Commodities Shoulder the Blame for Hits to Treasuries and Stocks

  • Runup in metals, oil spur ‘breakout’ in price metrics: Purves
  • Materials prices pushed up on tariff, sanctions, oil

Aluminum and Nickel Surge After New Sanctions Hit Russia

The recent weeks of sanctions, tariff dust-ups and tight oil supplies that jolted commodities prices higher have now got equities and Treasuries investors on the run, according to Weeden & Co.

Unlike in February, when optimism over global growth sent Treasury yields higher, this time it’s the price pressure from rising metals, Weeden’s Michael Purves wrote in a note to investors Thursday.

“This is a key risk,” the analyst said. “Higher rates and inflation without higher economic growth raises the discount rate for equity cash flows (lower P/E) but also raises stagflation risks for the economy and the stock market.”

The S&P 500 halted a three-day rally Thursday as the 10-year Treasury yield pushed above 2.9 percent for the first time since February. Crude pushed toward $70 a barrel in New York, while aluminum’s rallied more than 30 percent since the start of April.

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