Morning Bid: Bonds spoil the AI party

By Mike Dolan

May 18 (Reuters) -

What matters successful U.S. and planetary markets today

By Mike Dolan, Editor-at-Large, Finance and Markets

A enslaved marketplace crunch meets the AI boom. Aggravated by still-rising lipid prices, accelerating inflation, and the menace of higher involvement rates and rising authorities indebtedness ‌estimates, the enslaved marketplace has been spooked again, casting a pall implicit AI-obsessed banal markets.

The U.S. Treasury agelong enslaved output has deed ‌its highest level since earlier the Great Financial Crisis successful 2007, with 30-year yields topping 5.159%, portion 10-year yields person jumped to their highest successful much than a year.

I'll get into that ​and much below.

But first, perceive to the latest occurrence of the Morning Bid regular podcast. Subscribe to perceive Reuters journalists sermon the biggest quality successful markets and concern 7 days a week.

BONDS SPOIL THE AI PARTY

As G7 concern chiefs conscionable successful Paris connected Monday, enslaved accent is spreading astir the world.

Japan’s long-dated authorities yields spiralled to grounds highs connected Monday. European yields are astatine their highest levels, variously, successful 15 to 20 years, portion Britain, facing a caller governmental psychodrama amid brewing ‌challenges to Prime Minister Keir Starmer’s leadership, is seeing ⁠its highest semipermanent borrowing costs since the 1990s.

Interest complaint rises are expected successful Europe and Japan adjacent month, with a much than 50% accidental the Fed volition travel by year-end.

The lipid daze successful the Gulf is astatine the bosom of ⁠the latest ostentation and rate-hike angst. Tensions are rising determination erstwhile again amid caller drone strikes, including connected a atomic powerfulness works successful the UAE, portion the Strait of Hormuz remains efficaciously closed to each but a trickle of tankers.

World crude prices pushed supra $110 per tube connected Monday arsenic U.S. President Donald Trump warned Tehran that ​the “clock ​is ticking” and prepared to sermon subject options connected Iran, according to Axios reports. Perhaps ​most worryingly, year-end lipid futures person risen to implicit $92/bbl - their ‌highest level of the warfare truthful far.

Stock indexes had mostly been ignoring the lipid shock, buoyed by the blistering AI concern boom, but they person been dragged backmost from grounds highs by the enslaved jolt. Major U.S. indexes closed down sharply connected Friday, portion Asian shares slipped connected Monday and Wall Street futures edged down earlier the bell.

Stateside, Nvidia’s results connected Wednesday are acceptable to predominate the slate this week arsenic a cardinal trial of the AI trade. Meantime, retailers led by Walmart volition shed airy connected the authorities of the U.S. user amid the vigor shock. And Monday volition spot the merchandise of ‌the NAHB lodging marketplace scale for May, with investors and policymakers keen to show ​the interaction of elevated owe rates.