US stock futures were trading higher on Friday, 20 August, as Wall Street attempted to recover from the previous day’s sell-off, which was driven by a sharp rebound in Treasury yields.
S&P 500 futures rose 0.3%, although the benchmark remained on track for its first weekly loss this month. Dow Jones Industrial Average futures gained 0.3%, while Nasdaq-100 futures advanced 0.6%.
Thursday’s session saw sharp losses as borrowing costs rebounded, with yields on both the 10-year and 30-year Treasury notes rising by more than five basis points and reversing their earlier declines. Both yields have since stabilised in Friday’s trade.
Financial markets have come under increasing pressure as Treasury yields climbed sharply through the summer amid concerns over inflation, rising government debt and other factors. Higher yields increase borrowing costs across the economy, potentially slowing growth and weighing on valuations of stocks and other assets.
The Treasury Department announced on Wednesday that it would at least double the size of its planned purchases of longer-term government debt, while Treasury Secretary Scott Bessent indicated on Thursday that the repurchase programme could be expanded further.
Market participants are warning that a lack of predictability when it comes to the US Treasury’s debt management strategy could ultimately portend higher borrowing costs.
Meanwhile, increased US defence spending and the country’s deeper involvement in the Middle East have added to concerns over the nation’s fiscal position. The US national debt has surpassed a record $40 trillion, prompting investors to demand higher returns amid growing concerns about widening budget deficits.
In other corners of the market, the yen was little changed after Japan’s key price gauge accelerated for a second month, keeping the Bank of Japan on track for another near-term interest rate hike as market speculation builds over a move as soon as September.
Bitcoin surpassed $70,000 for the first time in over two months after US President Donald Trump met crypto industry leaders.
Crude extends rally to sixth day
Crude oil prices remained elevated in trade as the US moved to isolate Iran’s economy in what Trump described as an “economic D-day”, with details of the initiative expected on Monday.
International benchmark Brent crude rose by $0.56 to around $94.34 a barrel, extending its gains for a sixth consecutive session and putting it on track for a second straight weekly gain. US benchmark West Texas Intermediate (WTI) crude gained $0.52 to $87.35 a barrel.
US Treasury Secretary Scott Bessent said on Thursday that Iran would face the “greatest coordinated economic isolation in the history of the world”.
The prospect of sweeping economic sanctions comes as Iran has refused to back down from its demands that the US end its blockade of Iranian ports and meet other conditions before Tehran considers reopening the Strait of Hormuz. Meanwhile, Iran has dismissed President Donald Trump’s threats of economic pain and isolation.
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