Wall Street stocks pause as Treasury yields hit new highs

  • Tech stocks give up some gains after Thursday’s rally
  • US Treasury yields near three-year high
  • Oil prices reverse and add to recent highs
  • Safe gold dives

March 25 (Reuters) – Wall Street stocks took a breather on Friday after a tech-driven rally and U.S. Treasury yields hit new highs as markets assessed a world of high interest rates and the effects of Russia’s war in Ukraine.

The Nasdaq fell around 0.35% as the rally in tech stocks lost steam, while the Dow Jones Industrial Average and S&P 500 rose around 0.25% as financial stocks rose on the growing bets of bigger interest rate hikes by the Federal Reserve. Read more

The MSCI gauge of stocks across the world (.MIWD00000PUS) fell 0.2%, but is expected to post a second straight week of gains for the first time in 2022. The pan-European STOXX 600 index (.STOXX) rose 0.2%. 0.11%, but was down over the week.

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Stock prices were supported by flash global Purchasing Managers’ Index (PMI) data for March this week, showing that the global economy was resilient overall, but the longer-term economic outlook makes cautious investors. Barclays, for example, this week cut its global economic growth forecast for 2022 to 3.3% as traders increased short bets.

Global bond markets were still struggling with one of their worst selloffs in recent memory.

Yields on benchmark U.S. 2- and 10-year Treasuries jumped to near three-year highs on Friday as the market anticipates inflation will soar and ponder the aggressiveness of the Federal Reserve as she is tightening her policy.

Ten-year Treasury yields rose 14 basis points to 2.482%, a rate last seen in early May 2019. The 2-year yield, which generally moves in line with interest rate expectations , rose 17 basis points to 2.295% – a rate also last seen in early May 2019.

Chicago Fed Chairman Charles Evans was the latest U.S. policymaker to sound more hawkish, saying on Thursday the Fed needed to raise interest rates “in a timely manner” this year and in 2023 to rein in high inflation. before it was integrated into American psychology and became even more difficult to get rid of. Read more

Bank of America (BofA) has joined a small but growing number of major investment banks calling for more aggressive interest rate hikes from the US Federal Reserve amid soaring inflation data. The bank now expects two hikes of 50 basis points each at its June and July meetings, with the “risks” that those expectations will be pushed back to May and June respectively. Read more

Markets expect US interest rates to rise a total of 190 basis points over the rest of the year, after rising 25 basis points last week. Investors attribute a probability of about 77% to a rate hike of 50 basis points in March. ,

Morgan Stanley market analysts wrote in a note late Thursday that the Fed’s quick action was not too much of a concern for the economy.

“While a disorderly tightening of financial conditions remains a risk to the outlook, particularly in areas like credit, our core growth outlook remains constructive,” they wrote. “We think (this) helps contain the risks that financial conditions will become too dislocated in response to Fed actions.”

The inversion of the 2-year/10-year Treasury curve preceded the American recessions

OIL INVERSION

Oil prices turned positive on Friday after reports of a missile strike and a fire at the facilities of Saudi state oil company Aramco.

U.S. crude rose 0.74% to $113.17 a barrel and Brent to $119.65, up 0.52% after falling more than $3 earlier in the session. Both benchmarks were heading for their first weekly gains in three weeks. Read more

The broad dollar index was virtually flat but on track for a small weekly gain. The euro fell slightly.

“Everything in these commodity markets, everything is done in dollars, so as we’re seeing a bit of a pullback here in commodity prices, that’s going to coincide with a bit of softness for the dollar,” analyst Edward Moya said. market leader. , at Oanda in New York. “Until we have a major geopolitical development, you will probably only see instability from now on.” Read more

Demand for safe-haven assets, including gold and the Swiss franc, remained resilient as the conflict in Ukraine continued. Moscow announced on Friday that it was scaling back its ambitions in Ukraine to focus on territory claimed by Russian-backed separatists as Ukrainian forces went on the offensive, retaking land on the outskirts of the capital kyiv. Read more

Spot gold remained high at $1,953 an ounce, down about 0.23% on the day GOLD/

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Reporting by Lawrence Delevingne in Boston and Saikat Chatterjee in London, additional reporting by Chuck Mikolajczak in New York; Editing by Richard Chang and Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

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