September 28, 2022

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Wall Street stabilizes, Treasury yields hit new highs

Wall Street stabilizes, Treasury yields hit new highs

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, March 14, 2022. REUTERS/Brendan McDermid

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  • US stocks mostly maintain gains after Thursday’s rally
  • US 10-year Treasury yields are close to a three-year peak
  • Oil prices reverse, adding to their recent highs
  • Gold retreated as a safe haven

BOSTON/LONDON (Reuters) – Wall Street was mostly flat on Friday after a technology-driven rally and US Treasury yields surged to new highs as markets assessed a world of higher interest rates and the effects of the Russian war in Ukraine.

Dow Jones Industrial Average (.DJI) The index fell 47.83 points, or 0.14%, to 34,660.11 points, and the Standard & Poor’s 500 (.SPX) It lost 12.99 points, or 0.29%, at 4507.17 points. Nasdaq Composite (nineteenth)whose technical shares led the recent gains, fell 158.29 points, or 1.12%, to 14,033.55.

MSCI’s benchmark for stocks worldwide (.MIWD00000PUS.) It is down 0.44%, but is likely to post a second straight week of gains for the first time in 2022. Pan-European STOXX 600 Index (.stoxx)It was flat.

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Stock prices received a boost from March Global Purchasing Managers’ Index (PMI) data this week which shows the global economy has been broadly resilient, but the longer-term economic outlook is making investors cautious. For example, Barclays lowered its forecast for global economic growth for 2022 this week to 3.3% while traders raised their short bets.

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The global bond markets were still in the grip of one of the worst sell-offs in recent memory.

The yield on the benchmark 10-year Treasury, which led the bond market sell-off, rose 13.4 basis points on Friday to 2.477%, the highest in nearly three years. Yields have risen by more than 75 basis points in the past two weeks as traders have been quick to revise their expectations for a rate hike.

Charles Evans, president of the Chicago Fed, was the latest US policymaker to sound hawkish, saying on Thursday that the Fed needs to raise interest rates “in time” this year and in 2023 to curb high inflation before it becomes part of the economy. Integral with American psychology and become equal. Difficult to get rid of. Read more

Bank of America (BofA) has joined a small but growing number of major investment banks calling for sharper rate increases from the US Federal Reserve on the back of higher inflation data. The bank now expects two hikes of 50 basis points each at its June and July meetings with the “risks” of those forecasts being dragged back to May and June, respectively. Read more

Markets expect US interest rates to rise by as much as 190 basis points in total for the remainder of this year, after a 25 basis point hike last week. Investors are assigning a roughly 80% chance of a 50 basis point rate hike in March. And the

Market analysts at Morgan Stanley wrote in a note late Thursday that the Fed’s quick move was not overly worrisome for the economy.

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“While an unregulated tightening of financial conditions continues to pose a risk to the outlook, particularly in areas such as credit, our underlying growth outlook remains constructive,” they wrote. “We believe it helps contain the risk that financial conditions will become extremely volatile in response to the Fed’s actions.”

not enough

The broader dollar index was almost flat but on track for small weekly gains. The euro rose.

“Euro against the US dollar remains stuck at around 1.10, with better-than-expected Eurozone Purchasing Manager surveys for March not enough to spur buying interest,” UniCredit analysts said.

Demand for safe haven assets including gold and the Swiss franc remained resilient as the conflict in Ukraine continued. Moscow on Friday hinted at scaling back its ambitions in Ukraine to focus on territory claimed by Russia-backed separatists, as Ukrainian forces launched an offensive and recaptured territory on the outskirts of the capital, Kyiv. Read more

Spot gold remained high at $1,954 an ounce, down about 0.15% from the day gold/

Oil prices turned positive on Friday after reports of a missile attack and fire at the state-run Saudi Aramco oil facility.

Brent crude rose $1.20, or 0.7 percent, to $119.92 a barrel, and US West Texas Intermediate crude rose $1.04, or 0.9 percent, to $113.34, after both fell more than $3 earlier in the session. Both benchmarks were heading toward their first weekly gains in three weeks. Read more

The 2-year/10-year Treasury curve inversion preceded recessions in the US
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Additional reporting by Lawrence Delevingne in Boston and Sickat Chatterjee in London. Editing by Susan Fenton and Richard Chang

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