- The Oil price faces a sharp selling pressure as US bond yields have risen sharply after Moody’s downgraded US Sovereign rating.
- 10-year US Treasury yields surge to near 4.54%.
- China’s Industrial Production and Retail Sales grew moderately in April.
West Texas Intermediate (WTI), futures on NYMEX, tumbles to near $61.00 on Monday. The Oil price faces selling pressure since opening the week due to a significant increase in US Treasury yields. Interest on US government securities has surged substantially as Moody’s Rating has downgraded the United States (US) long-term issuer and senior unsecured securities from Aaa to Aa1.
10-year US Treasury yields are up 2.3% to near 4.54%, a move that could limit the administration from increasing fiscal expenditure, which will weaken the demand for Oil.
The report from Moody’s rating showed that the agency downgraded the US Sovereign credit rating in the wake of mounting debt, which has been a deteriorating fiscal status. Additionally, the credit rating firm stated that swelling government debt and interest payments, now materially above peers in the same rating tier, forced it to revise the credit rating.
The US downgrade has resulted in a sharp decline in the US Dollar (USD). The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, plummets to near 100.20.
Meanwhile, weak China data has also weighed on the Oil price. Earlier in the day, the National Bureau of Statistics of China reported that Industrial Production and Retail Sales grew at a moderate pace in April. Industrial Production rose by 6.1% year-on-year, slower than 7.7% growth in March. In the same period, Retail Sales expanded moderately by 5.1%, compared to estimates of 5.5% and the prior release of 5.9%.
