US Yields Jump as Gold Hits Record Highs

US bond yields surged to a three-month high as strong economic data fuelled doubts over upcoming Federal Reserve rate cuts, with the 10-year Treasury spread over European bonds widening. Meanwhile, gold prices reached record highs as investors prepared for potential volatility ahead of the US election. In corporate earnings, major US companies such as General Motors, Lockheed Martin, and Texas Instruments are set to report today.

Equities

The FTSE 100 was flat at 8,355.90 on Monday, with gains in commodity-linked stocks countering losses in utilities. BP rose 1.9% and Shell climbed 1.1%, both benefiting from a 1.3% rise in the oil and gas sector. Precious metal miners were also up 1.8%, as gold prices hit record highs amid ongoing uncertainty around the US election.

The utilities sector dipped 0.6%. Investors are waiting for speeches from Bank of England officials this week for insight into potential interest rate cuts.

In the US, the Dow Jones fell 0.8% to 42,931.60, and the S&P 500 dropped 0.18% to 5,853.98, marking a retreat after six weeks of consecutive gains. The Nasdaq, however, edged up 0.27% to 18,540.01, driven by Nvidia, which jumped 4.14% to close at a record high of $143.71.

The 10-year Treasury yield reached 4.17%, weighing on market sentiment. Tech giant Tesla fell 0.84%, as many rate-sensitive stocks came under pressure.

Boeing rose 3.1% after news that workers might vote on a new deal to end a five-week strike, while Spirit Airlines soared 53.06% following an agreement to extend its debt refinancing deadline by two months. Humana slipped 2.46% after a report revealed resumed merger talks with Cigna, which itself fell 4.69%.

Investors are now looking ahead to earnings reports from 114 S&P 500 companies this week, including Tesla, Coca-Cola, and Texas Instruments, as well as key economic data such as home sales, the Fed’s Beige Book, and PMI reports.

Forex & Commodities

The US dollar strengthened on Monday, climbing 0.53% against a basket of currencies to reach 104.01, as rising US bond yields and solid economic data suggested the Federal Reserve might be slow to cut interest rates. Benchmark 10-year Treasury yields hit a three-month high at 4.18%. The British pound slipped 0.54% to $1.2977, while the euro fell 0.5% to $1.0811. The dollar also gained 0.84% against the Japanese yen, reaching 150.77, ahead of Japan’s upcoming election.

Gold prices edged higher, trading near a record high at $2,732.44 per ounce, buoyed by safe-haven demand amidst geopolitical tensions and the approaching US election. Silver also rose, hitting $34.05 per ounce, with Citi Research raising its 12-month forecast for silver prices to $40.

Oil prices dipped slightly, with Brent crude down 0.3% to $74.10 per barrel and US West Texas Intermediate falling 0.2% to $69.90. This followed efforts by the US to push for a ceasefire in the Middle East and concerns about slower demand growth in China, despite ongoing stimulus measures from Beijing. Both oil benchmarks had gained nearly 2% on Monday, driven by continued uncertainty in the region.