North American Morning Briefing: Global Bond Selloff Deepens, Oil Hovers Close to $95 a Barrel

Stock futures were down Wednesday, while oil extended gains, as the U.S.

and Iran continue to battle for control of the Strait of Hormuz.

Oil hovered around $95 a barrel, putting further pressure on bond yields as a rout in sovereign debt extended in early European trade.

"Oil sits at the center of everything," Goldman Sachs said. "If energy keeps rising, the Fed reaction function gets dragged with it and sustained upside becomes much harder."

Investors are increasingly pricing in a Federal Reserve rate hike at the central bank's meeting this month, placing further upward pressure on yields. The market is currently pricing in a 69% probability of a rate hike this month, according to LSEG.

For the day ahead, investors are watching for the August ADP report for the U.S. and the Fed's Beige Book. Broadcom, Snowflake and Hewlett Packard report earnings after the bell.

Stocks to watch

Broadcom reports earnings after markets close.

Dell Technologies rose 9% premarket after it reported a big earnings and revenue beat thanks to demand for its servers.

GitLab soared premarket after its second-quarter result topped expectations both on revenue and earnings.

Watch For:

U.S. ADP National Employment Report for August; EIA Weekly Petroleum Status Report; Bank of Canada interest-rate announcement

Today's Top Headlines/Must Reads:

- G-20 Squabbling Overshadows Summit as Global Bond Markets Strain

- The Bond Market Issues World Leaders a Failing Grade

- Volkswagen Fights Chinese Competition-and Its Own Board-in Battle to Survive

MARKET WRAPS Forex:

The dollar rose as renewed U.S.-Iran hostilities continued to push oil prices higher.

The euro weakened to its lowest in two weeks against a broadly stronger dollar as renewed Middle East hostilities increased energy prices. Rising oil and gas prices, in addition to increased expectations that the Fed could raise interest rates soon--potentially as early as this month--leave the euro vulnerable to further declines, ING said.

Bonds:

Treasury yields hit fresh multimonth highs in early trade as an escalation in U.S.-Iran hostilities pushed oil prices up, fueling inflation fears and expectations of an interest-rate hike by the Fed.

The bond market outlook could get worse before it gets better, Allianz Research said. "While current yield levels look attractive, the negative feedback loop between higher rates and debt sustainability could trigger self-fulfilling prophecies in several countries."

Energy:

Front-month Brent crude futures rose 0.6% in European trading Wednesday, extending a 4.6% surge Tuesday. West Texas Intermediate futures gained 0.2%.

Metals:

Gold prices fell to their lowest level in more than three weeks as escalating tensions in the Middle East conflict pushed energy prices higher, stoking inflation fears and boosting rate-hike bets. In early European trading, New York futures fell 0.5%, down 6% on the week.

Iron ore

Iron ore was lower in early trading. Expectations of strong supply in 2H are putting pressure on the black metal, according to Nanhua Futures.

TODAY'S TOP HEADLINES

Ryanair Cuts Traffic Target to Reduce Exposure to Unhedged Winter Oil

Ryanair cut its traffic target for fiscal 2027 to reduce its exposure to unhedged jet fuel during the winter season.

The Dublin-based budget airline said Wednesday that it is now targeting traffic of 214 million passengers in the fiscal year to the end of March 2027, down from 216 million passengers previously. It reported 208.4 million passengers in fiscal 2026.

Volvo Car Sales Slip on China, U.S. Weakness

STOCKHOLM-Volvo Car said global sales fell 7.4% on year in the three months through August, with demand hit by continuing market challenges in China and the U.S.

The Swedish automaker, which is majority-owned by China's Zhejiang Geely Holding Group, sold 148,239 cars in the period, down from 160,160 in the same three months the year prior, it said Wednesday.

Italian Gaming Group Lottomatica to Merge With Spain's Cirsa

Gaming groups Lottomatica and Cirsa Enterprises have agreed to an all-share merger deal that will see the combined entity retain a listing in both Italy and Spain.

Milan-listed Lottomatica said that Wednesday's deal will see shareholders of Barcelona-based Cirsa receive 0.668 newly issued Lottomatica shares for each share held, with current Lottomatica shareholders expected to own 67.5% of the combined company and Cirsa shareholders holding the remaining 32.5%.

Volkswagen Fights Chinese Competition-and Its Own Board-in Battle to Survive

When Volkswagen Chief Executive Oliver Blume took a cost-cutting plan to his board this summer that envisioned a doubling of job losses to 100,000, he was fully aware it would be rejected.

Such is the predicament of running Germany's premier industrial company, where half the supervisory-board directors are worker representatives and swing votes are held by the local government.

Europe Joins Global Bond Selloff as Middle East Hostilities Lift Oil Prices

U.S. Treasury and eurozone government bond yields rose further on Wednesday, following similar moves in Asian bonds, as renewed hostilities between the U.S. and Iran pushed oil prices higher, adding to inflation fears and prospects of a Federal Reserve interest-rate hike.

Yields again hit significant highs as a result, with 10-year German Bund yields reaching their highest since 2011 and yields on U.K. 10-year government bonds, known as gilts, climbing to their highest level since 2007.

G-20 Squabbling Overshadows Summit as Global Bond Markets Strain

ASHEVILLE, N.C.-Treasury Secretary Scott Bessent arrived here to host global economic officials in the Blue Ridge Mountains, fresh off the breakdown of trade talks with Canada, currency and bond-market interventions, and President Trump's renewed economic threats against Iran.

Two days later, the G-20 finance ministers' gathering comes to a close amid a global bond-market selloff, spats over tariffs, public insults and fighting over a group photo.

U.S. and Iran Trade Strikes in Latest Fight for Control of Hormuz

The U.S. and Iran exchanged fire Tuesday as the two countries continued to battle for control of the Strait of Hormuz.

President Trump said the U.S. strikes were launched in retaliation for Iran's attempt to mine the strait and target American servicemembers in the Middle East over the weekend.

U.S. and Iran Trade Strikes in Latest Fight for Control of Hormuz

The U.S. and Iran exchanged fire Tuesday as the two countries continued to battle for control of the Strait of Hormuz.

President Trump said the U.S. strikes were launched in retaliation for Iran's attempt to mine the strait and target American servicemembers in the Middle East over the weekend.

G-20 Squabbling Overshadows Summit as Global Bond Markets Strain

ASHEVILLE, N.C.-Treasury Secretary Scott Bessent arrived here to host global economic officials in the Blue Ridge Mountains, fresh off the breakdown of trade talks with Canada, currency and bond-market interventions, and President Trump's renewed economic threats against Iran.

Two days later, the G-20 finance ministers' gathering comes to a close amid a global bond-market selloff, spats over tariffs, public insults and fighting over a group photo.

Charlie Kirk Murder Case Sent to Trial, With Death Penalty a Possibility

The man accused of killing conservative activist Charlie Kirk potentially faces the death penalty after a Utah judge ruled on Tuesday there was enough evidence to warrant a trial for aggravated murder.

Tyler Robinson, 23 years old, was in court for an evidentiary review, an early stage of the legal process under Utah law in which prosecutors need to show they have enough evidence to establish probable cause and move forward.

The Island Paradise That Is a Secret Hub for Russian Sanctions Evasion

MALÉ, Maldives-The white sand beaches, turquoise waters and secluded luxury resorts of this South Asian archipelago attract millions of tourists each year. But a new trade has quietly emerged behind the postcard-perfect backdrop: a web of companies helping Russia evade sanctions.

Hundreds of millions of dollars in goods that are restricted or destined for sanctioned companies have changed hands at the airport, according to documents reviewed by The Wall Street Journal and interviews with Western officials. Some of these goods serve both civilian and military uses. The airport's cargo holds are often filled with aircraft parts and electronic components, as well as other restricted goods, according to the documents and officials.

Write to priscila.barrera@wsj.com

TODAY IN CANADA Earnings:

Major Drilling Group 1Q

Economic Indicators (ET):

0945 Bank of Canada interest rate announcement Stocks to Watch:

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September 02, 2026 06:13 ET (10:13 GMT)

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