U.S. stock futures were little changed early Friday as Treasury yields held near multi-year highs, keeping investors focused on tighter financial conditions and their impact on risk assets.
S&P 500 futures slipped 0.05%, Nasdaq-100 futures edged higher, and futures linked to the Dow Jones Industrial Average added just 3 points, or 0.01%. In Thursday’s regular session, the S&P 500 and Nasdaq Composite both finished essentially flat.
In the bond market, the 10-year Treasury yield climbed to 5.225% late Thursday, its highest level since 2007, while the 30-year yield reached 5.502%. By Friday morning, the 10-year yield was at 5.17%, the 30-year stood at 5.463%, and the 2-year note yield was little changed at 4.899%.
According to CNBC, this week’s move higher in yields was driven by hawkish remarks from Federal Reserve Governor Michael Barr, persistently high energy prices tied to the Iran war, and a strong purchasing managers' report. CME FedWatch tool data implies roughly a 68% chance of a rate hike in October.
In housing finance, the 30-year fixed rate mortgage rose to 7.45%, its highest level since 2024. Because that rate tracks the 10-year Treasury note, the increase points to rising borrowing costs for consumers.
Morgan Stanley economist Heather Berger wrote in a note to clients that even before the moves of the past few days, declines in credit card annual percentage rates and auto loan rates seen from mid-2024 through the start of 2026 had already stalled, while mortgage rates had reaccelerated. She said those pressures are expected to weigh on spending next year, mainly through goods, contributing to a 40 basis point deceleration in real consumption growth.
For the week, the Dow is on track for a fourth straight weekly loss and is down 0.6%. The S&P 500 is up 0.7% week to date, while the Nasdaq has gained 1.6%.
In Asia-Pacific trading, Japan’s Nikkei 225 closed 1.3% higher, Australia’s S&P/ASX 200 fell 0.43%, and Hong Kong’s Hang Seng index was down 1.21% in the final hour of Friday trading. Markets in mainland China and South Korea were closed for a holiday.
European equities opened broadly higher as oil prices retreated. The pan-European Stoxx 600 rose nearly 0.7% and was on course for a weekly gain of 0.15%. European oil majors underperformed, however, with BP down more than 2%, Shell lower by 0.4%, and TotalEnergies off 0.5%.
In commodities, November Brent crude futures fell 1% to $93.66 a barrel, while November West Texas Intermediate futures dropped 0.68% to $105.86. Reuters reported that U.S. and Iran negotiators in New York are discussing a phased deal aimed at easing the standoff in the Persian Gulf.
Consumer conditions are also under pressure elsewhere. In Germany, consumer confidence suffered a “significant setback” in September, according to a joint report from the Nuremberg Institute for Market Decisions (NIM) and GfK, as higher energy prices weakened income expectations.
Later Friday, traders will watch the University of Michigan consumer sentiment report and durable goods data for further clues on the path of interest rates.
