The words that Fed number one Jerome Powell uttered at the Jackson Hole symposium could not fail to have an effect on the US government bond market, as well as on equities.
10-year Treasury rates rise more than 3.12%, advancing up to +8 basis points in Asian market trading: but it is the trend of 2-year Treasury rates – yields more closely reflect expectations on the monetary policy of the US central bank – which is highlighted, with a jump up to 3.45%, the maximum value since November 2007, and in conjunction with the sharp sales that are hitting Asian stocks (and not only) after the speech delivered by Jerome Powell.
US 30-year rates also rose, to 3.2%, as did 5-year Treasury rates also hit 3.2%. Federal Reserve Chairman Jerome Powell confirmed the US central bank’s determination to stop inflation on Friday, admitting the Fed will continue to raise interest rates in a way that would cause “some pain” to the US economy.
“Price stability is the responsibility of the Federal Reserve and serves as the foundation of our economy,” said Jerome Powell in his Jackson Hole speech. “Without price stability, the economy doesn’t work for anyone,” he added. The Dow Jones thus collapsed by 1,008 points, just over 3%, suffering the worst session since May. The S&P 500 and Nasdaq Composite plummeted 3.4% and 3.9% respectively, ending the worst session since June.
As of this writing, Dow Jones futures are down by over 200 points, while Nasdaq futures are down 1.22%; those on the S&P 500 fell 0.85%.