“There are growing expectations that central banks, especially the Federal Reserve, will have to speed up the pace of policy tightening to curb inflation, which could trigger a recession. Markets now estimate that the Fed’s rate hike cycle will peak at 4%, rather than the 3% seen last month. European stock markets also rise up to 1%.
These expectations raised the cost of 10-year loans in the United States – the reference rate for the world economy – to 3.44%, its highest since 2011. Although the yield fell in the session to around 3, 3%, it is still about 180 basis points (bps) above the levels at the end of 2021.
“Simply put, when we see monetary tightening on the order of what we’re seeing globally, something is going to break.said State Street’s Timothy Graf. “Stocks are reflecting the reality of the first-order effect of tightening financial conditions.”
Asian stocks fell 1%, extending Monday’s gloomy session on Wall Street, when the S&P 500 and Nasdaq indices lost 4% and 4.7%, respectively. Markets also have to deal with the dollar rising to new 20-year highs against a basket of currencies. In the session, it fell 0.10%, giving other currencies a break, although the yen continued to languish at 24-year lows against the greenback.
Source: Ambito
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