Yields edge lower on peace negotiation optimism. Treasury yields declined today as it was reported that Pakistan was looking to serve as a mediator and restart talks between the US and Iran, following attacks over the last two weeks. The 2-year and 10-year yields each closed 2 bps lower, at 4.33% and 4.68% (up 13-15 bps on the week), respectively. Brent crude settled around $98 per barrel, after surpassing $100 yesterday. Meanwhile, equities ended the day mixed, with the S&P 500 up 0.05% and the NASDAQ down 0.64%.
Fighting in Mideast continues, Pakistan attempts to revive talks. The US has reached the 13th night of air strikes, with Iran’s military also launching strikes on US military facilities in the Middle East. Vessel traffic in the Strait of Hormuz continues to fall, though some ships are now traveling through the Red Sea despite Houthi militia attacks there over the past week. Meanwhile, sources say that Pakistan is exploring the possibility of resuming peace negotiations between the US and Iran, a move reportedly encouraged by China. An official from Pakistan said that a “pre-requisite for any talks to resume” would be for attacks on Persian Gulf nations to stop.
Business activity jumps as World Cup fuels demand. Preliminary July data today showed the US composite PMI at 53.6, the highest level in eight months and above expectations of 52.2. The acceleration was driven by heightened demand for services, which also rose to 53.6, as the World Cup and July 4th celebrations were taking place. Meanwhile, the manufacturing gauge declined to 53.8, its lowest level since March. Chris Williamson, chief business economist at S&P Global Market Intelligence said, “July saw a concerning intensification of supply chain delays and accompanying renewed upturn in price pressures, constraining growth and subduing demand.”
