S&P 500 futures are little changed as Treasury yields stabilize

S&P 500 futures traded near the flatline on Thursday as Treasury yields stabilized and traders weighed the inflationary implications of rising crude oil prices. Futures tied to the broad market index were little changed, while Nasdaq-100 futures slipped 0.3% and Dow Jones Industrial Average futures rose 83 points, or 0.2%. The cautious session follows a three-day losing streak for major U.S. stock indexes and precedes fresh employment data due later in the week. Oil prices continued their ascent, with West Texas Intermediate crude futures trading 2% higher at around $93 per barrel and Brent futures advancing more than 1% to above $97. Rising energy costs have put upward pressure on Treasury yields recently, as investors fear that elevated crude prices will drive inflation and force the Federal Reserve to maintain or increase interest rates. However, U.S. yields were roughly flat on Thursday, with the benchmark 10-year Treasury note yield trading around 4.77%, after hitting its highest level since November 2023 on Wednesday.

A key factor steadying yields was a sharp rally in the Japanese yen, which rose more than 1% against the U.S. dollar to 156.1 yen. The yen’s strengthening reduces the need for Japanese authorities to sell dollar-denominated assets, which can push global yields higher. Adam Crisafulli of Vital Knowledge noted that a stronger yen could help unravel the macro overhangs weighing on equities, as a sustained rally in the Japanese currency would in theory remove upward pressure from global yields. Japanese Vice Finance Minister for International Affairs Atsushi Mimura said Thursday that authorities are “neither satisfied nor reassured” by recent market moves and remain on a “state of heightened alert,” per a Reuters report. While traders are watching for signs of currency intervention, some attribute the yen’s move to increased expectations for Bank of Japan rate hikes.

The stabilization in yields comes after a volatile session on Wednesday, when the 2-year Treasury yield hit 4.41%, its highest level since January 2025, and the 10-year yield briefly touched 4.818%, the highest since November 2023. Both retreated from those peaks by the close. New York Federal Reserve President John Williams told CNBC on Wednesday that he views higher Treasury yields as a reflection of solid economic prospects, following record-breaking corporate profits in the second quarter. Still, Thursday saw yields move lower across the curve, with the 10-year yield falling more than 2 basis points to 4.7680% and the 30-year yield dropping 2 basis points to 5.2433%. The 2-year yield was more than 2 basis points lower at 4.3609%. Traders now look to key services and jobs data for further insight into the domestic economic picture.

Separately, the Dutch central bank transferred approximately 86 tons of gold from the U.S. and Canada to the U.K. between March and August, citing “increasing geopolitical unrest.” The gold, representing just over one-quarter of the bank’s reserves held in New York and Ottawa, is now stored with the Bank of England. The move underscores how geopolitical uncertainty continues to reshape central bank strategies.

Headline: Treasury Yields Steady as Yen Rally Offsets Oil-Driven Inflation Fears