US Markets Mixed into Weekend – Nasdaq up 0.4%
US equity markets finished mixed on Friday as investors continued to assess the implications of the Federal Reserve’s latest interest rate hike alongside ongoing geopolitical developments. The Dow Jones edged 0.18% lower to close at 51,682, while the S&P 500 gained 0.17% to 7,650 and the Nasdaq outperformed with a 0.39% advance to 26,522.
US Treasury yields moved sharply higher across the curve as markets continued to adjust to the outlook for tighter monetary policy. The policy-sensitive 2-year yield jumped 7.9 basis points to 4.743%, reaching its highest level since July 2024, while the benchmark 10-year yield climbed 6.6 basis points to 4.996%, leaving it within touching distance of the key 5% level.
The US dollar experienced another choppy trading session but ultimately finished little changed against the major currencies. The USD Index slipped just 0.03% to close at 100.22 despite the substantial move higher in Treasury yields.
Oil prices declined for a second consecutive session as some geopolitical concerns eased heading into the weekend. Reports that China had asked Iran to assist in limiting Houthi attacks on Saudi Arabia helped reduce immediate concerns over regional energy supplies. Brent crude fell 0.91% to $103.87 a barrel, while WTI dropped 1.58% to $100.30, although both contracts remain above the psychologically important $100 level. However, further Houthi strikes over the weekend have seen prices open higher this morning in the Asian session.
Gold rebounded as the week drew to a close, gaining 0.85% to finish at $4,376.91. The precious metal moved back towards the middle of its recent trading range despite the sharp increase in US Treasury yields.
Yen Remains in Focus at the Start of the Week
The Japanese Yen will remain a major focus for FX traders in the coming days following the Bank of Japan’s interest rate hike on Friday. Volatility remained elevated in the later sessions after reports that the BoJ had conducted rate checks as the Yen weakened, keeping traders firmly on alert for the possibility of intervention. USDJPY had gained strongly after the rate hike, with the bank nowhere near as hawkish as traders had expected. With this coming just a couple of days after a much more hawkish FOMC, the path for a move higher was open, and the pair gained near 200 pips on the day to top out just under the 200-day moving average on the Daily chart. The rate check from the BOJ did see the pair pull back over 100 pips from the highs of the day; however, fundamentals now do still point to the risk of further depreciation for the Yen against the dollar, and traders are expecting more volatility in the coming days.
Another Quiet Monday Calendar to Start the Trading Week
It is a relatively quiet start to the new trading week from a macroeconomic perspective, with little in the way of major data scheduled. Japanese markets are closed for a public holiday, which could contribute to thinner liquidity during the Asian session. With the Yen already experiencing elevated volatility following Friday’s Bank of Japan decision and subsequent rate checks, traders will remain particularly alert to sharp moves in Japanese currency markets.
Although there is little in the way of data releases to move markets today, updates from central bankers, including the ECB’s Christine LaGarde and the Bank of Canada’s Tiff Macklem, could see moves in their respective markets, while any updates on trade from scheduled meetings between US and Chinese representatives in New York ahead of President Trump’s and Xi Jinping’s meeting on Thursday at the White House could move sentiment.
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