(Bloomberg) — US futures pointed to extended losses on Thursday, as US 10-year Treasury bonds topped 4% for the first time since November in a sign that the Federal Reserve’s warnings of higher-for-longer interest rates are finally sinking in.
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Contracts on the rate-sensitive Nasdaq retreated 0.5%, underperforming after both it and the S&P 500 index ended February with losses. Europe’s Stoxx 600 equity gauge wavered after erasing an earlier loss of as much as 0.6%. In the US premarket, Silvergate Corp. plunged as much as 32% after the crypto-friendly bank said its weighing the viability of its business and Tesla Inc. retreated as much as 5.7% after the electric-vehicle maker’s investor day disappointed analysts.
The focus now is on how much higher interest rates might go in the US and eurozone, with swaps markets now pricing a peak Fed policy rate of 5.5% in September, and some even betting on 6%. US 10-year yields, the main reference rate for the global…
2023-03-02 06:24:22
Article from finance.yahoo.com
US markets reacted negatively this past week to higher rate messages in the wake of Federal Reserve Chairman Jerome Powell’s congressional testimony. Futures fell around 1% in premarket trading following Mr. Powell’s remarks.
On Wednesday Mr. Powell delivered a somewhat hawkish message during the Question and Answer section of his testimony, telling Congress that the Federal Reserve would continue to discuss the possibility of raising interest rates in the near future in order to keep economic growth on track.
The response was swift. In trading on Wednesday, the S&P 500 and the Dow Jones Industrial Average both fell nearly 2%, and the Nasdaq Composite fell nearly 3%.
The fall was compounded by President Trump’s comments on Thursday questioning the Fed’s actions, adding to the wave of negative sentiment among investors.
It appears that the markets are not confident in the idea of higher rates, with the suggestion that it may slow down economic growth. Investors fear higher rates will make it more expensive to borrow money and could dampen consumer spending.
Though it’s unlikely the Federal Reserve will make any decisions right away, one thing is clear: the markets are sensitive to the possibility of higher rates and are likely to remain volatile until the Fed makes its next statement.
In conclusion, investors should keep a close watch over the Federal Reserve as it continues to discuss the possibility of higher interest rates. The markets will continue to be influenced by Fed statements and new economic data, so it’s important for investors to stay informed throughout the process.