The article continues below the ad
– It’s a lot. It just shows that the market is obviously very volatile, says Stein Bruun, chief economist at Arctic.
He is referring to the sharp rise in the interest rate on US government bonds with a maturity of ten years. It is often called the world’s most important interest rate. After fresh inflation figures from the USA were released at 14.30 on Thursday, the interest rate jumped up, and it has hardly wanted to stop.
Since the release of the figures, the interest rate has risen from 4.54 per cent to 4.71 per cent. At most, it was up to 4.73 percent on Thursday. That means a jump of 19 basis points in a few hours.
The interest rate hike sent the three key indices on Wall Street straight down. This is what it looked like when Wall Street closed:
The S&P 500 fell 0.62 percent. The Nasdaq Composite fell 0.63 percent. The Dow Jones fell 0.51 percent.
Before Thursday, the US stock market had risen for four days in a row.
High interest at auction
Core inflation in the US ended as expected at 4.1 per cent on an annual basis in September. Total inflation ended at 3.7 per cent, against the expected 3.6 per cent. Bruun believes this is part of the explanation for the jump in interest rates, but not all.
The article continues below the ad
The chief economist refers, among other things, to today’s auction of 20 billion dollars worth of 30-year US government bonds, which came in at 4.837 percent. It is the highest interest rate achieved since 2007, according to Bloomberg. Bruun also points out that the interest rate has fallen back quite a bit in recent days. As a result, there may be some investors who choose to take a profit in the bonds, where the prices move in the opposite direction to the interest rates. In addition, there may be a number of market players who had positioned themselves for today’s inflation figure to be slightly lower than it was, according to Bruun.
– In the very short term, the ten-year interest rate will probably be around the levels we are at now, but volatility is high and has been for a long time, he says.
The American central bank, with Jerome Powell (on the television screen) at the helm, has unleashed heavy interest rate hikes to pull inflation down from high peaks. (Photo: Seth Wenig/AP Photo/NTB) More…
The interest rate on two-year government bonds has also risen sharply – from 4.99 per cent to 5.06 per cent.
Inflation in September was almost unchanged from the previous month.
Chief economist Marius Gonsholt Hov at Handelsbanken says there is still uncertainty around the interest rate peak in the US, but that today’s figures support that it is here.
– The Fed may have reached the interest rate peak, but it is certainly not decided. Several Fed representatives have recently talked down interest rate expectations, we could also read that in yesterday’s interest report, says Hov.
The article continues below the ad
The interest rate report clearly showed that the central bank is uncertain about the way forward. Ahead of the court report, long-term interest rates also fell a good deal, from very high levels.
– It does part of the tightening job for the Fed, and therefore diminishes the need to increase the key interest rate, says Hov.
The dollar is strengthening
The market is now pricing in around a 40 percent probability that interest rates will be raised at the US central bank’s (Fed) rate meeting in December. Otherwise, the dollar rises somewhat on Thursday. So does the VIX index, often referred to as the fear index.
Car manufacturer Ford fell two percent after the United Auto Workers (UAW) union surprisingly extended the strike to include Ford’s Kentucky plant that produces SUVs and pickups. It is the company’s largest facility measured both in terms of revenue and number of employees.
The car manufacturer Ford falls on the stock market after new strikes by the UAW trade union. (Photo: Luke Sharrett/AFP/NTB) More…
Pharmacy chain Walgreens rose seven percent after presenting figures for the third quarter.
The spot price of Brent North Sea oil, which is used as a reference for oil trading worldwide, is up around one percent for the day.
The article continues below the ad
Highest interest rate in 22 years
US central bank chief Jerome Powell and his colleagues at the Fed have raised interest rates to the highest level in 22 years in the fight against inflation. At the time of writing, the key interest rate is in the range 5.25-5.5 per cent.
On Wednesday evening, the minutes from the September meeting were published, and the Fed is clear in its speech: “Interest rates must remain high until they are sure that inflation is on its way back to the target of two percent.” The central bank, on the other hand, is more uncertain whether a new interest rate hike will be necessary or not.
The majority of members considered it so that another increase in the policy rate at one of the next meetings will be natural, while a minority considered it likely that no further increases will be necessary, according to the minutes.
DN and the dog Arthur explain inflation
Why has everything become so much more expensive?
02:17
Published: 17.07.23 — 11:41
*(Terms) Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For further terms see here.
2023-10-12 18:59:35
#Strong #interest #rate #jump #hours #lot
