On Wednesday, the U.S. September services PMI rose to a nearly five-year high, while the manufacturing PMI climbed to a more than four-year high. Combined with input costs accelerating due to rising oil prices, this reignited market concerns over further interest rate hikes by the Federal Reserve.Federal Reserve Governor Barr stated that the risk of exceeding the inflation target has increased and that further rate hikes may be necessary.
The U.S. Dollar Index rose steadily, breaking through the 101 mark, surging 0.6% intraday to close at 101.14.U.S. Treasuries faced a sharp sell-off, with yields surging across the board and approaching their highest levels since 2007. The benchmark 10-year Treasury yield rose 15.4 basis points to close at 5.122%;the yield on the 2-year Treasury note—which is sensitive to the Fed’s policy rate—rose 15.6 basis points to 4.912%.
Spot gold fluctuated lower throughout the day, ultimately closing down 1.63% at $4,287.35 per ounce;Spot silver closed down 3.83% at $64.44 per ounce.
The UK Maritime Trade Operations (UKMTO) reported that a cargo ship in the Strait of Hormuz was struck by an unidentified projectile, caught fire, and was adrift, with two casualties;Iran stated it would not reopen the Strait of Hormuz until its conditions were met, prompting a significant rebound in international oil prices. WTI crude surged 2.94% to $92.11 per barrel; Brent crude ultimately closed up 4.88% at $103.42 per barrel.