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Middle East Tensions, Fed Comments Keep Oil Steady as Treasuries Hold Gains, Says Commerzbank
Brent crude was little changed, remaining below $86 a barrel as investors digest the latest development in the Middle East, while Treasuries held onto gains at the front end of the curve following Tuesday's rally. Longer-dated yields, however, edged higher, according to Commerzbank.The U.S. launched a fourth consecutive day of strikes on Iran. President Donald Trump warned of attacks on Iranian bridges and power plants next week unless Tehran resumes negotiations, while dropping plans for a 20% toll on ships using the Strait of Hormuz, said Commerzbank in a note.Separately, Saudi Arabia struck an airport in Yemen.Chair Kevin Warsh said the latest consumer price index report doesn't signal "mission accomplished" for the Federal Reserve and expressed interest in developing new measures of inflation. Warsh also said the Fed's balance sheet is unlikely to return to its 2006 size. Separately, Chicago Fed President Austan Goolsbee described Tuesday's CPI data as "surprisingly benign".In Asia, China's economy expanded 4.3% annually in the second quarter, missing the 4.5% consensus forecast, although June industrial production and retail sales both came in stronger than expected, said Commerzbank.In Europe, a draft European Commission proposal would relax leverage ratio-related capital requirements for banks, according to the FT. Finance Minister Rachel Reeves said the British government plans to issue its first digital bond early next year.
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