The U.S. 10-year Treasury yield rose by +6% as the market moves to close today’s catastrophic losses.
Without a doubt, the Wall Street index is having one of its worst opening days since 2018, if not longer. The 10-year Treasury yield in the United States peaked at 3.094%. The big jump in bond treasuries was due to interest rate hike risks, inflation pressure, and the drop in investors’ confidence in the U.S. economy.
According to David Keller, a chief market at Stokkarts.com, the goal for the U.S. treasury yield is to hit 3.25%. From his perspective, that’s the next objective for the 10-year Treasury yields to bring things to the pre-pandemic levels.
Yet, the consequences and the threats of a 50 basis point hike are clear today, especially in the housing market. We will likely see a sliver increase in mortgage rates and housing prices in the next couple of months.
The Dow Jones industrial average is currently down by 3.28%, the Nasdaq is down by 5.1%, and the S&P has retreated by 3.7%. The setback for the big three industries came as a result of big tech stocks that failed in the first quarter. Amazon is still down by 7.71% after disappointing first-quarter earnings results.
Both Meta and Netflix are still ranked low in comparison to last year and the year before.AMD is down by 5.1% and Apple declined by 5.56%. According to Morgan Stanley, we are more likely to see another 50bp interest hike in the next few months than the Fed will lower it to 25bp. Yet, in his latest conference, the FED chairman said that they are considering a 75 bp interest hike by the next meeting. Jerome added that inflation is much too high and the central banks are moving expeditiously to bring it down. This statement by Jerome supports the possibility of a more aggressive interest hike by July, estimated at 75 bp.
Experts are divided on whether or not inflation has peaked, putting enormous pressure on policymakers. Economic growth and peak inflation are viewed as the primary factors that will relieve the FEDs of their burden.
The inflation rate surged 8.5% a year over a year to the highest level since 1982, and it’s going up with no convincing signs of slowing down.
The key variables that could lower and cool down the hot market would be a strong economic rebound and a compromise solution between Russia and Ukraine.
Arguably, the war ongoing between Russia and Ukraine has pushed energy and material prices too high levels. TAs the United Nations’ effort to find common ground and a compromise solution continue, the key solution in this crisis is compromised.
The pace of price hikes won’t end anytime soon. We will see high increases in the costs of ingredients, food, energy, and products. Due to improvements in labor sectors and incomes, the average American consumer has been able to keep up with these high prices until now. But the question that consumers ask now is, when can we keep the Federal Reserve from slowing down inflation?
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