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US stock futures and Treasuries fall after hot inflation report

Wall Street stock futures and U.S. Treasury bonds were sold on Thursday after reports of higher-than-expected inflation fueled fears that the Federal Reserve would raise interest rates more aggressively.

Contracts tracking the broad S&P 500 fell 1.8% ahead of the opening bell in New York, while those tracking the Nasdaq 100 fell 2.7%. The Europe region’s Stox 600 fell 0.7% after Hong Kong’s Hang Seng closed 1.9% lower than him.

Treasuries also came under pressure, with 10-year Treasury yields rising 0.1 percentage points to 4% and 2-year yields rising 0.16 percentage points to 4.44%. When bond prices fall, bond yields rise.

These moves in stock and bond markets saw the notable US consumer price index hit 8.2% in September, with annual inflation easing slightly from 8.3% in August, but better than economists expected. arose from 8.1% forecast.

The ‘core’ consumer price index was 6.6%, beating expectations of 6.5% and 6.3% last month.

“The pace of inflation remains stubbornly high, ignoring the Fed’s attempts to tighten monetary policy and push the economy down,” said Richard Flynn, managing director of Charles Schwab UK.

“Combined with rising prices and a stronger-than-expected jobs report last month, it is almost certain that the Fed will implement a fourth rate hike of 0.75 percentage points at its next meeting in November.”

Market participants are scrutinizing reports on rising prices and employment conditions in the world’s largest economies, looking for signs of how far the Fed and its multilateral institutions will tighten monetary policy. Fears are growing this year that rate setters will prolong the recession.

Federal Reserve Board It has already raised borrowing costs by 0.75 percentage points in its last three meetings, with benchmark interest rates ranging from 3% to 3.25%. The market has priced in that he is expected to increase four times in a row by a similar size.

“This week’s CPI will be the most important catalyst for the November 2 Fed meeting,” JPMorgan said in a memo to investment clients ahead of the inflation report. Another said a three-quarters rise “feels like a foregone conclusion, but his two subsequent meetings have shown no consensus.”

The Federal Reserve said in the minutes of its September monetary policy meeting released late Wednesday that the central bank is concerned Doing “too little” to eradicate soaring inflation.

Equity and bond markets have come under severe pressure this year, battered by higher interest rates and the potential for further twists in monetary policy.

Rising borrowing costs are undermining the appeal of more speculative stocks that were early winners in the coronavirus pandemic, eating into projected cash flows that are typically modeled into the future. The tech-heavy Nasdaq Composite Index is down a third this year.

https://www.ft.com/content/830e1327-716c-4973-9669-d4b65d6bdbf9 US stock futures and Treasuries fall after hot inflation report

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