Financial basis

US stocks suffer their worst monthly rout since March 2020

Bloomberg: US stocks suffered their worst monthly rout since March 2020 after markets were repeatedly hit by the Federal Reserve’s determination to keep raising interest rates until inflation subsides under control. The S&P 500 closed a volatile session lower. The index posted its third consecutive quarter of losses for the first time since 2009. US Treasuries fell on Friday after a late month-end sell-off, with the benchmark 10-year yield around 3.82%.

Fed Vice Chair Lael Brainard briefly assuaged concerns on Friday after acknowledging the need to monitor the impact rising borrowing costs could have on global market stability. But markets continued to be jittery as investors faced continued strength in personal consumption spending, one of the Fed’s favorite inflation indicators.

Risky assets have been in freefall since the central bank made a massive third hike last week and officials repeatedly warned of further trouble ahead. UK markets added to the stress this week, after the government unveiled sweeping tax cuts that threatened to exacerbate inflationary pressures, and the Bank of England tried to manage the ensuing chaos .

Investors are now awaiting jobs data next week for further clues on the Fed’s rate hike path. Upcoming inflation and GDP readings will also provide details on the significant easing of price pressures. All eyes will be on earnings season, which begins next month, for insight into how companies are handling headwinds including a strong dollar, rising spending and slowing demand. Fears of a global recession continue to grow as the threat of a rate hike undermines growth.

“Investors are eager and nervous to realize how dovish or hawkish global central banks are becoming as tighter financial conditions and rising interest rates weaken economic performance and threaten financial stability,” said José Torres. , senior economist at Interactive Brokers.

Geopolitical tensions also continued to simmer as Vladimir Putin vowed his annexation of four occupied regions in Ukraine was irreversible and President Joe Biden declared a massive leak from the Nord Stream gas pipeline system in the Baltic Sea an act intentional.

Some of the major movements in the markets:

Shares

The S&P 500 fell 1.5% at 4:07 p.m. PT
The Nasdaq 100 fell 1.7%
The Dow Jones Industrial Average fell 1.7%
The MSCI World index fell 1.4%

Currencies

The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.1% to $0.9804
The British pound rose 0.4% to $1.1156
The Japanese yen fell 0.2% to 144.78 per dollar

Cryptocurrencies

Bitcoin fell 0.2% to $19,470.55
Ether rose 0.1% to $1,339.75

Obligations

The yield on 10-year Treasury bills rose three basis points to 3.82%
Germany’s 10-year yield fell seven basis points to 2.11%
The UK 10-year yield fell five basis points to 4.09%

Goods

West Texas Intermediate crude fell 2% to $79.63 a barrel
Gold futures are little changed