U.S. Stocks, Bonds Slip Before Yellen; Oil Drops: Markets Wrap

  • Central bankers to speak at annual meeting in Jackson Hole
  • Crude falls after Wednesday’s gains as hurricane targets Texas

Amey on Possible Messages Coming From Jackson Hole

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U.S. stocks and Treasuries edged lower as markets struck a cautious tone amid political wrangling over the debt ceiling and ahead of central bank speeches in Jackson Hole. Oil fell as a storm strengthened into a hurricane aimed at Texas.

The S&P 500 Index ended the day lower after whipsawing from gains to losses. Food retailers led declines after Hormel Foods Corp. and JM Smucker Co. reported earnings that missed estimates and Amazon.com Inc. said it’d start cutting prices at Whole Foods locations next week. The dollar gained against most peers, while U.S. benchmark yields rose to 2.19 percent. Crude slid below $48 a barrel and natural gas futures climbed.

With little to trade on, investors focused on events that have the potential to roil markets in the next few days. Speeches Friday by Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi may offer clues on the timing of stimulus reduction. President Donald Trump again used Twitter to fuel the debate on legislation to keep the U.S. government open next month. Countering, House Speaker Paul Ryan said Thursday the borrowing limit will be raised.

Bloomberg’s Joe Carroll takes a look a Hurricane Harvey’s potential impact on oil prices.

(Source: Bloomberg)

Hurricane Harvey is forecast to turn into a Category 3 storm when it makes landfall late Friday in an area of Texas thick with oil refineries and natural gas plants. It’s unlikely to have a major impact on Gulf oil production, but any damage to refineries could sap demand for crude.

“We’re going to continue to trade in ranges -- there’s not enough going on and you still have the central bank puts. Enough is on the sidelines and volumes are very small,” said Andrew Brenner, head of international fixed income at Natalliance Securities LLC. “People are maybe anticipating something out of tomorrow’s Jackson Hole speeches, but I’d be very surprised if anything happens.”

Terminal subscribers can read more on our Markets Live blog.

Among other key events looming this week:

  • Yellen is scheduled to discuss financial stability at 10 a.m. New York time on Friday at the Kansas City Fed’s symposium in Jackson Hole. Draghi is set to speak at 3 p.m.

Here are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.2 percent to 2,438.98 as of 4 p.m. in New York. The gauge is down over 1 percent for the month.
  • The Stoxx Europe 600 Index gained 0.2 percent, and is set for third monthly slide.
  • The U.K.’s FTSE 100 Index rose 0.3 percent, touching the highest in over a week.
  • Germany’s DAX Index rose 0.1 percent, on track for first monthly gain since June.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.2 percent, targeting its first monthly rise in six months.
  • The Japanese yen fell 0.5 percent to 109.57 per dollar.
  • The euro dropped 0.1 percent at $1.801.
  • The British pound was little changed at $1.2803.

Bonds

  • The yield on 10-year Treasuries gained two basis points to 2.19 percent. The rate on Treasury bills maturing Oct. 12 jumped by as much as five basis points Thursday, the largest intraday move since March.
  • Germany’s 10-year yield steady at 0.38 percent, the sixth day without a gain.
  • Britain’s 10-year yield fell one basis point to 1.05 percent, lowest since June.

Commodities

  • West Texas Intermediate crude declined about 2 percent to settle at $47.43 a barrel, on track for its fourth weekly decline.
  • Gold futures fell 0.2 percent to settle at $1,292 an ounce, set to rise for the second month in a row.

— With assistance by Dani Burger, and Sophie Caronello

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