[U.S. market]Stocks sold, hawkish Fed likely to continue – dollar low 145 yen – Bloomberg

The US stock market fell sharply on the 7th. The U.S. employment report showed a strong labor market, and the Fed’s aggressive interest rate hikes are likely to continue. The 10-year U.S. Treasury yield has posted its longest consecutive weekly rise since 1984. The dollar/yen exchange rate is in the low 145 yen range.

  • US stocks continue to fall sharply, accelerating selling on the view that the hawkish Fed will continue
  • U.S. Treasuries fall, 10-year yield rises for 10th consecutive week
  • US Dollar Continues to Rise Against Yen in the Lower 145 Yen Range – US Employment Statistics
  • NY crude oil rises for 5 days in a row, weekly high since March-supply concerns
  • New York gold falls, Fed expected to continue hawkish trajectory-US employment data

The S&P 500 fell 2.8% to 3639.66. Nearly 95% of the constituent stocks fell. The Dow Jones Industrial Average fell by $630.15, or 2.1%, to $29,296.79. The Nasdaq Composite Index fell 3.8% and the Nasdaq 100 Index fell nearly 4%.

David Donabedian, chief investment officer of CIBC Private Wealth Management, said the jobs data put an “exclamation mark” on the idea that the process of bottoming out the market would be protracted. eToro’s Carey Cox said that in a “strangely reversed world” of big rate hikes, the strong stat could be taken as one reason to brace for turmoil. A 75-basis-point rate hike in November is a “definite thing,” said Win Singh of Brown Brothers, who said a 75-basis point hike in December was becoming more likely.

U.S. Treasuries plunge across the board, yields reach record highs of the weekreached. As of 4:15 p.m. New York time, the 10-year yield rose 6 basis points to 3.88%. It rose for 10 consecutive weeks on a weekly basis. Swaps markets have priced in a rate hike of nearly 75 basis points at the Federal Open Market Committee (FOMC) meeting in November. The peak level of the policy interest rate indicated by the money market also rose.

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New York Fed President Williams said the policy rate will eventually need to rise to around 4.5%. He simply said the pace of the rally and peak in this tightening cycle would depend on economic conditions ahead. In recent days, other Fed officials have also taken a decisive hawkish tone.

New York Fed Governor Says Policy Rate Will Raise to Near 4.5% to Curb Inflation

Investors’ attention will shift to US inflation data and the FOMC meeting minutes (September 20-21) to be released early next week.

In the foreign exchange market, the Bloomberg Dollar Spot Index, which shows the dollar’s movement against 10 major currencies, rose 0.4%. The view that hawkish monetary policy will continue in response to the US employment data has strengthened. The Canadian dollar also outperformed other currencies on the back of better-than-expected Canadian employment data and higher oil prices.

Deutsche Bank’s Alan Ruskin said in a note after the jobs report that there was little to prevent the Fed from reacting aggressively to a large inflation overshoot. “The jobs report gives the authorities (hawkish) latitude. As long as the economy is strong there is no incentive to change policy,” he said.

The dollar continues to rise slightly against the yen. At one point, it was priced at 145.44 yen. As of 4:15 p.m. New York time, the dollar/yen rose 0.2% to 145.37 yen to the dollar. The euro fell 0.5% against the dollar to $0.9738 per euro.

Dollar/yen spot market (white line) and September 22 closing price (orange dotted line)

Source: Bloomberg

New York crude oil futures rose for a fifth straight day. On a weekly basis, it was the sharpest high since early March. Despite simmering macroeconomic uncertainties, the supply outlook was further deteriorating.

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Time spreads, the price differentials between futures months, were in short supply even before OPEC+, a group of OPEC and major non-member oil producers, announced major production cuts this week. was suggested.

Analysts at fuel wholesaler TAC Energy said: “Supply concerns appear to be the main driver of market movements this week, with demand concerns taking a back seat, even as demand concerns remain central in the stock market. No,” he said in a report to clients.

Output reduction by alliance set to tighten market further

The West Texas Intermediate (WTI) futures contract on the New York Mercantile Exchange (NYMEX) for November closed at $92.64 a barrel, up $4.19 (4.7%) from the previous day. It rose more than 16% for the week. London ICE’s North Sea Brent December delivery rose $3.50/bbl on the day to $97.92/bbl.

New York gold prices fell. Spot prices dipped below $1,700 per ounce. Selling was fueled by a still-tight labor market in the U.S. jobs report that suggested the Fed would maintain its hawkish policy trajectory.

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