On Monday, global financial markets adopted a risk-off stance as long-dated US Treasury yields continued their ascent, with the 30-year bond yield reaching levels not seen since 2007, surging nearly six basis points to 5.315% [2]. The 10-year Treasury yield also climbed by almost four basis points to 4.728% [2]. This move was driven by investor concerns over the surging US national debt, a flood of long-dated bond sales, and persistent inflation above the Federal Reserve's target for the past five years [2]. The US Dollar Index (DXY) remained nearly unchanged, down 0.02% at 99.59 [2], but other sources noted the dollar sagged to two-month lows, holding below the 100.00 mark, as underwhelming US data on jobs, inflation, and retail sales trimmed expectations for a Fed rate hike in September 2026 [3]. Money markets have priced in a 68% chance that the Fed will hold rates unchanged at the September meeting [2].
A fresh escalation in the Middle East further rattled markets, as Iran reportedly detained a UAE-owned oil tanker near Qeshm Island in the Strait of Hormuz, according to Iran's Fars news agency [1]. Additionally, a senior Iranian official stated Tehran is shifting to a "fully offensive" stance and warned of further escalation if diplomacy fails [3]. These developments pushed crude oil prices sharply higher, with West Texas Intermediate (WTI) oil jumping toward $84.00 per barrel, up more than 2% [3][1]. Gold also extended its rally above $4,400, supported by the weaker dollar and rising geopolitical tensions [3].
US equities responded to these competing threads with a second consecutive session of losses. The S&P 500 closed near 7,748, down roughly 0.48% on the day, as the oil move and bond selloff weighed on risk assets [1]. Despite the broader decline, semiconductor stocks such as Intel and Micron rallied after a report that Anthropic's second-quarter revenue jumped at least 14-fold year-over-year, topping $11.5 billion with positive adjusted operating income, signaling robust AI hardware demand [1]. However, some megacap tech names lagged, causing the Nasdaq 100 to erase earlier gains [1].
Currency markets reflected the risk-off mood, with the US dollar showing mixed performance against major currencies. The dollar was strongest against the Japanese yen (+0.10%) but weaker against the euro (-0.08%), pound (-0.05%), and several others [3]. EUR/USD held near 1.1580 after retreating from two-month highs, while GBP/USD remained in the mid-1.3500s ahead of UK jobs data [3]. USD/JPY traded around 159.00 following a soft Japanese GDP print [3].
Looking ahead, investors are focused on the upcoming release of the Federal Reserve's meeting minutes on Wednesday, which may provide further clarity on the central bank's policy direction [2].
CONCLUSION
The surge in US Treasury yields and escalating Middle East tensions have triggered a risk-off response across global markets, with equities declining and commodities like oil and gold rallying. The US dollar remains under pressure amid disappointing economic data and reduced expectations for a Fed rate hike. Investors are now awaiting the Federal Reserve's meeting minutes for further guidance on monetary policy.