2023-06-29 21:02:00
In the US financial market on the 29th, government bond yields surged. The indicators announced in the morning showed the strength of the US economy, and the speculation that the US Fed will need to raise interest rates two more times this year has increased.
JGB latest price vs. previous business day (bp) rate of change US 30-year bond yield 3.90% 9.02.37% US 10-year bond yield 3.84% 12.93.47% US 2-year bond yield 4.86% 15.03.17% US Eastern Time 16:00 52 minutes
Bonds of all maturities were sold. Yields on two-year bonds jumped 15 basis points to 4.86%. The swap rate market has priced in a roughly 50% chance of a second, not one, rate hike this year. In addition, the inversion of the yield curve (reversal of long-term and short-term interest rates) progressed in response to the announcement of the index.
Two additional US interest rate hikes within the year, priced at more than 50% probability – interest rate swap market
The January-March (first quarter) U.S. real gross domestic product (GDP) figures announced in the morning were revised upwards to increase by 2% annually from the previous quarter, and the number of new U.S. unemployment insurance applications last week was expected to reach October 2021. Since then, it has decreased significantly. The U.S. economy is stronger than many expected at the beginning of the year. The Fed’s watchful inflation gauge has been revised down slightly, but remains well above its 2% target.
U.S. Unemployment Claims Decline for First Time Since October 2021
January-March U.S. GDP Revised Up to 2% YoY Annual Growth – Solid Personal Consumption (1)
stock
The position adjustment at the end of the quarter caused unstable price movements, but the S&P 500 stock index rose. Financial institutions such as major banks that passed the US Federal Reserve Board (FRB) stress test (prudential examination) led the rise. Wells Fargo and JPMorgan Chase both rose more than 3%.
Fed says all 23 major banks will pass stress tests this year (2)
S&P 500 Stock Index 4396.4419.580.45% Dow Jones Industrial Average 34122.42269.760.80% Nasdaq Composite Index 13591.33-0.420.00%
The Nasdaq 100 Index is underperforming. Microsoft and Nvidia lowered and pulled their feet. Micron Technology was sold because of concerns it was slow to clear excess inventory.
Micron’s June-August quarter sales forecast strong, suggesting easing of oversupply (2)
“The market is digesting the recent strong economic data, both positively and negatively,” said Carol Schrief, chief investment officer at BMO Family Office. “But it also encourages the Fed to continue raising rates.”
The Fed is likely to raise interest rates in July and possibly September, especially if economic data continues to be strong and corporate earnings in the second quarter beat expectations. .
This is consistent with Federal Reserve Chairman Jerome Powell’s view that the Fed will probably need at least two more rate hikes this year and that he “doesn’t rule out” a series of rate hikes.
The S&P 500 is poised to finish the first half up regarding 15%, despite concerns over a slowing economy and persistently high inflation. In the first half of the year, there were a series of bankruptcies of regional banks, geopolitical risks, and the problem of the federal debt ceiling.
Adam Turnkist, chief technical strategist at LPL Financial, said historical data suggested the bullish momentum might continue in equities. Since 1950, years with an increase of 10% or more in the first half have risen an average of 7.7% in the second half, ending positive 82% of the time.
Mr. Turnkist pointed out that there will be some turmoil ahead, but the good news is that if the first half ends in positive terms, the second half will not be so weak. A drop in stocks would be a “buying opportunity to step into this new bull market,” he said.
foreign exchange
In the foreign exchange market, the yen continued to fall once morest the dollar, hitting new lows for the first time in a row. At one point, it was sold as high as 144.90 yen, approaching the psychological milestone of 145 yen. Dollar buying took over as bond yields surged following indicators of the strength of the U.S. economy.
Bloomberg Dollar Index 1236.603.120.25% USD/JPY¥144.79¥0.310.21% EUR/USD$1.0866-$0.0047-0.43% 16:52 ET
Yen Temporarily Hits 144.90 Yen Against US Dollar, New Year’s Lows for Days – NY Market (1)
Win Singh, Global Head of Currency Strategy at Brown Brothers Harriman, said, “The dollar-yen exchange rate rose from February to mid-June at 130-140 yen, and from mid-June to the current 140-145 yen, followed by 145-145 yen. We are regarding to break into a new range of 150 yen.” “There are no signs of the Bank of Japan changing its policy, and the divergence of monetary policy directions continues to widen,” he said.
The Bloomberg Dollar Spot Index rose to its highest level since June 8.
Euro falls once morest dollar. Although it was bought at first, it turned out to disappear as the dollar rose almost across the board in response to the strong US index.
crude
New York crude oil futures continued to rise slightly. Amid the release of strong US economic data, the hawkish outlook for interest rates presented by major central banks was conscious of it, leading to volatile price movements during the day.
US economic data released on the same day showed the underlying strength of the economy and the labor market, suggesting potential strength in crude oil demand. But it also made it more likely that the Fed would continue to raise rates.
Fed Chairman Jerome Powell said in a speech on Wednesday that it would likely take at least two more rate hikes this year to bring inflation down to the Fed’s 2% target.
Fed Chair Powell Appropriate for At Least Two Rate Hikes This Year
WTI futures on the New York Mercantile Exchange (NYMEX) for August closed at $69.86 a barrel, up 30 cents (0.4%) from the previous day. London ICE North Sea Brent August delivery rose 31 cents, or 0.4%, to close at $74.34.
Money
The New York gold market is expanding to make up for the decline. The spot price dipped below $1,900 per ounce as speculation of further monetary tightening increased due to factors such as an unexpected drop in U.S. unemployment claims.
US Treasury yields rose in response to the data, putting pressure on gold, which does not generate interest. However, it quickly rebounded following breaking below $1,900, suggesting continued demand for gold despite yield and dollar movements.
“The move below $1,900 in brisk trading suggests a battle between technical sellers and buyers to seize this opportunity,” said Ole Hansen, head of product strategy at Saxo Bank. “The jump above $1,900 once more prompted a short cover,” he said.
The gold spot price was unchanged at $1,907.97 an ounce as of 2:45 pm New York time. At one point, it fell 0.7% to $1,893.14. Gold futures for August delivery on the New York Mercantile Exchange (COMEX) fell $4.30, or 0.2%, to close at $1,917.90.
Original title:Fed Traders Jack Up Bets on Two Hikes by Year-End: Markets Wrap(excerpt)
Wall Street Gears Up for Two Fed Hikes by Year-End: Markets Wrap(excerpt)
Dollar Advances as Yields Surge on US Data: Inside G-10（抜粋）
Oil Edges Higher as Traders Weigh Mixed Economic Outlook Signals(excerpt)
Gold Rebounds After Slip Below $1,900 on US Jobless Claims Data（抜粋）
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