- US major indices close lower. Declines today erase the week's gains.
- Powell exits after one of the wildest Fed eras in history
- Gold tumbles lower today on the back of higher yields and the higher USD
- Israel says it carried out targeted strike in Gaza against Hamas head.
- Baker Hughes total rig count rises by +3 to 551
- European shares close lower on the day and lower on the week
- Silver is sharply lower on higher USD/higher yields. Technically breaks the 100 day MA.
- Microsoft shares are higher as Pershings Ackman bets on the company
- US industrial production for April 0.7% versus 0.3% estimate
- Canada Manufacturing Sales for March 3.0% vs 3.5% estimate
- NY Fed manufacturing index for May 19.6 vs 7.5 estimate
- Canada housing starts for April 279.3K vs 240.0K estimate
- investingLive European markets wrap: Oil prices, yields surge as Beijing distraction ends
- US and China have aligning views on Iran, says Trump
- Iran foreign minister says current negotiations are suffering from lack of trust
Fed Chair Powell’s eight-year run as Fed Chair officially came to an end today, and he exited with markets under heavy pressure from sharply rising yields and renewed inflation concerns.
US Treasury yields surged across the curve. The 2-year note yield rose 8.7 basis points on the day and 19.0 basis points for the week to 4.079% — the highest level since March 2025. Meanwhile, the 10-year yield climbed 13.8 basis points today and 23.7 basis points for the week to 4.597%, its highest level since May 2025.
A key driver behind the move was another sharp rise in oil prices, which continued to fuel inflation fears. WTI crude for July delivery surged $4.24, or 4.37%, to settle at $101.16. For the week, crude oil rallied $6.48, or 6.84%, adding to concerns that inflation pressures could remain elevated longer than markets had anticipated.
US equities did not respond well to the combination of higher yields and surging energy prices. The major indices gave back much of their weekly gains in Friday trading. The Dow Jones Industrial Average fell -1.07% on the day and ended the week down -0.17%. The S&P 500 declined -1.24% Friday but still managed a modest weekly gain of 0.13%. The NASDAQ dropped -1.54% on the day and slipped -0.08% for the week.
Small-cap stocks were hit particularly hard as rising yields pressured growth and financing expectations. The Russell 2000 fell -2.44% Friday and closed the week down -2.37%.
In the forex market, the US dollar strengthened broadly as rising yields boosted demand for the greenback. All the major currencies declined versus the dollar on the day:
- EUR -0.37%
- JPY -0.26%
- GBP -0.58%
- CHF -0.41%
- CAD -0.22%
- AUD -1.00%
- NZD -1.23%
For the week, the British pound was the weakest major currency amid political uncertainty and sharply higher UK and US yields. The New Zealand dollar was the next weakest as risk-off flows intensified:
- EUR -1.35%
- JPY -1.32%
- GBP -2.26%
- CHF -1.38%
- CAD -0.51%
- AUD -1.35%
- NZD -2.17%
Precious metals were also hammered by the combination of higher yields and a stronger US dollar. Gold fell $110.11, or -2.37%, to $4,539.39 — its largest one-day decline since March 26. Silver plunged $7.51, or -9.03%, to $75.89, marking its biggest daily drop since February 12.
On the economic front, the Empire State Manufacturing Index came in much stronger than expected at 19.6 versus 7.5 expected, reaching its highest level since April 2022. However, a large part of the strength appeared tied to rising prices, reinforcing inflation concerns rather than easing them.
Earlier this week, both CPI and PPI inflation reports came in significantly hotter than expected, increasing concerns that the upcoming PCE inflation data could also surprise to the upside. As a result, market pricing has shifted noticeably, with traders now seeing a greater likelihood of additional tightening rather than easing.
That shift runs counter to comments from incoming Fed Chair Kevin Warsh, who had advocated for lower rates while campaigning for the role under President Trump. However, once seated at the Fed, Warsh will hold just one vote on a 12-member FOMC committee. Given the recent inflation data and the sharp rise in yields, it is difficult to envision the new Chair supporting a rate cut at his first policy meeting.
