Brent Tops $108 as Futures Head Lower Into the Open
Oil priced the weekend's Iran news for the first time this morning. Brent rose 4% to $108.50; it closed Friday at $104.32. U.S. crude, WTI, gained 4.2% to $96.30.
The trigger was Donald Trump's rejection of Iran's offer to reopen the Strait of Hormuz. The strait stays closed. Trump said he expects more talks this week, and Saudi Arabia's foreign minister is in Washington to meet Secretary of State Marco Rubio.
Friday's rally rested on hopes for that deal. This morning, that support is gone.
Oil is pushing yields higher too. The 10-year Treasury yield is at 5.21%-5.23%, 3 to 5 basis points above Friday's 5.18% close. The 30-year yield topped 5.5%, a level not seen since 2004.
Fed funds futures put the odds of an October hike near 66%. The higher oil goes, the firmer inflation expectations and hike pricing become.
Futures fell in response. S&P 500 futures are down 0.5%-0.6% and Nasdaq 100 futures about 1%. Energy and refiners are higher; tech, semiconductors and precious metals are lower. Gold futures fell 3.2%.
The Nasdaq's extra weakness has a second source: OpenAI. On Sunday the company paused training, evaluation and inference with tool use for its most capable models. It cited a security incident involving an internal research model and suspended its largest planned training run.
