Monetary policy decisions, statements, and forecasts have continued to impact trading in stocks, bonds, currencies and commodities around the world overnight. Equity and bond market momentum has been generally downward, adding to yesterday’s late afternoon selloff that was sparked by a combination of hawkish FOMC member forecasts on future US interest rates and from Fed Chair Powell at his press conference. The US central bank raised its benchmark rate another 0.75%, and FOMC members raised their Fed Funds forecasts to suggest another 1.00%-1.25% of increases could potentially be on the way by year end.
Major US indices finished Wednesday down 1.7%-1.9%, but they have stabilized this morning with the three main contracts trading flat to up 0.3%. In Europe, the Dax is down 0.6% and the FTSE is down 0.2%. Meanwhile, bond prices remain under pressure with treasury yields rising across the curve. This morning finds the 1-year, 2-year, and now the 3-year treasury note yields trading above 4.0%.
There has been significant action in currency markets overnight. Late yesterday, the US Dollar Index soared to its highest level since 2002, but it has retreated overnight and into this morning following a number of other central bank decisions. The Japanese Yen, in particular, is bouncing back soaring 2.3%. There have been reports in the media that the Bank of Japan has intervened to defend the currency after it remained dovish on interest rates at its latest meeting. The Euro and Pound are up 0.4%-0.5% this morning after the Bank of England and the Swiss National Bank announced interest rate increases of 0.5% and 0.75% today, respectively, as was expected. The Canadian Dollar is up 0.2%, Gold is up 0.3%, and Bitcoin is steady. Commodity action is mixed today with copper climbing 0.9%, WTI Crude Oil gaining 1.6%, and Natural Gas falling 1.9%.