US equities fell further in three weeks and Treasury yields rose after unexpectedly high inflation that boosted bets that the Federal Reserve will have to step up its fight against inflation.
The S&P 500 plunged more than 2.5 percent, leaving it heading for its ninth weekly drop in 10, as fears grew that efforts to combat inflation could stifle growth. Technology stocks suffered the brunt of Friday’s defeat, with the Nasdaq 100 falling more than three percent. Growth stocks from Cathie Wood’s flagship ETF to software developers and chip makers plummeted. A separate report showed that US consumer sentiment fell to a record high in early June, increasing pressure on the shares of airlines, casinos and hotels.
In the Treasury market, two-year rates soared to three percent, a level not seen since 2008, narrowing the gap with longer maturities and indicating expectations of a faster rate of hardening. central bank. Bitcoin fell below $ 30,000, the Cboe volatility index rose to $ 29 and the dollar advanced.
Rate traders raised their bets on the Fed’s rise, with three half-point increases likely during policy meetings in June, July and September, according to market-based prices. The central bank has indicated it will likely raise rates by 50 basis points when it meets next week.
The consumer price index rose one percent from the previous month, surpassing all estimates. Housing, food and gas were the main contributors. The so-called core CPI, which eliminates the most volatile food and energy components, rose 0.6% from the previous month and 6% from a year ago, also above forecasts.
“It’s just bad,” said Dennis DeBusschere, founder of 22V Research. . front was massive in relation to the long end “.
Separately, the University of Michigan’s preliminary June sentiment index fell to 50.2 from May 58.4, according to data released Friday. The figure was weaker than all estimates from a Bloomberg survey of economists with an average forecast of 58.1.
More market feedback
- “From the Fed’s perspective, the chase continues, and more aggressive Fed measures are likely to be needed to catch up with rampant inflation,” wrote Charlie Ripley, senior investment strategist at Allianz Investment Management. in a note. “Whether this translates into more aggressive rises this summer or a continuation of 50 basis points rises this fall is the option for the Fed, but the general reality for the Fed is that inflation is out of control and they have their job, for them in the coming months ”.
- “One of the things we’ve seen in previous inflation readings is that the most sticky core components were starting to catch fire, and we saw that this was accelerating with the last basic impression,” said Max Gokhman, director of AlphaTrAI Investments “That means the Fed’s firefighters have to fight harder and that means the bulls can be burned.”
Some of the main movements in the markets:
Stocks
- The S&P 500 fell 2.7% at 11:27 a.m. New York time
- The Nasdaq 100 fell 3.5%.
- The Dow Jones Industrial Average fell 2.3%.
- The Stoxx Europe 600 fell 2.7%.
- The MSCI World Index fell 2.7%.
Coins
- The Bloomberg Dollar Spot index rose 0.8%.
- The euro fell 0.9% to $ 1.0523
- The British pound fell 1.4% to $ 1.2319
- The Japanese yen rose 0.2% to $ 134.14
Good
- The 10-year Treasury bond yield rose 10 basis points to 3.14 percent
- Germany’s 10-year yield advanced six basis points to 1.49%.
- The 10-year yield on the UK advanced 11 basis points to 2.43 per cent
Goods
- West Texas Intermediate crude fell 1.5% to $ 119.63 a barrel
- Gold futures rose 0.5 percent to $ 1,861.90 an ounce