Global Markets Grapple with Inflation Worries as Oil Prices Surge and Bonds Face Pressure

Asia shares slumped, but US equity futures and Treasuries stabilized as oil prices surged, heightening concerns about inflation. The US benchmark oil price reached $95 a barrel, the highest in over a year, due to falling stockpiles, contributing to worries about persistent inflation. This pushed the 10-year Treasury yield near 4.6%, its highest since 2007. US and European equity futures showed marginal gains, while Asian stocks struggled, with Japan, New Zealand, and Hong Kong falling over 1%. A global equities index faced its tenth consecutive loss, matching a 12-year record. September proved challenging for global stocks and bonds, with the 10-year Treasury yield rising significantly, and US corporate bonds dipping into negative territory for 2023.

Seasonally adjusted retail sales in Australia climbed 0.2% in August compared to the prior month. It was slower than the 0.3% expected by economists polled by Reuters.

In China, mainland shares declined, and Chinese developers continued to face losses, including Evergrande Group. The Bloomberg dollar index fell slightly after a six-day rally, while the yen strengthened but remained near 150 per dollar. Japan's 20-year yield reached its highest since 2014, and Australian and New Zealand rates also increased. Minneapolis Federal Reserve President Neel Kashkari noted potential economic slowdowns due to a US government shutdown and an autoworker strike, suggesting less aggressive monetary policy.

Market observers anticipated key data releases, including US GDP and initial jobless claims, along with the personal consumption expenditures price. A large options position held by a JPMorgan Chase & Co. equity fund raised concerns of potential market dislocations.