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Briefing.com Summary:
*Oil prices are up after the U.S. and Iran traded strikes over the weekend.
*Aon is buying USI Insurance Services from KKR for $17 billion.
*The U.S. has secured majority control of more than 65 billion barrels of proven oil reserves in Venezuela.
This week is the week leading up to Labor Day weekend, which means it is one last hurrah for summer vacation plans that is apt to translate into thinner trading conditions. That could mean some increased volatility or a lot of narrow, range-bound trading. Much will depend on the news catalysts.
There is a negative bias this morning in the equity futures market that is oriented around a negative news catalyst. Specifically, the U.S. and Iran traded military strikes over the weekend; President Trump, in a Truth Social post, teased the possibility of Kharg Island being "blown to smithereens," and, lo and behold, oil prices have increased.
WTI crude futures are up 3.3% to $86.16/bbl, and Brent crude futures are up 3.0% to $90.77/bbl, even as President Trump also said the U.S. has secured majority control of more than 65 billion barrels of proven oil reserves in Venezuela.
Treasury yields were slow to respond to the move in oil initially but have perked up in recent action. The 10-yr note yield is up three basis points to 4.75%, attentive to the inflation concerns that often accompany rising oil prices.
The bump in oil prices and bond yields have weighed on sentiment that has manifested itself in the equity futures trade.
Currently, the S&P 500 futures are down 29 points and are trading 0.5% below fair value, the Nasdaq 100 futures are down 101 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are down 209 points and are trading 0.5% below fair value.
These aren't scary-looking indications by any means. They are almost formulaic, which in turn points to a recognition that they can be unwound just as quickly as they took root with a well-timed soundbite or a rotation into the mega-cap stocks.
Treasury yields, however, remain the spoil agent. If longer-dated Treasury yields keep pushing higher, then the stock market may find itself in some quicksand.
At the moment, there isn't much corporate news of note to stop the sinking. There have been some M&A deals, highlighted by Aon's (AON) $17 billion cash acquisition of KKR's (KKR) USI Insurance Services business, but a deal in the insurance industry just doesn't excite the masses like a big deal in the tech sector does.
Market participants, therefore, are holding their buying interest—perhaps while holding a cold beverage on vacation (it's 5:00 o'clock somewhere).
