[Marchnad yr UD]Stocks fall sharply, Fed’s hawkish attitude – dollar middle 144 yen – Bloomberg

The US stock market fell sharply on the 29th. The S&P 500 stock index sank to its lowest level since November 2020. Several US Fed officials have taken a hawkish stance. The turmoil in European markets also continues to weigh on investor sentiment.

The dollar/yen exchange rate is in the mid 144 yen range. Although it rose slightly from the previous day, it was slightly down from the level at the end of Tokyo time.

  • US Stocks Rebound, S&P 500 S&P 500 Wipes Out Day Before – European Market Turmoil Also Weights
  • 10 year bond yield 3.77% due to falling stock prices, etc.
  • US dollar/yen rises to mid 144 yen level, pound rises, euro also rises
  • NY Crude Oil Drops, Recession Fears Dominate Sentiment
  • NY Gold Rebounds Slightly, US Economic Stats Outlook for Aggressive Interest Rate Rises Again

The S&P 500 fell 2.1% to 3640.47. Although there was a scene where there was a drop of 2.9% at one point, the margin of decline narrowed towards the end of trading. However, it erased the previous day’s rise, which rebounded for the first time in seven business days. The Dow Jones Industrial Average fell $458.13, or 1.5%, to $29,225.61. The Nasdaq Composite Index fell 2.8%.

The tech-heavy Nasdaq 100 Index fell 2.9%. At one point it was down 4%. Apple sold off heavily, pushing the entire index down. Bank of America (BofA) warns of slowing consumer demand for Apple devicesdowngrade the investment decision.

Against the background of falling stock prices, US Treasury bonds have narrowed the range of the decline. As of 4:20 pm New York time, the 10-year yield increased four basis points to 3.77%.

St Louis Fed President James Bullard said the Fed expects further policy tightening in the coming months and that the market understands it well. Cleveland Fed President Mester also said he plans to continue raising interest rates.

St Louis Fed Markets ‘Correctly Interpreted’ Message to Continue Rate Hikes

Cleveland Fed President Needs Continued Rate Hikes to Stop Inflation

“The impact the Bank of England has had on global markets has really surprised me,” said Fiona Cincotta, senior financial markets analyst at City Index. “But it was a short-lived relief rally, which seems quickly to be pushed aside by fears of inflation and fears of rising interest rates again.”

“The market is finally coming to terms with the near certainty of a recession right now and adjusting to it,” said Sean Snyder, head of investment strategy at CitiUS Wealth Management.

The dollar fell in the foreign exchange market. Meanwhile, the pound was bought and appreciated against most of the top 10 currencies. The euro also rose. Some European Central Bank (ECB) policymakers are calling for a 0.75 point rate hike at their meeting in October.

ECB Shimkus “75bp is my choice”, continued support for October rate hike (1)

The Bloomberg Dollar Spot Index, which tracks the dollar’s movements against 10 major currencies, fell 0.3%. As of 4:20 pm New York time, the dollar rose 0.2% against the yen to ¥144.47. After reaching 144.80 yen late Tokyo time, growth has been slow. The euro rose 0.7% against the dollar to $0.9801 per euro. The pound rose 1.7% against the dollar to $1.1076.

“As we approach the end of the month and the quarter, I wonder if the portfolio adjustment move can provide some support for Treasuries or cap the dollar’s upside, or both,” said John Hardy, head of foreign exchange strategy at Saxo Bank. “It will be interesting to see if CNY’s tactical consolidation forces the Fed to change course,” the report said.

Bank of America (BofA) strategists led by Athanasios Bambakidis said, “Continuation of high core inflation will force the Fed to push for a faster, bigger and longer cycle of rate hikes, pushing the dollar to a peak in the process. push up definitely,” analyzed the report.

New York crude oil futures fell. Organization of the Petroleum Exporting Countries (OPEC) and non-member oil producing countriesAlthough there is speculation that OPEC+ will decide to cut production, it fell as stocks fell on new signs of economic decline.

West Texas Intermediate (WTI) futures on the New York Mercantile Exchange (NYMEX) for November delivery fell 92 cents (1.1%) to close at $81.23 a barrel. London ICE North Sea Brent for the November contract fell 83 cents to $88.49.

Crude oil futures are on track to end the week positive on a weekly basis, but could slip into negative quarterly figures for the first time in nearly two years amid growing fears of a recession. The dollar has soared this month, hovering near all-time highs, making dollar-denominated goods less attractive.

“The last few days have been mostly macroeconomic stuff, because we’re not seeing any real measurable change in supply or demand at the moment,” said John Kilduff, partner at Again Capital in York New. “What is really important is the general market sentiment about the central bank’s policy against high inflation,” he said.

Top row: WTI futures (white), September 28 closing price (orange), Bottom row: E-mini S&P 500 futures (blue)

Source: Bloomberg

The New York gold market fell slightly. The movement became actively sheltered in cash, and the general sell-off of financial markets extended to goldUS economic data was seen as paving the way for more aggressive US rate hikes.

Sentiment in the gold market remains bearish, with US Fed officials indicating that they will continue to raise interest rates. Gold holdings in gold-backed exchange traded funds (ETFs) have fallen to their lowest level since May 2020. Inflation-adjusted US Treasury yields, which drive gold prices, are near 10-year highs .

“Higher real yields are a real boost for gold,” said Adrian Ashe, head of research at Bullion Vault.

December gold futures on the New York Mercantile Exchange (COMEX) closed at $1,668.60 an ounce, down $1.40 (less than 0.1%) from the previous day. As of 1:50 pm New York time, the spot price was down 0.1% to $1,658.52.

Bullion is slipping after the Bank of England's bond buying program triggered a price jump

Gold spot price (white, right axis), Bloomberg Dollar Index (blue, left axis)

Source: Bloomberg

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