By:
On Tuesday, investors considered the possibility of the Federal Reserve maintaining its strict monetary policy stance for a longer period of time than anticipated in the wake of persistently positive economic data. As a result, global stocks markets declined, and U.S. Treasury rates rose to new highs.
Although Fed policymakers gave a hint this week that the U.S. central bank was likely to maintain hiking interest rates for longer than was initially anticipated in its effort to contain inflation, market sentiment has remained negative.
After recent statistics showed stronger-than-anticipated U.S. employment and consumer prices, the Fed will issue the minutes of its most recent meeting on Wednesday, providing speculators with a glimpse of how high officials expect interest rates to go.
Benchmark 10-year note rates increased to their highest level since November 10 and then dropped to 3.9272%. At negative 78 basis points, the yield curve between two-year and 10-year notes remained quite inverted, signalling growing concerns about the possibility of an oncoming recession.
Tom Plumb, portfolio manager at Plumb Balanced Fund in Madison, Wisconsin, said that the Fed faces a challenge because as long as people are employed, they spend money on rotating specific expenses like travel, house improvement, etc.
Plumb continued, “Anytime the market attempts to convince itself that tapering or the Fed will take its foot off the brakes some time soon, they get slapped with reality that it’s probably not going to happen for the next six months or so.
The MSCI world equity index shares, which monitors stocks in 50 nations, decreased by 1.2%. Before recovering some of its losses, European stock prices dropped as much as 1%, last down 0.16%.
Wall Street’s selloff in technology, consumer discretionary, industrial, and financial stock prices drove all three major indexes lower. The S&P 500 lost 1.55% to 4,015.9, the Nasdaq Composite dropped 1.9% to 11,562.98 as the Dow Jones Industrial Average sank 1.53% to 33,308.97.
Oil prices slipped in a volatile session as persistent concerns about global economic growth outweighed supply curbs, prompting investors to profit from the previous day’s gains.
While U.S. West Texas Intermediate crude (WTI) for March, which expires on Tuesday, slipped 0.01% to $76.33 per barrel, Brent oil was down 1.06% at $83.18 per barrel.
Despite the Fed’s monetary policy initiatives, data showed that the U.S. economy is resilient, and the dollar was unchanged against most major currencies. Trading was higher for the dollar index at 0.077%. The euro dropped 0.14% to $1.0667 due to data showing a decline in euro zone manufacturing activity.
Gold prices declined as bond yields increased and the currency moved higher. The price of spot gold lost 0.3% to $1,835.16 per ounce, while U.S. gold futures decreased 0.26% to $1,835.60 per ounce.
Reading More:
