The Hawkish Federal Reserve predicts the Treasury market
The US currency plummeted and Treasure stocks rose after making a decision to Settlements indicated that it expects to raise interest rates by 2023, a year earlier than previously thought.
The Benchmark S&P 500 fell 0.6%, led by a decline in the number of technical companies including Oracle, Microsoft and Facebook. Nasdaq Composite was also down 0.6 percent.
The market downturn coincided with a sell-off of the Treasury stock of $ 21tn, while yields over the same 10-year period rose by 0.06% to 1.56%.
Among the short-term structures that the government loves most interest rate plan, there was a very large movement. Yields recorded for five years increased by 0.09% to 0.88%, while yields for two years increased significantly by 0.19%.
“Just as the market was getting along well with the Fed patient and over-breathing,” the plot of the drop has changed, “said Seema Shah, chief executive officer at Principal Global Investors, referring to a picture showing forecasts of Fed officials’ interest rates.
“Now it will be [Fed chair Jay] Powell and other Fed spokesmen to reassure markets that resilience in 2023 should not be compromised. ”
The stock market crash was predicted by a very low interest rate, which the Fed has stabilized near zero since the crisis began in March last year.
While policymakers at a major US bank showed that they could raise prices sooner than they had previously thought, they did not show a change in the Fed’s $ 120bn-a-month buy-in program, which is expected to be released soon.
But markets are worried that the signs of rising prices, which Fed policymakers approved on their financial project released Wednesday, could force the central bank.
“Given that the Fed’s only implications are high, it clearly follows that the economy is moving down a bit,” said Ian Lyngen, chief of US interest at BMO Capital Markets.
Ian Shepherdson, an economist at Pantheon Macroeconomics, added that predicting inflation in 2023 means that members of the Fed’s policy committee “are now ready to speak, so President Powell will not be able to repeat his March / April stones…” The negotiations are in full swing, but the decision is sure to be made. ”
The U.S. dollar rate rose 0.4% and the Treasury’s inflation target. The pound fell 0.4% against the dollar, while the euro fell 0.7% to $ 1.20.
European stocks finished on a new record before the Fed’s election. Stoxx Europe closed 0.2% on another full-time peak, with the ninth quarter moving backwards.
Frankfurt’s Xetra Dax rose 0.1%, while the CAC 40 in Paris and London’s FTSE 100 rose by 0.2%.
Additional reports of Siddharth Venkataramakrishnan in London
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