Treasury yields rise despite softer US services

Key Developments

US services growth slows: The ISM services index eased to 54.9 in September from 55.4 in August, slightly below market expectations, while new orders remained strong. The prices-paid index rose to 74.0, its highest level in more than four years, while the employment component returned to expansion.

Treasury yields push higher: US Treasury yields rose despite markets continuing to price a low probability of an October Fed hike, with the 10-year yield briefly reaching 5.35%, its highest since 2002. US equities nevertheless advanced, with the S&P 500 gaining 0.7% and the Nasdaq rising 1.1% to a record high, led by technology stocks.

French concerns weigh on euro: The euro fell as much as 0.8% to a 17-month low against the dollar as concerns over France’s fiscal position continued to pressure government bonds. The spread between French and German 10-year yields remained elevated after reaching its widest level since the eurozone sovereign debt crisis last week.

Türkiye inflation falls below 30%: Consumer inflation slowed to 29.7% y/y in September from 31.5% in August, below market expectations of 30.3%. Prices rose 1.8% m/m, while producer-price inflation eased to 27.4% y/y.

Oil prices extend decline: Brent crude fell 1.9% to just above $100/b on Monday as Middle East crude exports continued to recover and the G7 pledged additional supply from emergency reserves. Oil prices have declined from last week’s highs despite continued disruption to regional shipping and refining capacity.

Today’s Major Data

India PMIs, US trade due: HSBC publishes India’s September services and composite PMIs today, following last week’s stronger manufacturing reading. The US also publishes its August trade balance.