Key facts
- The European Central Bank is expected to raise interest rates by 25 basis points on Thursday.
- Crude oil prices closed at their highest level since late May above $100 per barrel.
- 10-year Treasury yields hit their highest in three years, approaching 5%.
- US producer price inflation data for August is due Thursday after the ECB policy decision.
- European natural gas futures hit their highest in three years.
- President Trump indicated the Iran war would not end until after November's midterm elections.
Energy and bond markets are on edge as markets await a likely European Central Bank interest rate rise and US inflation data on Thursday. Crude oil closed at its highest level since late May above $100 per barrel, and 10-year Treasury yields hit their highest in three years, approaching the 5% milestone. This comes amid intense attacks on Gulf shipping and President Donald Trump's indication that the Iran war would not end until after November's midterm elections. A planned $6 billion buyback of longer-dated bonds disappointed some investors. European natural gas futures also hit their highest in three years.
The European Central Bank is widely expected to lift its main policy interest rate by a quarter percentage point to 2.5% on Thursday, its second hike of the year, as inflation rates have been aggravated by Iran-related energy price spikes. Financial markets anticipate further rate rises over the next 12 months. Fresh jitters in the AI world about damage to software firms from new models and rogue AI agents were compounded by warnings from Anthropic employees about an end to humanity.