Latest News And Breaking Headlines

US stocks and bonds under pressure after Fed minutes and UK data

Stocks and bonds came under pressure on Wednesday as investors noted disappointing earnings from US retailer Target, worse-than-expected inflation data in the UK and minutes from the latest Federal Reserve meeting in which the central bank signaled that restrictive rates may be needed “for some time”.

Wall Street’s S&P 500 stock index ended the day at 0.7 percent, while the tech-heavy Nasdaq Composite meter fell 1.3 percent.

Shares of Target fell 2.7 percent on Wednesday after the US retailer failed to meet earnings expectations for the three months to July 30 and the CEO spoke of a “very challenging environment”.

The figures were released just a day after earnings reports from retail chain Walmart and DIY chain Home Depot indicated some resilience in consumer spending, despite inflationary pressures hitting customers. Shares of Target had fallen as much as 5 percent earlier in the day.

Those market moves came as investors assessed another burst of economic data, starting with higher than feared inflation rates for the UK. The country’s consumer price index registered a 10.1 percent year-over-year increase for July, surpassing the 9.4 percent mark recorded in June and above economists’ consensus forecast of a 9.8 percent increase.

The UK’s numbers led to a decline in the country’s short-term debt, which is sensitive to changes in interest rates expectations as investors raised their estimates of how much the Bank of England would raise borrowing costs to curb rapid price growth.

The yield on two-year government bonds rose as much as 0.3 percentage point to 2.45 percent, the highest level since the global financial crisis in 2008. The yield on ten-year government bonds rose by no less than 0.19 percentage point to 2.32 percent.

Low trading volumes over the summer exacerbated movements in government bonds, said Lyn Graham-Taylor, Rabobank interest rate strategist. “Gilts have sold more than I expected given the news. The magnitude of that move has dragged Bunds and Treasuries down.”

That sale bounced off other countries’ debt markets and propelled the two-year treasury to its two-month high in early trading. The move did not last, however, as the two-year period fell after the release of the minutes of the Federal Reserve’s last policy meeting in July, when the US central bank raised interest rates by 0.75 percentage point.

The market reaction suggested that investors viewed the minutes as moderate, despite showing that Fed officials had discussed the need to keep interest rates at levels that constrain the U.S. economy “for some time” in an effort to keep the highest inflation in about 40 years. year.

Two-year government bond yields ended the day at 0.02 percentage points to 3.28 percent.

Elsewhere in stock markets, the European regional Stoxx 600 closed 0.9 percent, while the German Dax fell 2 percent. In Asia, Japan’s Topix index closed 1.3 percent, while Hong Kong’s Hang Seng rose 0.5 percent.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More