Global stock markets, in general, fall, as yields rise US bonds drives uncertainty among investors.
In this context, world stocks fall this Tuesday, being affected by a rebound in the performance of US treasury bondswhich in turn drives value of the dollar. This increase occurs after the authorities of the Federal Reserve They will reiterate that borrowing costs will not decrease in the short term.
The Fed’s outlook are impacting other interest rate sensitive assets, like oil, which registers another drop today. The 10-year bond yield has soared above 4.5%, reaching its highest level since late 2007. Yesterday, it experienced its biggest daily rise since early September, influencing a decline in stocks, commodities and currencies.
The MSCI world equity index is experiencing its second consecutive day of decline, with a decrease of 0.34%, approaching its lowest level in four months. In Europe, only the healthcare sector, consumer staples and the financial sector manage to remain in positive territory, however, these gains are offset by losses in other sectors, leading tol STOXX 600 down 0.4%.
The futures of US stock indices signal an opening on Wall Street with a slight retraction of 0.1%. The latest catalyst for these movements were two Fed officials who stated yesterday that monetary policya should remain restrictive for “some time” so that inflation returns to the 2% objective set by the entity.
“In the United States there seems to be a certain exceptionality in growth: the consumer continues to drive growth and, In the medium term, it favors flows to the United States“said Samy Chaar of Lombard Odier in Geneva.”These three factors – relatively high oil prices, relatively high US real yields and a relatively strong dollar – are weighing on financial markets and creating a relatively difficult environment.“.
The yen is being particularly affected by the dollar strengthwhich is at 10-month highs, and due to the increase in the performance of bonuses at this timedue to the considerable difference between the interest rates from the United States and Japan. The Japanese currency is trading at 149.88 units per dollar, recovering slightly from its 12-month low of 149.935. So far this year, it has lost 14% of its value against the greenback, marking its worst result since 2014.
The 10-year Treasury yield rose 2.5 basis points to 4.708%, slightly below the session high of 4.710%, its highest level since October 2007. In the area of raw materials, crude oil registered a drop of close to 0.5%, extending its declines for the second consecutive day. On the other hand, gold fell 0.1%, settling at $1,826.50 per ounce, after seven consecutive days of decline, heading for its longest streak of losses in five years.
Source: Ambito
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