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Tuesday, December 06, 2022

Global Stocks Target 1% Weekly Decline, US Yield Curve Signals Bearish

by Carolyn Kohn and Wayne Cole

London,SydneyNovember 18 – Global stocks lost 1% for the week on Friday, off recent two-month highs, after Federal Reserve officials warned more on interest rates, while the US bond yield curve predicted a recession. .

* The dollar and bond yields rose after St. Louis Federal Reserve President James Bullard said, in order to be “restrictive enough” to contain inflation, interest rates could be raised from the current level of 4.00% to 5% and 5.25%. Will have to increase the middle. ,

* This dealt a blow to investors who were betting on rates to go above 5% and quoted Federal Reserve funds futures prices as likely to go up to 5% at 5.25% instead of 5.0% from 4.75%. were watching

* index MSCI Global equity futures were up 0.17%, while US S&P futures were flat after the S&P 500 index fell 0.3% on Thursday.

* European shares rose 0.54% and the banking sector advanced nearly 1% as the European Central Bank prepares to launch the biggest cash withdrawal from the euro zone banking system in its history.

* The ftse Britain was up 0.33% a day after Chancellor of the Exchequer Jeremy Hunt announced tax hikes and spending cuts to reassure markets the government was serious about fighting inflation.

* The US two-year Treasury yield rose again to 4.48%, recovering from a sharp decline of 33 basis points to a low of 4.29% prompted by last week’s inflation data.

* That left them 69 basis points above the 10-year yield, the biggest inversion of the curve since 1981 and an indicator of an impending recession.

* The dollar was steady at 106.65 against a basket of currencies, after hitting a three-month low of 105.30 earlier in the week.

* The US currency was steady at 140.23 yen but held above a recent low of 137.67 yen. Sterling was up 0.3% at $1.1904.

* The euro was trading at $1.0357 after falling from a four-month high of $1.0481 on Tuesday, as some policymakers urged caution in tightening.

* index MSCI Asia-Pacific shares except Japan closed flat. Chinese shares declined 0.45% as Beijing asked banks to test liquidity in the bond market, with some investors suffering losses as rising yields rose.

* Japan’s Nikkei index fell 0.1% as data showed inflation at a 40-year high, and a weaker yen raised import costs.

* Brent crude fell 0.2% to $89.51 a barrel, while US crude was steady at $81.67 a barrel.

Gold was up 0.1% at $1,763 an ounce after hitting a three-month high of $1,786 earlier in the week.

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