Dollar Gains on Surging Bond Yields as Commodities Hold Steady

On Thursday, October 1, the primary force across global markets was a sharp rise in government borrowing costs, as a global bond selloff lifted long-term yields. Higher Treasury yields bolstered the U.S. dollar and set the tone across commodities and foreign exchange.

Crude oil ended the day little changed. Market participants balanced supply concerns tied to stalled diplomatic negotiations between the United States and Iran against recovering crude export flows from Middle Eastern terminals.

In metals, gold held steady as a cooler U.S. inflation reading tempered expectations for an October interest rate hike, counteracting the downward pressure from elevated Treasury yields and a stronger currency. Copper found support after Chinese manufacturing activity returned to expansion and exchange inventories in Shanghai declined.

In currency markets, foreign currencies weakened as the dollar strengthened. The euro weakened against the dollar as fiscal debates in France added to pressure from rising yields. The British pound also weakened against the dollar to multi-month lows as investors evaluated persistent inflation and elevated energy costs.

Bitcoin and ether posted small changes during the session, with Bitcoin -0.2% and Ethereum -0.1%.

Because commodity and foreign exchange markets trade continuously, prices moved further after Thursday's close. As of 10:30 am New York, overnight trading showed silver -0.8% and the euro against the dollar -0.8%.

Looking ahead, scheduled events include the U.S. September employment report. In Europe, the calendar features the flash inflation estimate for the euro area and the latest Italian retail sales release.