[Mercato USA]Stocks rebound, even more interest rate hike speculation is buying the dominant dollar into the low-140 yen range – Bloomberg

The US stock market rebounded on the 18th. The buying prevailed even as Fed officials warned of another rate hike. The yen depreciated slightly against the US dollar to as low as 140 yen.

The S&P 500 index rose 0.5% to 3965.34. The Dow Jones Industrial Average rose $199.37, or 0.6%, to $33,745.69. The Nasdaq Composite Index rose less than 0.1%. The S&P 500 fell 0.7% and the Nasdaq 100 index fell 1.2% for the week.

It was a day for options that tend to be volatile ($2.1 trillion in value), but trading was thin.

US Treasury yields continued to rise a day after aggressive statements by US Fed officials continued yesterday. St. Louis Fed Chairman James Bullard said the Fed would need to raise interest rates “at least” by 5% to 5.25% to slow inflation. A day earlier, Minneapolis Fed Chairman Neel Kashkari said, “It’s debatable how high interest rates need to be to balance demand.”

St. Louis Fed Chairman Says Rates Need To Go “At Least” To 5-5.25%

The Minneapolis Fed is not yet at the end of its rate hike streak

“Markets are getting more confident and realistic about a rate hike to 5% or 5.25% next year,” said David Donabedian, chief investment officer at CIBC Private Wealth Management. I think he’s looking at the light at the end of the tunnel,” he said.

“The Fed has repeatedly said it’s not done squeezing inflation, but the market isn’t fully listening,” said Quincy Crosby, chief equity strategist at LPL Financial. take advantage of the Fed’s decision to slow rate hikes to 50 basis points at its Dec. 14 meeting.”

US Treasuries continue to fall. As of 4:22 pm New York time, the 10-year yield was up 6 basis points to 3.83%.

The dollar is solid in the foreign exchange market. The dollar index rose 0.5% for the week, its first gain in five weeks. The purchases gained momentum on the back of the outlook for the trajectory of the Fed’s rate hike.

The Bloomberg Dollar Spot Index, which tracks the movement of the dollar against 10 major currencies, rose 0.2%. As of 16:24 New York time, the dollar was up 0.1% against the yen at ¥140.39. The euro fell 0.4% against the dollar to $1.0324 per euro.

MUFG Bank forex analyst Lee Hardman said in a report that the Fed is pushing market expectations for terminal rates (towards the 5% range), as suggested by St. Louis Fed Chairman Bullard on Wednesday, noting that they might try to withdraw. “As US Treasury yields rise, this strategy could lead to a dollar rally. But for the dollar to return to the cyclical highs it reached in late September, it will take a major risk-off event. I think,” he said. . .

New York crude futures fell for the third day in a row. On a weekly basis, the stock is down 10%, the biggest drop since April. The stagnation of Chinese demand and the tightening of monetary tightening have completely changed the sentiment of the market. All gains after major oil producers cut production have been lost.

West Texas Intermediate (WTI) futures for December delivery on the New York Mercantile Exchange (NYMEX) fell $1.56 or 1.9 percent from the previous day to $80.08 a barrel. The London ICE North Sea Brent contract for January fell $2.16 to $87.62.

WTI’s December spread over its January delivery turned negative that day, reverting to a positive spread suggesting oversupply. This is the first time since last year that the spread has been positive.

New York gold futures continue to fall. On a weekly basis, it was the first decline of the month. This week, several Fed officials dismissed the prospect of halting rate hikes.