Yields mixed as geopolitics, debt concerns continue. Treasury yields rose today as concerns over energy-driven inflation and fiscal deficits in the US and overseas remained in focus. The move higher partially reversed over the remainder of the session, as the 2-year yield closed 1bp lower at 4.81% and the 10-year yield closed 3 bps higher at 5.31%. Meanwhile, technology stocks drove equities higher, pushing the NASDAQ to close 1.05% higher at a new all-time high of 27,477.
Services prices hit four-year high as growth cools. ISM Services data released today showed a slower pace of expansion than in August, as the headline index edged down to 54.9, slightly below the 55.0 forecast and the prior period’s 55.4. Of the 17 services sectors, 13 reported growth, including accommodation and food services and wholesale trade. The ISM prices paid index increased to 74.0, its highest level since July 2022, beating expectations of 73.3 and up from 72.6 in August, as inflation worries continue. Supply chain disruptions caused by the war in Iran were the main driver. Steve Miller, chair of ISM’s business survey, said “supply chain constraints were also a top concern of respondents and were impacting both lead times and costs.” Order backlogs, also affected by supply chain issues, reached their highest level since July 2022.
Iranian President calls negotiations with the US “meaningless.” According to Iranian state television today, President Pezeshkian described peace talks with the US as “meaningless,” adding that the US has “attacked us three times after talks, and this shows that they are not seeking dialogue.” After side talks at the UN General Assembly failed to result in a deal, negotiations between the two nations have reportedly stalled. Elsewhere in the region, Pakistan and Turkey are deploying troops to Saudi Arabia as part of a new alliance aimed at defending energy infrastructure from escalating attacks by Iran-backed Houthi rebels. Saudi Arabia and the Houthis continue to fight over control of the Bab el-Mandeb Strait as strikes also escalate in the Red Sea.