The S&P 500 index registered on Tuesday its biggest daily increase in two years, after weaker US economic data and a rate hike in Australia lower than expected raised hopes of a less aggressive tightening by the Federal Reserve. The nasdaq had recorded a good day driven by the big technology.
However, the rate hike applied this Wednesday by the bank of New Zealand revived the fear about the dynamics that the monetary entities will follow to contain the advance of the inflation. Also, the central banks that supervise eight of the 10 most traded currencies made rate hikes of 550 basis points together last month, bringing the total volume of rate hikes in 2022 from G10 central banks to 1,850 basis points. This fuels expectations of persistence in rate hikes.
Oil prices rose before the meeting of OPEC + producers to discuss a large cut in crude output, after advancing more than 3% the day before. The organization determined that the production cuts will be above two million barrels per day, according to what the Iranian governor told the press before the OPEC Amir Hossein Zamaninia.
The performance of US 10 year bonds rise after two days of declines, after hopes of the Federal Reserve’s monetary policy easing faded. The data that reinforced this hypothesis were the insinuation that the labor market maintains its recovery.
“Everyone is praying for bad news, people were glad there were a million fewer jobs, that’s a bad sign,” he said. Bryce Dotty, of Sit Fixed Income Advisors in Minneapolis in dialogue with Reuters and added: “Investors are holding out until the Fed sheds its kind of ‘let’s take the economy to perdition’ message.”
“There is a growing sense that the market may have gotten ahead of itself in thinking that inflation has peaked and that central banks will start to scale back their aggressive stances,” he said. Stuart Cole, of Equity Capital. “Until we see major declines in the CPI, I think central banks will remain aggressive and will be willing to accept moderation in growth, meaning a mild recession, if that is the price to pay for genius.” of inflation goes back into the bottle,” he added.
Source: Ambito
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