Fed Minutes Scared Investors
Minutes from the Fed's December meeting released on Wednesday, January 5, showed that officials had discussed tapering the U.S. central bank’s asset holdings amid surging omicron infections setting new daily records as well as raising interest rates sooner than expected to fight inflation.
Minutes from the Fed's December meeting released on Wednesday, January 5, showed that officials had discussed tapering the U.S. central bank’s asset holdings amid surging omicron infections setting new daily records as well as raising interest rates sooner than expected to fight inflation. Therefore "many" judge the appropriate pace of the Fed's balance sheet reduction should be faster this time.
Investors said the hawkish signal bolsters the case for those who believe the central bank will need to act more decisively in order to contain inflation. This can spark further bets on higher bond yields while continuing to shake up the growth and technology shares that powered last year’s dynamic stock rally.
As a result, stocks extended declines yesterday after the release of the minutes, led by a selloff in technology and growth shares. Bond yields conversely rose, with the benchmark U.S. 10-year yield rising to its strongest level since April 2021.
China’s PBOC Surprised by Countering Western Central Banks while Cutting Interest Rates
China lowered a key interest rate for the first time since the peak of the pandemic in 2020 as a property-market slump and repeated virus outbreaks dampened the nation’s growth outlook. Bonds rallied.
Make No Mistake: Current Inflation Snapshot and Outlook are Really Intimidating
U.S. consumers have been facing the steepest price increase in almost four decades, paying more for everything from cars to gasoline to food as uncomfortably hot inflation erodes most workers' wage gains.
Bank Stocks Should Not be Omitted Eyeing Fed’s Intention to Raise Rates
Equity markets are becoming increasingly bifurcated, as value stocks are outperforming growth stocks given the complex factors at play with the Federal Reserve and the economy.
