil Rallies on Reported Iran Seizure of UAE Tanker; US 30-Year Yields Hit Highest Since 2007
Key Takeaways
- •Iran's reported capture of a UAE oil tanker lifted WTI crude by $2.03 to $84.43, keeping the Strait of Hormuz in focus as a key oil supply risk.
- •US 30-year Treasury yields rose above 5.30% to their highest level since 2007 as part of a global bond selloff that also feeds into US mortgage pricing.
- •The S&P 500 slipped 0.5%, with megacaps Meta and Microsoft down more than 3%, while Micron gained over 4%, showing the weakness was not a broad AI selloff.
- •Canada's July CPI printed at 3.0% year-over-year versus 2.9% expected, keeping inflation above the Bank of Canada's 2% target, while the US Empire Manufacturing index reached 20.60 against an 11.00 estimate.
- •Gold advanced $42 to $4,417, and USD/CAD finished flat near 1.3845 as US-Canada trade talks continue ahead of an Aug 19 tariff deadline.
US economic data and Middle East headlines drove trading across markets on 17 August, with oil rallying after a report that Iran had seized a UAE tanker and long-dated Treasury yields climbing to their highest level since 2007.
Headline Data
- Canada July CPI: 3.0% year-over-year, versus +2.9% expected (investingLive), keeping inflation above the Bank of Canada's 2% target
- US Empire Manufacturing index: 20.60, versus an 11.00 estimate (investingLive). The Empire State survey is compiled monthly by the Federal Reserve Bank of New York, with readings above zero signaling expansion in New York State factory activity.
- Iran has set a deadline of "a few weeks" for full implementation of the MOU (memorandum of understanding) (investingLive)
- US 30-year yields rose to the highest level since 2007 (investingLive)
- US August NAHB housing market index: 35, versus 33 expected (investingLive). The index is published by the National Association of Home Builders, and sub-50 readings indicate more builders view conditions as poor than good.
Markets
- Gold up $42 to $4,417
- US 10-year yields up 2.8 bps to 4.72%
- WTI crude oil up $2.03 to $84.43
- AUD leads, JPY lags
- S&P 500 down 0.5%
Markets remained in the summer doldrums, but the session was far from dead. The main swing came after Iran's Fars news agency reported that the country had captured a UAE oil tanker. The Strait of Hormuz, the chokepoint at the mouth of the Gulf through which roughly a fifth of globally traded oil passes, has long made shipping incidents in the region a focus for oil supply risk. That triggered a bid in oil that spilled over into bond and stock market selling. Compounding the worry, US 30-year yields hit a fresh cycle high above 5.30% as part of a global bond selloff. It was the first time since 2007, the year the global financial crisis began, that the long bond traded at these levels. Long-dated Treasury yields also anchor US mortgage pricing, a channel through which the bond selloff reaches household borrowing costs.
Equity selling was concentrated in some megacap names, with Meta and Microsoft down more than 3%, but it was not an AI slump, as Micron rose more than 4%.
In FX, the mood was generally positive as risk trades climbed. There were some murmurs on the US-Canada trade talks, and the pair hit 1.3845 before rising 30 pips from the lows to finish flat on the day as the two countries negotiate ahead of an Aug 19 tariff "deadline".
Gold was solid, rising $40 and flirting with last week's highs.
