Government Bond Yields Rise as Central Banks Hint at Rate Hike

In the US financial market on the 22nd, government bond yields rose. The world’s major central bank officials said they were not ready to declare victory in curbing inflation and hinted at the possibility of another rate hike.

JGB latest price vs. previous business day (bp) rate of change US 30-year bond yield 3.87% 6.11.59% US 10-year bond yield 3.79% 7.62.04% US 2-year bond yield 4.79% 7.61.61% US Eastern Time 16:00 56 minutes

Two-year U.S. Treasury yields hit their highest level since March. Federal Reserve Chairman Jerome Powell said he thought one or two more interest rate hikes might be needed this year, and the Bank of England was on pace to tighten. , and warned that further interest rate hikes may be needed.

Powell may need one or two more interest rate hikes this year – Senate testimony (1)

Bank of England accelerates rate hike, unexpected 0.5 points to 5% policy rate (3)

US stocks

The S&P 500 stock index rebounded for the first time in four business days. Most of the day was unsettled. KB Home fell after disappointing earnings guidance. The Nasdaq 100 index, which is dominated by large tech stocks, rose 1.2%. Amazon.com, Apple, and Microsoft were all bought.

S&P 500 Stock Index 4381.8916.200.37% Dow Jones Industrial Average 33946.71-4.81-0.01% Nasdaq Composite Index 13630.61128.410.95%

“The central bank said ‘action is not enough’. At the beginning of the year, officials thought they had done enough and everyone thought we were going into a recession,” said Philipp Colmer, global strategist at MRB Partners. But now the data continues to show that we are moving away from that scenario.” “Without a recession, it’s really hard to push core inflation down because to do that you need a weak job sector.”

Christina Hooper, chief global market strategist at Invesco, said the Fed risks sending the economy into a “deep recession” if it actually tightens two more times this year. “Again, there is a long lag between when monetary policy is implemented and when it actually shows up in real economic data,” he said, adding, “Because of those lags, most of the impact is still not being seen. No, so we have to be very vigilant about going too far.”

Marco Kolanovic, market strategist at JPMorgan Chase & Co., said the second half of the year could be a turbulent one for U.S. stocks as the Fed’s rapid rate hikes have a lag effect on the real economy. showed the point of view.

US stocks will struggle in 2H without rate cut, says JPMorgan’s Kolanovic

foreign exchange

In the foreign exchange market, the yen weakened against all 10 major currencies. Against the US dollar, the exchange rate fell to the 143 yen level for the first time since November last year. The Swiss franc fell to its lowest level since the transition to a floating exchange rate system, and against the euro it fell to its lowest level since 2008. This is because Japan continues its monetary easing measures, while other major countries and regions are actively raising interest rates to curb inflation.

Yen hits all-time low against Swiss franc, approaches 143 against US dollar (3)

Bloomberg Dollar Index 1226.503.830.31% USD/JPY¥143.12¥1.240.87% EUR/USD$1.0955-$0.0031-0.28% 16:56 US Eastern Time

“The root cause of the yen’s depreciation is interest rate differentials,” said Mark Chandler, chief market strategist at Bannockburn Global.

“The only thing that can reverse the yen’s weakness is a policy change by the Bank of Japan or a fall in U.S. Treasury yields,” said Kit Jacks, chief global FX strategist at Societe Generale. “Our economists expect the BOJ to act in July on yield curve control (YCC), and our rates strategist thinks Treasury yields will turn lower soon, but that Until it happens, the frustration will continue.”

crude

Crude oil futures in New York fell sharply. Market sentiment deteriorated due to the global tightening of monetary policy aimed at fighting inflation.

Weekly inventory data released by the U.S. Energy Information Administration (EIA) showed crude stocks fell by about 4 million barrels, but that didn’t dampen the risk-averse mood. The U.K. and Norwegian central banks decided to raise interest rates on Monday, following Fed Chairman Jerome Powell’s remarks earlier in the day that another rate hike is likely to be justified. Concerns have risen that the economy will cool as a result of global monetary tightening aimed at curbing inflation.

“West Texas Intermediate (WTI) is at $70,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. “Supply and demand factors are out of line with day-to-day price movements, and the market will continue to be very volatile until macro and supply/demand factors converge,” he said.

WTI futures for August delivery on the New York Mercantile Exchange (NYMEX) closed at 69.51 barrels per barrel, down $3.02 (4.2%) from the previous day. London ICE North Sea Brent August delivery closed at $74.14, down $2.98, or 3.9%.

Money

The New York gold market continues to fall. Fed Chairman Jerome Powell reiterated his intention to continue raising interest rates, pushing U.S. Treasury yields higher and weighing on gold prices.

Spot gold was down 0.9% from the previous day to just $1,915 an ounce as of 2:25 pm New York time. Gold futures for August delivery on the New York Mercantile Exchange (COMEX) fell by $21.20, or 1.1%, to close at $1,923.70.

Original title:Bond Yields Climb on Hawkish Central Bank Warnings: Markets Wrap(excerpt)

Yen Slumps Broadly as Bank of Japan’s Policy Diverges From Peers(excerpt)

Yen Falls to Record Low Against Swiss Franc on Policy Divergence(excerpt)

Oil Sinks as Hawkish Fed Spooks Investors, Overshadows EIA Data(excerpt)

Gold Slips as Treasury Yields Rise on Hawkish Powell Comments（抜粋）

2023-06-22 21:01:00
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What factors contributed to the weakening of the yen in the foreign exchange market

In the US financial market on the 22nd, government bond yields increased as major central bank officials expressed concerns about inflation and the possibility of further rate hikes. The rise in yields affected various aspects of the market, including stocks, foreign exchange, crude oil, and gold.

Government bond yields rose, with two-year U.S. Treasury yields reaching their highest level since March. Federal Reserve Chairman Jerome Powell indicated the need for one or two more interest rate hikes this year, while the Bank of England unexpectedly raised its policy rate by 0.5 points to 5%.

Despite initial volatility, the S&P 500 stock index rebounded after three consecutive days of losses. Large tech stocks like Amazon.com, Apple, and Microsoft performed well, resulting in a 1.2% increase in the Nasdaq 100 index.

In the foreign exchange market, the yen weakened against all major currencies due to Japan’s continuing monetary easing measures and other countries raising interest rates. The exchange rate against the US dollar reached its lowest level since November last year, and against the Swiss franc, it hit an all-time low. The Swiss franc also fell to its lowest level since 2008 against the euro.

Crude oil futures in New York experienced a sharp decline as market sentiment deteriorated due to the global tightening of monetary policies aimed at combating inflation. Despite a decrease in crude stocks according to data from the U.S. Energy Information Administration, concerns remained about the impact of global monetary tightening on the economy.

In the New York gold market, prices continued to fall as the Fed’s comments on further rate hikes raised concerns among investors.

Overall, the rise in government bond yields and the cautious stance of major central banks regarding inflation and interest rates influenced various sectors of the US financial market, including stocks, foreign exchange, crude oil, and gold. Investors are closely monitoring these developments and their potential impact on the overall economy.