Morning Minutes

Hawkish Fed Talk Sends Yields Climbing, Stocks Slumping

morning-minutes-featured-image-currencies-650x400

Share:

Facebook
Twitter
LinkedIn
Email
Print

Yesterday’s bearish shift in sentiment toward equities has continued overnight and into this morning. US index futures are adding to yesterday’s index losses with Dow futures down 0.7% and NASDAQ futures down 1.6% after the Dow fell 0.8% and the NASDAQ fell 2.2% on Tuesday. Over in Europe, the Dax is down 1.7% while the FTSE is down 0.3%.

Despite talk of potentially more sanctions against Russia, there doesn’t appear to be a spike of fear out there. The Euro is holding steady while defensive havens like the Japanese Yen and Gold are both down about 0.2% today. This suggests that investors appear to be primarily focusing on hawkish comments out of the Fed yesterday.

Fed Vice Chair nominee Lael Brainard, an Obama/Biden appointee, has historically been one of the most dovish governors at the Fed. Yesterday, she highlighted the importance of getting inflation down and hinted that the Fed could start “to reduce the balance sheet at a rapid pace as soon as our May meeting”, in addition to continued interest rate hikes. Later in the day, the need to fight inflation was echoed by San Francisco Fed (historically one of the more dovish regional Fed banks) President Daly.

With Fed members previously considered to be on the more dovish side turning hawkish, investors responded by driving up traded interest rates, sending the 10-year treasury note yield up toward 2.60%, giving the US Dollar a boost and putting a headwind in front of stocks. Cryptocurrencies are also down today with Bitcoin falling 2.0% and Ethereum sliding 4.1%. The one bright spot so far today has been energy contracts with WTI Crude Oil up 1.4%, Brent Crude up 1.0% and Natural Gas up 4.5%.

Later today, minutes from the last Fed meeting are due but these may be overshadowed by more recent comments from Fed officials. Canada Ivey PMI is out later this morning (street 60.0) but the next main events north of the border are tomorrow’s Federal Budget, Friday’s employment report and next week’s Bank of Canada meeting.     

Subscribe to the Morning Minutes:

Today's earnings reports and market activity, delivered right to your inbox.

Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Read More

Legal and Regulatory Disclosures

Terms and Conditions:
This information is for Investment Advisors only. The website is for informational purposes only and is not intended to provide a complete description of SIA Wealth Management’s products or services. Past performance is not indicative of future results. It should not be construed as investment advice or relied upon in making an investment decision. Products and services of SIA Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. The information contained in this Website does not constitute an offer or solicitation by anyone to buy or sell any investment fund or other product, service or information to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot be legally made or to any person to whom it is unlawful to make an offer of solicitation. All products and services are subject to the terms of each and every applicable agreement. It is important to note that not all products, services and information are available in all jurisdictions outside Canada.

SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, Advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIA Wealth Management Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

INTERNET EXPLORER NOTICE