US Stock Market: S&P 500 Futures Down, Oil and Bonds to Blame

The American stock market started the day on a sour note, to put it mildly. S&P 500 Index futures dropped 0.6% by 7:44 a.m. in New York. The reason? A volatile mix that made investors nervous, not exactly small change. By 7:44 a.m. in New York, S&P 500 Index futures were down 0.6%.

When oil prices go up, people start worrying about inflation. This pushes many to sell government bonds, because they fear their value will erode over time. It's a bit like when gas prices make you sweat every time you fill up your tank; investors feel the same way. The rise in oil prices triggered a significant sell-off in government bonds.

With the massive selling of bonds, their yields shot up. It's a self-feeding mechanism: the more people sell, the higher yields climb to attract new buyers. Specifically, 30-year Treasury yields hit their highest level since way back in 2004. This is a clear sign that the cost of money is stirring. 30-year Treasury yields reached their highest point since 2004.