October 25th 2022, 1:14:44 am
(about 7 months ago)
After a good run last week, North American equities gave up some of the gains in the past two days as the reality of more interest rate hikes and possible recession haunted markets again. S&P 500 and Nasdaq declined 1.02% and 0.68% respectively and Canada’s S&P/TSX lost 1.33%. Real estate and energy sectors are the biggest decliners month to date on higher mortgage rates and lower energy prices.
The US Treasury yield jumped back with two-year surpassing 4.25% again, showing another percentage of an interest rate increase, currently at 3.25%, expected by markets. Central bank officials have made it clear that they will continue raising rates unless they have clear evidence that inflation has peaked.
Economic data still send mixed data but overall shows the strength of the US economy and more likelihood of the Federal Reserve continuing with their tightening program. The US unemployment application rose to 219,000 last week but was still at historic lows, and the private sector added 208,000 jobs in September, exceeding expectations.
The higher interest rates keep pushing the US dollar higher against other major currencies like Norwegian Krone, New Zealand Dollar, and Japanese Yen, which are crushed year to date.