European equities fall as oil and bond yields bounce higher

Market data:

• WTI crude gained 1.5%, reaching $90.72.
• 10-year Treasury yields fell 1.9 basis points to 5.236%.
• Gold stable at $4,179.
• GBP outperformed, AUD underperformed.
• European stocks largely down; S&P 500 futures slipped 0.1%.
• Bitcoin crept up 0.3% to $83,834.

The session opened with broader markets enjoying a brief respite, as crude oil and government bond yields retreated from high levels.

Overnight, oil prices fell after the US announced a release of up to 40 million barrels from the Strategic Petroleum Reserve. Meanwhile, bond yields eased after Fed official Williams dialed back hawkish expectations regarding further tightening, saying there is "no need for urgency" after the September rate increase.

Earlier, WTI crude hit a low of $88.60 before recovering to $90.72, netting a 1.5% gain for the day. Ten-year Treasury yields also bounced back from around 5.20% to above 5.23%, still well below the overnight peak of 5.29%.

The rise in oil and bond yields is now dampening overall market sentiment, with European stocks giving back earlier gains.

Regional indexes posted small opening gains but have reversed all of them; the DAX is now 0.2% lower and the CAC 40 has fallen 0.5%. US futures presented a comparable pattern, beginning the session more steadily before turning slightly lower ahead of the Wall Street open.

In the currency sphere, the dollar is failing to hold onto its weekly gains, indicating a more mixed sentiment. The greenback is slightly weaker. EUR/USD gained 0.1% to 1.1355, USD/JPY fell 0.1% to 157.10. GBP/USD advanced 0.4% to 1.3285, touching its highest level in a week.

Month-end and quarter-end flows may be influencing prices, although current moves seem at odds with Bank of America's model projections. These forecasts are not definitive directional guides; such flows are difficult to forecast and only become more pertinent as the fixing date approaches.

Gold is largely unchanged after an earlier rally towards $4,200 dissipated. The metal now sits at $4,179, little changed on the day.

As September comes to a close, all focus remains on crude and bond markets. Treasury yields will return to the spotlight with the US PCE price index release; another increase could quickly reignite pressure on riskier trades before month-end.