Yields continue to climb as oil jumps. Treasury yields rose today as Brent crude surpassed $100 per barrel, driven by continued attacks in the Middle East and no clear progress towards a resolution. The 2-year yield closed 5 bps higher at 4.35% and the 10-year yield closed 4 bps higher at 4.69%. Meanwhile, equities sold-off on negative sentiment from the Iran war and disappointing earnings results from Alphabet Inc. and Tesla Inc. The S&P 500 and NASDAQ closed 1.21% and 2.15% lower, respectively.
Houthi attack threatens further pressure on oil. The Iran-backed Houthi militia has struck two Saudi oil tankers in the Red Sea, opening a second maritime front alongside the ongoing standoff in the Strait of Hormuz. It’s unclear whether the ships were damaged in the attacks, though there are signs that some vessels are now avoiding the area, potentially threatening another key transitway for oil tankers. President Trump said he is now weighing a “massive attack” on Iran, describing it as “bigger than ever before,” as neither the US nor Iran have indicated willingness to revive peace talks.
US jobless claims fall to lowest level since 1969. During the week ending July 18th, 187k individuals applied for unemployment benefits, down 22k from the week prior and 23k below expectations. The figure marks the lowest level of unemployment applications since 1969 and offers another sign of labor market resilience. Meanwhile, continuing claims were nearly flat against the prior week, with 1.8 million individuals receiving benefits. Whether current geopolitical tension in the Middle East will have an effect on employment remains uncertain, though Carl Weinberg, chief economist at High Frequency Economics said, “The labor market has yet to show any sign of wear and tear from the surge in oil prices.”
