U.S. stocks seemed to fall Friday, with the Dow Jones down about 400 points and posting a 2 percent loss for the week, the most since January. The Fed's James Bullard said Friday that he sees the first interest rate hike in late 2022.
Stocks were already falling early in the session as investors continue to review the Fed's stance and fresh economic data, while Treasury yields fell from recent weekly highs, partly reflecting slightly less optimism about economic growth. The Fed stated on Wednesday that it now expects two interest rate hikes by the end of 2023, and Powell mentioned that discussion of tapering bond purchases would likely begin soon, though investors were somewhat confused about when exactly that would occur. At the same time, policymakers projected higher inflation and GDP growth this year, but recent data showed rising jobless claims and falling retail sales, and the housing market is also starting to slow. On top of that, there are threats of the delta variant of the coronavirus spreading.
WTI crude oil futures fell for a second consecutive session to $70.8 a barrel on Friday and recorded their first decline in four weeks as the U.S. dollar strengthened to levels last seen more than two months ago after the U.S. Federal Reserve signaled it would raise interest rates earlier than expected. At the same time, concerns about fuel demand increased after the U.K. reported on Thursday the largest daily increase in new cases of COVID-19 since mid-February. Oil prices were also impacted by news that talks between Tehran and Washington on reviving the 2015 nuclear deal have moved closer to the agreement. Nevertheless, WTI remains close to the two-and-a-half-year high reached on Wednesday.
The so-called Treasury bond yield curve flattened at the end of an agitated week in the markets. The yield on the 10-year Treasury note hovered around 1.5 percent, after rising to 1.59 percent on Wednesday and falling to 1.47 percent on Thursday. At the same time, the yield on the two-year bond was 0.24 percent, its highest level since April 2020. The retreat in long-dated bonds may indicate that investors are less optimistic about economic growth, while the sharp rise in yields on short-dated bonds, which are most sensitive to interest rate changes, reflects that a rate hike is widely expected.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
77.46% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
