US equities and bonds plunge on the hawkish tone from the central bank

🏦 US equities and bonds plunge on the hawkish tone from the central bank.🏦

The volatility in US markets elevated today on the hawkish tone from Federal Reserve Governor Lael Brainard, who noted that US central bank would speed up financial policy tightening as soon as May.  The extensive money supply and historic near-zero interest rates increased the inflationary pressure on the US economy. The central bank is determined to reverse the policy to shrink its balance sheet to bring the record-high inflation of 7.91% back to the 2% target.  

The US S&P 500 and Nasdaq declined 1.26% and 2.26%, respectively. Canada’s S&P/TSX composite lost 0.7%, and European markets were mixed with Euro Stoxx 50, losing 0.84%. The 10-year Treasury yields rose for the third day to a three-year high, standing at 2.56%. The yield curve remains inverted, with short-term interest rates higher than long-term interest rates, which indicates that the US economy may be heading toward a recession.

 

Oil prices remain elevated, with West Texas Intermediate crude standing at 100.3 with a new round of sanctions from Europe on Russia ratcheting up the geopolitical tensions and prolonging Russia’s invasion of Ukraine. US dollar continues to weaken against the Canadian dollar at 1.24 CAD.