The U.S. Treasury yield rose to 2.28%, which is the highest record since 2019
Monday morning was an overwhelming morning for Wall Street and investors as a result of the recent comments by Powell, the Fed chairman. The market is changing rapidly, and we’re afraid it’s taking a negative direction.
According to Reuters, the Wall Street indexes fell today. The Nasdaq fell by 0.5%, the Dow index plummeted by 0.7%, and the S&P declined by 0.2%. For the Nasdaq index, reports indicate that it has recorded new 52-week highs and no lows.
The Russian-Ukrainian military conflict is taking a brutal path. The Russian army is a stop away from the invasion of the whole country. As a result of the military operation now, Russia is taking control of major exports, considering Ukraine was a major export country to Europe and the world.
The market is reflecting the news negatively, as are traders and investors. According to the Ford Company CEO, the European market just took a big hit. The semiconductor industry in Europe is now suffering from a chip shortage. In some ways, that will slow down the EV market and the SUV market as well. Tesla, Ford, Nio, Xpeng, and other names that have different headquarters in Europe will have to adapt to the new changes. Experts believe that over the long term, the shortage of semiconductors will lead to a shortage in units’ production. Therefore an increase in prices.
In his remarks, Powell hints that to fight inflation and cool down prices, the FED might become wildly aggressive in the next meeting. Initially, Federal Reserve policymakers state that all hikes will be equal. But in light of recent events, the chance of a 50% interest hike in the next meeting is increasing.
On top of that, after a sharp increase in energy prices last week, today’s energy stocks surged. Oil stocks climbed by 6%. Repeating March’s first week of increases. The increase in energy stocks came as a direct result of the shortage in oil supplies and the fears of a long-term war scenario.
Treasury yields in the United States have risen to 2.28%, the highest level in the last two years. Last week, the Federal Reserve lifted its central bank interest rates by 25 basis points. As a reflection of the increases, treasury yields are slightly increasing, as are mortgage rates.
Traders now are positive that the Federal Reserve policymakers will lift interest rates by 50%.
What does that mean for the market?
The U.S. economy is now facing complex challenges in the form of a combination of inflation and recession. A 50% interest hike will make it difficult to borrow money from banks. This usually means you will have to pay extra interest on the money you borrow. The private sector in the U.S. is already taking hits as a result of labor shortages and high material costs.
Russia is one of the world’s largest exporters in terms of oil, materials, food, and other essential exports. By sanctioning Russia, the economy will have to deal with the economic effects.
The U.S. Treasury yield rose The U.S. Treasury yield rose The U.S. Treasury yield rose