Asian shares traded mostly lower, and oil prices saw a slight decline at the start of a week marked by the anticipation of crucial economic updates from the United States. Investors are closely monitoring the upcoming release of the U.S. personal consumption expenditures (PCE) report for July, the Federal Reserve's preferred inflation gauge, which is expected to show inflation remaining above the central bank's 2% target.
The Federal Reserve has been working to bring inflation back to its target rate, facing challenges from global tariffs and disruptions to oil shipments exacerbated by the conflict in Iran. The recent rise in bond yields led the U.S. Treasury Department to intervene by doubling its buybacks of longer-term bonds, an effort to lower the 10-year Treasury yield and reduce mortgage costs. Despite this intervention, the 10-year yield edged back up to 4.73% on Monday, near its highest point in over a year, with the 30-year yield also near its highest level since 2007. Higher yields can potentially slow the economy and impact investment values.
Markets will also be looking for signals from Federal Reserve Governor Kevin Warsh regarding interest rates and monetary policy in a significant speech scheduled for the annual gathering of economic leaders in Jackson Hole, Wyoming. Last week, U.S. stock markets saw modest gains, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite posting increases, supported in part by corporate profits exceeding analyst expectations.
Geopolitical tensions, particularly concerning Iran's role in the Strait of Hormuz and its impact on global oil shipments, continue to create market volatility. A new warning from Iran's top security body regarding support for U.S. economic measures against the Islamic Republic adds to the uncertainty. Early Monday, Brent crude oil was trading at $93.10 per barrel, and U.S. benchmark crude at $85.63 per barrel.
In cryptocurrency markets, bitcoin saw a notable rise, trading near $77,000 early Monday. This surge is partly attributed to the efforts to lower bond yields, as lower interest rates and increased liquidity can benefit cryptocurrencies. Hopes for U.S. legislative support for the crypto industry have also contributed to its recent gains.
In currency markets, the U.S. dollar was trading at 158.89 Japanese yen, down slightly from Friday's levels, while the euro remained unchanged at $1.1678.