US equities rose and the rise in Treasury bonds slowed after a reading on inflation expectations eased and James Bullard of the Federal Reserve suggested fears of recession have been exaggerated. .
The S&P 500 jumped more than 2 percent, putting it on track to achieve a three-week drop. Sentiment improved further after the University of Michigan’s long-term consumer inflation indicator indicator settled from a 14-year high that was initially reported, which could reduce the urgency of more pronounced rate increases. The Fed Chairman of St. Louis Bullard, considered the biggest hawk among Fed officials, said concerns about a recession in the United States are exaggerated.
Traders are beginning to assess any Fed action on rates beyond the December meeting, reducing the additional tightening they expect and flirting with the possibility of cuts in 2023. But they are still struggling with the question of what will come next. if there is an economic recession. catch.
“It’s kind of a pull and drag here between worries about a slowdown in global growth and a recession and the potential that there’s already a lot in the price,” said Emily Roland, John’s co-investment strategist. Hancock Investment Management. “Investors are considering whether or not the markets are over at the moment.”
Fed Chairman Jerome Powell tightened his determination to cool inflation in testimony before lawmakers this week, after acknowledging that a recession may be the price to pay.
Treasury yields rose after fighting for leadership early in the session, with the 10-year yield around 3.12%.
“The volatility of the fixed income market has been even higher than that of the equity market when you take the step ahead of the VIX,” said John Flahive, head of fixed income investments at BNY Mellon Wealth Management. “This has really been the basis of all the uncertainty in all the capital markets and one of our catalysts needed to calm the stock market, to get some balance, would be for the bond markets to calm down.”
Investors continued to take cash from equity funds, which recorded their largest outflows in nine weeks amid rising risk of recession. About $ 16.8 billion came out of global equity funds during the week through June 22, and U.S. stocks saw their first exit in seven weeks at $ 17.4 billion, he said. Bank of America Corp., citing data from EPFR Global.
West Texas Intermediate crude rose after falling during the previous two sessions. The fall in commodity prices has contributed to a moderation of market measures of inflation expectations.
“It looks like the Fed has been successful at least temporarily” in its mission to cool an overheated economy, wrote Lewis Grant, a senior portfolio manager at Federated Hermes, in a note to clients. “Commodity prices have fallen from their highs as fears of recession grow.”
New home sales in the U.S. rose in May, reflecting gains in the west and south and interrupting a three-month slump as the residential real estate market adjusts to rising borrowing costs and prices still high. The increase in sales may reflect that some buyers are blocking their mortgage rate in anticipation of even higher loan costs.
Elsewhere, Bitcoin rose, to around $ 21,000. The largest digital asset still outperformed smaller, lesser-known alternative currencies, such as XRP, Solana, Avalanche and Polygon, which rose more than 5% on Friday. The dollar fell.
Some of the main movements in the markets:
Stocks
- The S&P 500 was up 2.5% at 1:14 p.m., New York time
- The Nasdaq 100 was up 2.5%.
- The Dow Jones Industrial Average rose 2.2%.
- The MSCI World index rose 0.4%.
Coins
- The Bloomberg Dollar Spot index fell 0.2%.
- The euro rose 0.2% to $ 1.0546
- The British pound fluctuated slightly to US $ 1.2267
- The Japanese yen fell 0.2% to $ 135.16
Good
- The yield on 10-year Treasury bonds advanced three basis points to 3.12 percent
- Germany’s 10-year yield advanced one basis point to 1.44%.
- The UK’s 10-year yield fell one basis point to 2.30 per cent
Goods
- West Texas Intermediate crude rose 2.5% to $ 106.88 a barrel
- Gold futures changed little