Home Business Wall Street futures in sharp recovery. Traders digest Fed’s latest news, Treasuries rates blaze record-breaking

Wall Street futures in sharp recovery. Traders digest Fed’s latest news, Treasuries rates blaze record-breaking

by admin

On Wall Street, US futures rose solidly after yesterday’s decidedly negative closing.

At approximately 12.45 Italian time, futures on the Dow Jones rose by approximately 240 points (+ 0.82%); futures on the S&P 500 are up 1.02% to 3,707 points, while futures on the Nasdaq Composite are up by 1.25% to 11,457 points.

Protagonists were the speeches of some members of the Fed who, in general, confirmed all the determination of the US central bank led by Jerome Powell to move forward in its fight against inflation.

Focus in particular on the statements of Loretta Mester, president of the Cleveland Fed who, in a speech delivered at the Massachusetts Institute of Technology (MIT), stressed that “unacceptably high inflation is the key challenge facing the (US) economy. “And that” price stability is necessary to ensure a healthy labor market “.

Mester added that, in the US central bank’s fight against inflation, “further rate hikes will be needed”, explaining that “a tightening phase will be needed for some time” and that “the costs would be high if we were unable to act in a determined way “.

A certain nervousness about the risk of going too far with aggressive monetary tightening was expressed instead by Charles Evans, president of the Chicago Fed who, speaking in the CNBC broadcast “Squawk Box Europe”, admitted to having some anxiety about to the risk that the Federal Reserve will raise fed funds rates too quickly in its attempt to tackle inflation.

Evans said he remained “cautiously optimistic” that the US economy could foil a recession, provided no further shocks occur.

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“I believe that our estimates, on average, are of maximum rates by March, assuming the absence of further adverse shocks. And if things improve, maybe we could do even less, but I still believe that we will reach those rate peaks “.

Last week, Jerome Powell’s Fed made its third consecutive monetary tightening of 75 basis points, taking US fed funds rates to a record since 2008, in the range of 3% to 3.25%, in order to to defuse runaway inflation.

The traders seem to have digested the words coming from the various members of the Fed, with the yields of the US Treasuries that, after having struck new records, pointing downwards.

In particular, 10-year US Treasury yields drop to almost 5 basis points, to 3.823%, after flying up to over 3.9%, to 3.931%, a record value since April 2010.

Reverse also for the 2-year Treasury rates, those most sensitive to the Federal Reserve’s monetary policy decisions, which flew to 4.351%, the maximum value since August 2007 and which are now also yielding around five basis points, falling to 4.258%.

Wall Street appears to be eager for recovery, after suffering five consecutive losing sessions, which led the S&P 500 index to close at its lowest level since 2020 yesterday.

The Dow Jones is back in the bear market after slipping more than 20% below its tested record value. Not only. The list of 30 industrial stocks closed yesterday at the lowest closing level since the end of 2020. To be precise, the S&P 500 index closed yesterday at 3,655.04, down 1.03%, at the lowest value since. March 14, 2020.

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The Dow Jones lost 1.11% yesterday (-330 points), sliding to the worst close since November 12, 2020, at 29,260.81, while the Nasdaq Composite lost 0.60% and is down by more than 33% compared to its historical record, at 10,802.92.

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