2023-11-08 20:48:16
Global stock markets fell on Wednesday and the dollar rose for the third day in a row as some investors accepted the idea that even if the Federal Reserve stopped raising interest rates, they will stay at a lower level for longer. high level.
Yields across the Treasury curve were mostly lower as the benchmark 10-year note auction performed slightly better than expected and speculation that the Federal Reserve has likely ended its hike cycle interest rates having kept the downward momentum in place.
The dollar also rebounded from last week’s sharp fall as the Fed grew increasingly confident it had ended its rate-hiking cycle, although there was less consensus on whether a rate reduction, with inflation remaining above the US central bank’s 2% target.
“The fact that the Fed is no longer necessarily raising rates might make people a little more enthusiastic, but does that mean we’re going to start cutting rates aggressively? It’s too early to tell,” said Marvin Loh, global macro strategist at State Street in Boston.
“A lot of the questions we were asking that drove yields up are still there,” he added, referring to the rise in bonds that pushed the 10-year yield above by 5% two weeks ago. Bond prices move inversely to their yield.
Fed Chairman Jerome Powell made no comments on monetary policy or the economic outlook in prepared remarks at a U.S. central bank statistics conference. Investors have increased bets on Fed rate cuts next year, although the date has not yet been set.
Markets assess the probability of a rate cut of at least 25 basis points as early as May at almost 50%, according to the CME Group’s FedWatch tool, compared to around 41% a week earlier.
But futures also project that the Fed’s overnight lending rate will remain above 5% through next June.
MSCI’s global stock index lost 0.07% following recording its biggest weekly gain in almost a year last week. The European STOXX 600 index closed up 0.28%.
On Wall Street, the Dow Jones Industrial Average fell 0.19%, the S&P 500 index gained 0.01% and the Nasdaq Composite index fell 0.07%.
“The market is right that rates have peaked,” said Rhys Williams, chief strategist at Sprouting Rock Asset Management in Bryn Mawr, Pa., but given that the Fed “has been so macho regarding been rising for longer”, a rate cut is unlikely to happen soon.
European stocks rose, supported by gains in healthcare stocks and strong earnings reports, as investors weighed a raft of economic data and comments from central bankers for clues on the upward trajectory rates of the European Central Bank.
Data showed euro zone retail sales fell roughly in line with expectations in September, while another survey showed euro zone consumers raised their inflation expectations for Next 12 months at 4%.
The dollar index rose 0.03% to 105.55, and the euro rose 0.04% to $1.0703.
The euro is up 0.04% at $1.0703, but still far from the peak reached earlier this month at $107.11.
The majority of currency strategists polled by Archyde.com expect dollar weakness to persist through the end of the year, amid growing consensus that the currency cycle The Fed’s tightening of monetary policy has ended, suggesting a spike in yields in the United States.
MSCI’s index of Asia-Pacific shares fell 0.3% and the Nikkei 225 closed lower following Bank of Japan Governor Kazuo Ueda told parliament the central bank had no no need to wait for real wages to turn positive before ending stimulus.
Hong Kong’s Hang Seng fell and the mainland blue chip index lost 0.24%.
Chinese authorities have asked Ping An Insurance Group to take a majority stake in Country Garden, the country’s largest private real estate developer, four people familiar with the plan said.
A Ping An spokesperson said the company had not been approached by the government and denied reports reported by Archyde.com.
Oil prices fell to their lowest levels in more than three months on concerns regarding falling US and Chinese demand, while gold prices fell for the third consecutive session, due to the rising yields on short-term Treasury bills and falling yields on longer-term bonds.
Brent crude oil futures fell $2.07 to $79.54 a barrel and U.S. crude lost $2.04 to settle at $75.33.
The yield on the two-year Treasury note, which reflects interest rate expectations, rose 1.4 basis points to 4.932%, while the yield on the benchmark 10-year note fell 5 .6 basis points at 4.515%.
U.S. gold futures fell 0.8% to $1,957.80 an ounce.
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