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[U.S. market]Stocks fall, FOMC hawkish attitude-dollar temporarily high 144 yen – Bloomberg

On the 21st, the US stock market continued to fall after a rough price movement. Traders were overwhelmed by headlines about the Federal Open Market Committee (FOMC) policy announcement and Fed Chairman Jerome Powell’s press conference. It suggested that aggressive tightening would continue, and it was perceived that the possibility of a soft landing for the economy had become less and less likely.

  • US stocks continue to fall, volatility after FOMC announcement
  • US 2-Year Yield Breaks 4%, 10-Year Yield Hits 3.53%
  • The dollar index temporarily hit a record high of 144.70 against the yen.
  • New York crude oil continues to fall, increasing anxiety about the chain reaction of economic slowdown
  • Gold Spot Rises – Rate Hikes As Most Expected

The S&P 500 stock price index fluctuated after the FOMC announcement, ending at 3789.93, down 1.7% from the previous day. The Dow Jones Industrial Average fell by $522.45, or 1.7%, to $30,183.78. The Nasdaq Composite Index fell 1.8%.

Chairman Powell urges readiness for further ‘pain’ – to continue aggressive interest rate hikes (3)

“It’s like Paul Volcker has been sent to Chairman Powell,” said Seema Shah, chief strategist at Principal Global Investors. “We are talking about strong and swift measures that could come, trying to stamp out nasty inflationary pressures and avoid an even worse scenario later on.” “The Fed is looking for a hard landing, given the latest interest rate projections. A soft landing is almost out of the question,” she said.

Two-year Treasury yields topped 4%, the highest since 2007. As of 4:59 pm New York time, two-year bond yields rose eight basis points to 4.05%. The 10-year bond yield fell 3 basis points to 3.53%.

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In the foreign exchange market, the dollar index rose 1% at one point, hitting a record high. The background is the FOMC rate hike and further rate hike suggestions. The gains in the index narrowed after Powell’s remarks. The euro fell 1.6% against the dollar at one point. President Putin’s moves to escalate the war have been criticized by world leaders at the United Nations General Assembly.

The Bloomberg Dollar Spot Index, which tracks the dollar’s movements against 10 major currencies, rose 0.7%. As of 4:39 pm New York time, the dollar rose 0.2% against the yen to ¥144.01. There was also a scene where it was raised to 144.70 sen at one time. The euro fell 1.3% to $0.9845 against the dollar.

“While we expect the dollar to remain strong in the near term, we are still reluctant to assume sustained dollar strength from here,” Scotiabank’s Sean Osborne said in a note.

Trends in Dollar Index and US 2-Year Bond Yield

Source: Bloomberg

New York crude oil futures continue to fall. The escalation of Russia’s war could lead to supply disruptions, but after the FOMC rate hike, fears of a knock-on effect of a slowing economy weighed heavily on markets.

New York Mercantile Exchange (NYMEX) West Texas Intermediate (WTI) futures for November delivery closed at $82.94 a barrel, down $1 (1.2%) from the previous day. London ICE North Sea Brent November delivery fell 79 cents to $89.83.

“Oil prices continued to be heavy as the Fed signaled it would keep inflation under control by raising interest rates even as the economy slows,” said Ed Moya, senior market analyst at Oanda. .

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Crude inventories rose by 1.14 million barrels last week, according to Energy Information Administration (EIA) data. Demand for distillates, including diesel, fell on a four-week average to the lowest level in nearly a decade for the time of year.

The spot gold market rebounded from a temporary drop immediately after the FOMC policy announcement, rising 1.3% to $1,687.10 an ounce as of 2:58 pm New York time. The Fed’s interest rate hike came in line with most expectations, easing some concerns about a much larger rate hike.