Stocks drop as traders eye Fed’s big hikes: Markets over

(Bloomberg) – Shares fell with U.S. equity futures, giving up early gains, as traders brace for another mega U.S. interest rate hike amid Reserve concerns Federal could be overly tight and increase the likelihood of a hard landing.

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The Stoxx 600 Index fell 0.8% on losses to real estate and miners. U.S. equity futures also fell after a brief period of higher trades, with those on the tech-heavy and rate-sensitive Nasdaq 100 trading worse than their S&P peers. 500.

The US central bank started its meeting today and is expected to raise interest rates again by 75 basis points on Wednesday, signaling interest rates are heading above 4% and will then pause. The long-term holding strategy is rooted in the idea that central banks would avoid the disastrous stop-and-go policy of the 1970s that allowed inflation to spiral out of hand. Market participants have reverted to expectations for an even bigger gain, and only two of 96 economists in a Bloomberg survey now predict a full-blown move.

Danielle DiMartino Booth, CEO and chief strategist at Quill Intelligence, wrote in an email: “The Federal Reserve is likely to tighten policy straight into the teeth of a recession. “The stock market’s addiction to Fed easing as equities fall may be what Jerome Powell is aiming to quell with aggressive rate hikes, alongside inflation.”

Yields on 10-year Treasuries hit a peak of 3.5% while yields on policy-sensitive two-year yields hit their highest levels since 2007 and are poised to rise above 4%, reflecting fear of a difficult landing.

Meanwhile, in a worrisome trend for equities, real rates — inflation-adjusted Treasury yields — rose to their highest levels since 2011. As they were pinned into territory negative in a decade of easy money policy, the real exchange rate has been a key. dynamics of risk-asset rallies.

Relative yield markets are pricing in as two-year Treasuries inched closer to 4% and “it could be a little higher, but not terribly at this point,” said Peter Kinsella, head. forex strategy at Union Bancaire Privee Ubp SA, said on Bloomberg Television. It would still make sense for 10-year Treasury yields to head towards 3.5% or 3.7%, “but there’s probably not much more profit in that trade,” he said.

In China, banks left key lending rates unchanged after the central bank halted monetary easing and defended the weakening yuan.

Elsewhere, Bitcoin has struggled to return to $20,000. Oil fell below $86 per barrel and gold fell.

Will the Nasdaq 100 stock index hit 10,000 or 14,000 first? This week’s MLIV Pulse survey focuses on technology. It’s brief and we don’t collect your name or any contact information. Please click here to share your views.

This week’s main events:

  • US housing starts, Tuesday

  • EIA Crude Oil Inventory Report, Wednesday

  • US Existing Home Sales, Wednesday

  • Federal Reserve decision, followed by a press conference with Chairman Jerome Powell, Wednesday

  • Monetary Policy Decision of the Bank of Japan, Thursday

  • Bank of England interest rate decision, Thursday

  • US Conference Board leading index, initial jobless claims, Thursday

Some key moves in the market:


  • Futures on the S&P 500 fell 0.5% at 6:09 a.m. New York time

  • Nasdaq 100 futures fell 0.6%

  • Dow Jones Industrial Average futures fell 0.4%

  • Stoxx Europe 600 down 0.8%

  • The MSCI World Index was little changed


  • The Bloomberg Dollar Spot Index is up 0.2%.

  • The euro fell 0.2% to $1,0003

  • British Pound fell 0.1% to $1.1417

  • Japanese yen fell 0.3% to 143.70 per dollar


  • Yields on 10-year Treasuries rose 5 basis points to 3.54%

  • German 10-year yield rose 9 basis points to 1.89%

  • UK 10-year yield rose 12 basis points to 3.25%


  • West Texas Intermediate crude fell 0.3% to $85.50 per barrel

  • Gold futures fell 0.1% to $1,676 an ounce

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