World Equity, Wall Street Futures Drop on Fed Hawkish Inflation Talk

Global stocks fell and bond yields rose on Friday as Fed chair Jerome Powell digested hawkish remarks that investors needed faster rate hikes to curb inflation. ..

Powell said the half-interest rate hike will be “on schedule” when policymakers meet in May, as inflation in the United States is well above the Fed’s target of 2%. He added that “moving” is appropriate. To tighten the financial settings. “

Powell’s comment on a more aggressive path to policy normalization dropped stock prices early, sold out late Thursday, and Benchmark S & P 500 fell 1.5%.

Investors continued to buy stocks on Friday, with most major stock indexes declining on Friday, while oil prices fell by more than $ 2 a barrel.

Selling pressure continues in the bond market, with US two-year yields rising nearly 7 basis points to 2.762%, the highest since 2018, and Germany’s two-year yield for the first time in eight years. It became 0.211%.

ING Think analysts said, “Currently, there are significant fluctuations in the interest rate market, where we couldn’t expect a fluctuation of 10 to 15 basis points per day on the short side of the yield curve.” I am. I wrote in a memo.. “It is both commentary and action from central bankers who appear to be ready to take action to prevent inflation expectations from getting out of hand, which drives these fluctuations.”

By 5:48 am New York time, yields on longer-term US government securities have also risen, 10-year Treasury yields have risen by more than 2 basis points to 2.943%, and 30-year Treasury yields have risen by 2 basis points. It increased to 2.953%.

European equities receded, France’s CAC 40 fell 1.2% in early trading, Germany’s DAX fell 1.2%, and the UK’s FTSE fell 0.5%.

Wall Street futures fell 0.33% on both the Dow and S & P 500 futures, while Nasdaq futures contracts fell 0.36% by 6:18 am New York time.

Some economists have warned that the Fed’s aggressive tightening could increase the likelihood of a recession.

Moody’s chief economist Mark Zandi said in a webinar on Tuesday that the risk of a recession in the US economy is “very high and unpleasantly high at some point in the next 12, 18 or 24 months.”And i will say [it’s] It is rising. “

This is in line with previous Goldman Sachs predictions of a recession odds of 35%.

Mark Hamrick, senior economic analyst at Bankrate, told the Epoch Times in an email: “The negative stories surrounding a consumer-focused economy are primarily historic inflation spikes and wages and highs. It’s about the gap. “

Prices rise faster than wages, giving virtually many Americans wage cuts and reducing household purchasing power.

“At the same time, this year’s US economic growth is projected to outpace trends despite global headwinds, fiscal stimulus decline, supply chain turmoil, and an endless pandemic,” Hamrick said. I added.

Russia’s invasion of Ukraine and the accompanying rise in global inflation expectations Leading The Conference Board will downgrade its US economic growth estimate to 1.5% in the first quarter of 2022 (quarterly annual rate). On the other hand, the year-on-year annual GDP growth for 2022 as a whole is expected to be as follows. 3.0 percent.

Tom Ojimek


Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communication, and adult education. The best writing advice he has ever heard is from Roy Peter Clark.