Stocks and US equity edged lower Thursday as the dollar continues to dominate after high US inflation data increased concerns about more aggressive Federal Reserve Monetary tightening, which could cause a global recession.
Despite Chinese technology stocks edging slightly higher, An Asian share index has struggled to gain traction. Similarly, S&P 500 and Nasdaq 100 contracts have remained largely in the red, and those in Europe haven’t shaken up yesterday’s sell-off.
Traders have now shifted their focus to a historical 1% point Fed interest rate hike later this month, following the U.S CPI report rising to 9.1. On a positive note, the Fed Bank of Atlanta President, Raphael Bostic, stated that everything is in play to combat price pressures.
Meanwhile, the dollar has continued to push higher, reaching its highest level in over two years. Also, the Treasury two-year yield, which is quite sensitive to Fed’s move, rose while longer maturity rates have remained more stable. It is important to note that the inversion between two-year and 10-year yields, two very potent recession indicators are at their lowest since 2000.
Elsewhere, the euro reached parity on Wednesday and edged slightly lower, owing to the energy crisis rocking Europe and the war in Ukraine. The yen has also dipped, with oil hovering around $96 a barrel. Bitcoin, the leading cryptocurrency by market cap, fell sharply after Wednesday’s US inflation data report. Today, it has rallied past its significant price of $20,000 amid bankruptcy filing from top crypto lender Celsius Network.
In Singapore, the country’s currency gained as investors expect more aggressive monetary tightening, part of a global movement to cut down the cost of living. Australian bond yield rallied on a strong jobs report, which boosted the case for increased borrowing.
With the latest US inflation data report, there are tons of questions as to whether this is the peak of US inflation. Commodity prices, which edged higher partly because of supply disruptions as a result of the war in Ukraine have moderated recently.
As of the time of writing, the market has remained choppy. Investors will be looking forward to the New York trading session for more activities.
