Fed hawks bring markets back into line. Wall Street continues to lose ground after the negative session on the eve. At approximately 1.20 pm Italian time, futures on the Dow Jones fell by 162 points (-0.48%), futures on the S&P 500 lost 0.60% and futures on the Nasdaq lost 0.80%.
Yesterday, the producer price index PPI, another crucial parameter of the inflation trend, depressed the sentiment, with a contagion effect on the other stock exchanges.
The figure rose in January by 6% on an annual basis, slowing down from +6.2% in December, but definitely beyond the estimates of an increase of 5.4%. On a monthly basis, the rise in inflation measured by the index was 0.7%, compared to the +0.4% expected and a marked acceleration compared to the previous decrease of 0.4%.
Excluding the price components of energy and foodstuffs, the core data also recorded a rise of 5.4%, lower than the +5.5% in December, but also in this case well above the +4.9% expected.
The PPI was confirmed as the umpteenth macro data which indicated that inflation is not falling as hoped, not only by the markets, but by the American Central Bank itself led by Jerome Powell, despite the aggressive monetary tightening launched since last year, until at +75 basis points.
Further weighing on sentiment were the words uttered by some Fed officials.
In particular, the president of the St. Louis Fed James Bullard announced that, in the meeting of the FOMC, the monetary policy arm of the Federal Reserve, held on February 1st, would have preferred a rate hike of 50 basis points (and not by 25 points), adding that he does not rule out a tightening of this magnitude being launched by the Fed at its March meeting. And Loretta Mester, president of the Cleveland Fed, has also called for US fed rates above 5%.
Yesterday Wall Street thus closed in the red: the Dow Jones capitulated in the final by 431.20 points (-1.26%), the S&P 500 lost 1.38%, while the Nasdaq Composite slipped by 1 .78%.
The fear of further aggressive hikes by the Fed is also haunting the fixed income market, with 10-year US Treasury rates exceeding the 3.9% threshold, up to 3.93%, a record since November 10 of this year. 2022. Two-year Treasury yields rose to 4.69%.