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Brent crude creeps lower; Treasury yields firm as more Fed hikes on the cards


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Brent crude creeps lower; Treasury yields firm as more Fed hikes on the cards

➤ Brent crude oil falls below $80 a barrel.

➤ China avoids currency-manipulator designation; yuan slumps.

➤ U.K. could consider extending post-Brexit transition period.

➤ Global stocks mixed amid quarterly earnings, economic growth concerns.

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A bigger-than-expected increase in U.S. crude oil inventories sent Brent crude futures below $80 per barrel, mitigating supply concerns stemming from looming sanctions on Iran.

However, "with the impact of U.S. sanctions on Iran set to sap a significant chunk of global spare capacity out of the market in just a few weeks, we see a significant asymmetry in risks that suggests higher prices," TD Securities said in a note to investors. Brent crude oil was down 1.20% to $79.02 a barrel on the ICE Futures Exchange as of 6:56 a.m. ET.

Ten-year Treasury yields hovered around 3.21% after minutes from the Fed's latest monetary policy meeting showed that a handful of participants differed on whether the central bank should raise rates enough to actively slow the economy. Officials also differed on what they should do as they approach a "neutral" policy stance, where the Fed is no longer providing monetary stimulus but is also not restraining the economy, according to the minutes.

"While we look for the Fed to continue powering through with more rate hikes (one more this year and three next year), it is not our base that the central bank will move the level of interest rates above the terminal rate," ING strategists wrote.

Asian markets declined following release of the minutes, with Japan's Nikkei 225 index closing down 0.80% and Hong Kong's Hang Seng edging 0.03% lower. The Shanghai SE Composite index lost nearly 3%, amid concerns about China's economic growth. The country's third-quarter GDP numbers are due to be released this week.

Meanwhile, European stocks traded higher as third-quarter earnings continued to flow in, with France's CAC 40 index edging 0.43% higher, Germany's DAX gaining 0.30% and the FTSE 100 broadly unchanged. Swiss drugmaker Novartis AG saw its shares rise nearly 2% after it agreed to acquire Indiana-based Endocyte Inc. in a $2.1 billion deal, while Telefonaktiebolaget LM Ericsson (publ)'s shares climbed more than 6% as the Swedish company's third-quarter revenues beat expectations.

The gains are not expected to extend to Wall Street, with futures pointing to lower openings for the S&P 500, the Nasdaq 100 and the Dow Jones Industrial Average. The dollar index, which tracks the dollar against a basket of major currencies, reversed earlier gains, dropping 0.07% to $95.51.

Sterling appreciated 0.10% against the dollar, retracing earlier losses after retail sales in Britain underperformed in September and amid reports that Prime Minister Theresa May could consider extending the 21-month post-Brexit transition period beyond 2020. The euro and the Japanese yen each rose less than 0.20% against the dollar.

The Chinese yuan depreciated 0.15% against the dollar, after the U.S. Treasury refrained from calling China a currency manipulator, but kept the country on a watch list, citing Beijing's opaque exchange rate practices.

Gold futures dipped 0.08% to $1,226.40 per ounce.

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Proposal to export gas, coal from US military bases faces major obstacles

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The day ahead:

8:30 a.m. ET — U.S. jobless claims (Econoday consensus: 215,000)

8:30 a.m. ET — U.S. Philadelphia Fed business outlook survey (Econoday consensus: 20.0)

9 a.m. ET — U.S. Fed's James Bullard speaks

10 a.m. ET — U.S. leading indicators (Econoday consensus: 0.5% monthly)

10:30 a.m. ET — U.S. EIA natural gas report

12:15 p.m. ET — U.S. Fed's Randal Quarles speaks

4:30 p.m. ET — U.S. Fed balance sheet and money supply