Wednesday, February 1, 2023
Market-Reporter
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate
No Result
View All Result
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate
No Result
View All Result
Market-Reporter
No Result
View All Result
Home Bonds

GLOBAL MARKETS-Hawkish Fed fuels dollar, leaves stocks and bonds bruised

MtR by MtR
June 17, 2021
in Bonds
0


By Marc Jones, Wayne Cole

* Fed projects two rate rises in 2023, talks tapering

* Markets imply risk of first hike by end of 2022

* Bonds sell off hard, dollar surges, gold slides

* Graphic: Global asset performance tmsnrt.rs/2yaDPgn

* Graphic: World FX rates tmsnrt.rs/2egbfVh

LONDON/SYDNEY, June 17 (Reuters) – World equities were heading for their biggest fall in weeks on Thursday after the U.S. Federal Reserve startled investors by signalling it might raise interest rates at a much faster pace than assumed, sending bond yields and the dollar sharply higher.

The dollar added to what was the strongest one-day rise in 15 months after the Fed meeting, while Europe’s government borrowing costs moved higher after 10-year U.S. Treasury yields rose by their most since early March.

Europe’s STOXX 600 snapped a 9-day winning streak – its longest since 2017 – with a 0.3% early dip. Asia-Pacific shares were closing down around 0.7% , while Wall Street futures pointed to a modest 0.4% drop.

The Fed forecasts showed 13 of the 18 person policy board saw rates rising in 2023 versus only six previously, while seven tipped a first move in 2022.

“The new Fed ‘dot plot’ indicating that the median FOMC member now forecasts two Fed rate hikes in 2023, versus none in the March iteration, represented the hawkish surprise out of the June Fed meeting,” said Ray Attrill, head of FX strategy at NAB.

While these ‘dot plots’ are not commitments and have a poor track record of predicting rates, the sudden shift was a shock.

The Fed also signalled it would now be considering whether to ‘taper’ its $120 billion-a-month asset purchase programme meeting by meeting and downgraded the risk from the pandemic given progress with vaccinations.

JPMorgan analysts noted Fed Chair Jerome Powell had not been as aggressive in his media conference. He had described it as a “talking about talking about meeting,” a glib reference to his protestations earlier this year that the Fed was not even “talking about talking about” tighter policy.

“It appears that faster progress toward reopening and higher inflation surprises revealed some hawks on the FOMC, but we suspect that leadership is predominantly anchored at zero or one hike in 2023,” JPMorgan said, sticking with a prediction for tapering to start early next year.

Markets moved quickly to price in the risk of earlier action and Fed fund futures shifted to imply a first hike by the end of 2022. Yields on 10-year bonds shot up almost nine basis points to 1.57%.

ALL RISE

The dollar also broke out of recent tight ranges. It had risen 0.9% on Wednesday against a basket of currencies to 91.387 for its biggest gain since March last year and set a two-month high in early European trading.

Powell’s hawkish turn prompted both Goldman Sachs and Deutsche Bank to abandon their calls that the U.S. currency would weaken against the euro, although others were not so sure.

Agnès Belaisch, Chief European Strategist of the Barings Investment Institute, said the fact that the Fed was not going to lift rates any time soon was good for world growth and that FX markets would therefore get over Wednesday’s shift.

“He (Powell) said they wouldn’t do anything for the next two years, so it’s a shock but wrapped in good news,” Belaisch said. “I think he gave the markets the all-clear to rally”.

The euro slipped back towards $1.1950 in the European session and the dollar was just shy of its 2021 high against the yen, last buying 110.55 yen.

The kiwi dollar clawed back about half of its overnight losses after first-quarter growth figures blew past forecasts, and while the Aussie dollar and British pound stabilised emerging market currencies weakened.

Ahead for currency markets is an interest rate decision from Turkey’s central bank due at 1100 GMT, which has the lira on edge. Norway’s central bank kept its interest rates at zero, but said a hike will most likely follow in September.

Elsewhere, the rise in bond yields and the dollar were a double blow for non-yielding gold which was down at $1,810 an ounce after sliding 2.5% overnight.

Oil prices were insulated by the prospect of stronger world demand and still tight supply, with Brent reaching its highest since April 2019 before running into profit taking and headwinds from the sharply higher dollar.

Brent was last off 0.3% at $74.15 a barrel, while U.S. crude lost 0.2% as well to trade at $71.98.

Additional reporting by Tom Westbrook in Singapore; Editing by Alexander Smith



Source link

Related articles

As CPs, Bonds Listing on FMDQ, NGX Soar – THISDAYLIVE

August 10, 2022

Meta Raises $10 Billion In First-Ever Corporate Bond Offering

August 10, 2022

Related Posts

As CPs, Bonds Listing on FMDQ, NGX Soar – THISDAYLIVE

by MtR
August 10, 2022
0

Following uncertainty surrounding access to fresh capital for expansion, companies have found solace in the Nigerian debt capital market. Kayode...

Meta Raises $10 Billion In First-Ever Corporate Bond Offering

by MtR
August 10, 2022
0

Meta raises $10 billion in first-ever bond offeringFacebook-parent Meta Platforms Inc said on Tuesday it had raised $10 billion in...

Commercial paper, corporate bond issuances fall: ‘Bonds & loans realignment bumps up credit growth’

by MtR
August 9, 2022
0

A realignment in bank loans and debt market borrowings amid rising bond yields may be bumping up the loan growth...

The Bond Market’s Yield Curve Has Lost Its Way

by MtR
August 9, 2022
0

Comment on this storyCommentThe bond market’s yield curve has a sort of mythical hold on economists and investors. It’s easy...

Sri Lanka rupee guidance peg down: dull trade in bonds

by MtR
August 9, 2022
0

ECONOMYNEXT – Sri Lanka stocks gained for the ninth consecutive session on Tuesday (09) and generated the highest turnover in...

Load More
  • Trending
  • Comments
  • Latest

Bank of England tells ministers to intervene on digital currency ‘programming’

June 21, 2021

Tips for checking smoke alarms during daylight saving time

March 12, 2022

GLOBAL MARKETS-U.S. stocks follow Europe up; Treasury yields rise, dollar firm

July 9, 2021

What will Durham County education bonds pay for? A full list

July 8, 2022
African currencies week ahead: Zambia's kwacha seen on back foot, Kenyan shilling up – Business Recorder

African currencies week ahead: Zambia's kwacha seen on back foot, Kenyan shilling up – Business Recorder

0
Maxum Foods releases Global Dairy Commodity Update for June

Maxum Foods releases Global Dairy Commodity Update for June

0
Letter: Perpetual bonds can help states fight hunger

Letter: Perpetual bonds can help states fight hunger

0
United Kingdom ETFs Are Riding the Re-Opening Momentum

United Kingdom ETFs Are Riding the Re-Opening Momentum

0

Investment in overseas real estate surges : The DONG-A ILBO

August 11, 2022

U.S. inflation CPI report, Wall Street, currencies

August 10, 2022

Alberta oil production set new record in first half of 2022

August 10, 2022

Industrial Lubricants Market to Reach $71 Billion by 2027.

August 10, 2022

Recent News

Investment in overseas real estate surges : The DONG-A ILBO

August 11, 2022

U.S. inflation CPI report, Wall Street, currencies

August 10, 2022

Alberta oil production set new record in first half of 2022

August 10, 2022

Categories

  • Asia
  • Bonds
  • Canada
  • Commodities
  • Cryptocurrencies
  • Currencies
  • Emerging Markets
  • ETFs
  • Europe & Middle East
  • IPOs
  • Latin America
  • Mutual Funds
  • Personal Finance
  • Real Estate
  • Retirement
  • Spending & Saving
  • Stocks
  • U.S. Markets
  • Privacy & Policy
  • About Us
  • Contact Us
  • Advertise with us

© 2021 Copyright Market-Reporter

No Result
View All Result
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate

© 2021 Copyright Market-Reporter