Finance

Global energy benchmarks experienced a sharp decline, with Brent crude dropping over 7% and West Texas Intermediate falling below $80 per barrel. The steep selloff unwound a significant portion of July's risk premium, which had been driven by disruptions near the Strait of Hormuz. The sudden price drop follows a shift in Washington's rhetoric toward negotiations, alleviating immediate energy inflation fears.

US government bond yields rolled back significantly, tracking the sudden downturn in crude oil prices. The benchmark 10-year Treasury yield dropped to around 4.68% after flirting with its highest levels since January over the weekend. Decreased concern regarding energy-driven inflation and assurances over currency intervention funds allowed fixed-income markets to mount a broad-based rally.

The US and Japan confirmed a rare joint foray into the foreign exchange market to bolster the heavily pressured Japanese currency. This marks Washington's first yen-buying intervention in decades, successfully lifting the yen off a 40-year low against the greenback. Despite the sudden 5% surge in the yen's value, market analysts remain skeptical about a long-term rally due to negative real interest rates in Japan.