Stocks slide on inflation jitters | Defender of the Great Lakes
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Long-term U.S. Treasury yields jumped and global stock markets fell further as investors feared the Federal Reserve might not be able to rein in inflation in coming years despite U.S. data showing a deceleration in inflation. wage growth in April. On Friday, Labor Department data showed the jobless rate fell to its pre-pandemic low of 3.5% last month as job growth moderated and the average hourly wage fell to 5.5% compared to the previous year. But the data underscored the challenges the Fed and other central banks face as they battle rising inflation with China’s lockdowns causing continued supply chain disruptions and war in Ukraine. putting pressure on food prices. The outlook for inflation over the next two years is starting to look bleaker for bonds, or at least for bond traders, said Jim Vogel, interest rate strategist at FTN Financial. “We took into account, not necessarily the Fed’s inability to fight inflation, but an inflation problem that, at the moment, cannot be calmed down by central banks for the rest of the decade. It’s pretty dark,” Vogel said. The yield on benchmark 10-year Treasuries rose 5 basis points to 3.119%, a rate last seen in November 2018 after surging around 1.5% at the end of 2021. The Fed hopes to slow inflation by tightening monetary policy. Excessive tightening risks pushing the economy into recession, which has increased market volatility. Shares on Wall Street fell in a volatile trade that briefly pushed major indexes into the green and on track for a fifth consecutive week of declines. The Nasdaq fell 2.66%. Fed funds futures are priced at about a 75% chance of a 75 basis point interest rate hike at next month’s Fed policy meeting – even after the chairman of the Fed chief Jerome Powell said on Wednesday that the US central bank was not considering such a move. The pan-European STOXX 600 index fell 1.91% as regional stocks recorded their worst week in two months. MSCI’s global equity performance indicator lost 1.39% and emerging market stocks lost 2.61%. On Wall Street, the Dow Jones Industrial Average fell 1.08%, the S&P 500 1.14% and the Nasdaq Composite 1.65%. The dollar slid against a basket of currencies after two volatile days as investors focused on the Fed’s aggressiveness in raising rates. The dollar index hit a 20-year high overnight on safe-haven demand, the day after a sharp sell-off in equities led by rising US interest rates and as European currencies s weakened on concerns about growth in the region. The dollar index rose 0.077%, with the euro up 0.07% at $1.0547. The yen weakened 0.35% to 130.56 to the dollar. The European Central Bank is expected to raise its deposit rate into positive territory this year, French central bank chief Francois Villeroy de Galhau said, indicating support for at least three rate hikes in 2022. The Bank of England has raised rates by 25 basis points on Thursday. as expected. Oil prices climbed for a third straight session, dispelling concerns about global economic growth as looming European Union sanctions on Russian oil raised the prospect of tighter supplies. U.S. crude futures rose $1.51 to settle at $109.77 a barrel and Brent rose $1.49 at $112.39. Gold rose on a weaker dollar, but the prospect of aggressive rate hikes from the Fed put bullion on course for a third straight weekly decline. US gold futures settled up 0.4% at $1,882.80 an ounce. Bitcoin fell 1.64% to $35,933.47. Germany’s 10-year government bond yield hit 1.082%, its highest level since 2014. Australian Associated Press
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Long-term U.S. Treasury yields jumped and global stock markets fell further as investors feared the Federal Reserve might not be able to rein in inflation in coming years despite U.S. data showing a deceleration in inflation. wage growth in April.
On Friday, Labor Department data showed the jobless rate fell to its pre-pandemic low of 3.5% last month as job growth moderated and the average hourly wage fell to 5.5% compared to the previous year.
But the data underscored the challenges the Fed and other central banks face as they battle rising inflation with China’s lockdowns causing continued supply chain disruptions and war in Ukraine. putting pressure on food prices.
The outlook for inflation over the next two years is starting to look bleaker for bonds, or at least for bond traders, said Jim Vogel, interest rate strategist at FTN Financial.
“We took into account, not necessarily the Fed’s inability to fight inflation, but an inflation problem that, at the moment, cannot be calmed down by central banks for the rest of the decade. It’s pretty dark,” Vogel said.
The yield on benchmark 10-year Treasuries rose 5 basis points to 3.119%, a rate last seen in November 2018 after surging around 1.5% at the end of 2021.
The Fed hopes to slow inflation by tightening its monetary policy. Excessive tightening risks pushing the economy into recession, which has increased market volatility.
Shares on Wall Street fell in a volatile trade that briefly pushed major indexes into the green and on track for a fifth consecutive week of declines. The Nasdaq fell 2.66%.
Fed funds futures are priced at about a 75% chance of a 75 basis point interest rate hike at next month’s Fed policy meeting – even after the chairman of the Fed chief Jerome Powell said on Wednesday that the US central bank was not considering such a move.
The pan-European STOXX 600 index fell 1.91% as regional stocks recorded their worst week in two months. MSCI’s global equity performance indicator lost 1.39% and emerging market stocks lost 2.61%.
On Wall Street, the Dow Jones Industrial Average fell 1.08%, the S&P 500 1.14% and the Nasdaq Composite 1.65%.
The dollar slid against a basket of currencies after two volatile days as investors focused on the Fed’s aggressiveness in raising rates.
The dollar index hit a 20-year high overnight on safe-haven demand, the day after a sharp sell-off in equities led by rising US interest rates and as European currencies s weakened on concerns about growth in the region.
The dollar index rose 0.077%, with the euro up 0.07% at $1.0547. The yen weakened 0.35% to 130.56 to the dollar.
The European Central Bank is expected to raise its deposit rate into positive territory this year, French central bank chief Francois Villeroy de Galhau said, indicating support for at least three rate hikes in 2022.
The Bank of England raised rates by 25 basis points on Thursday as expected.
Oil prices climbed for a third straight session, dispelling concerns about global economic growth as looming European Union sanctions on Russian oil raised the prospect of tighter supplies.
U.S. crude futures rose $1.51 to settle at $109.77 a barrel and Brent rose $1.49 at $112.39.
Gold rose on a weaker dollar, but the prospect of aggressive rate hikes from the Fed put bullion on course for a third straight weekly decline.
US gold futures settled up 0.4% at $1,882.80 an ounce.
Bitcoin fell 1.64% to $35,933.47.
Germany’s 10-year government bond yield hit 1.082%, its highest level since 2014.
Australian Associated Press