The dynamic at the beginning of the year has changed completely, stalled in its tracks by the more aggressive approach of the US Federal Reserve. A tipping point that pushes bond yields to new highs, directly affecting technology stocks.
On Wall Street, the S&P 500 closed 1.8% lower on Tuesday and the Nasdaq Composite 2.6%, weakened by tensions in the interest rate markets and disappointing results from Goldman Sachs. The yield on the US 10-year bond exceeded 1.87% for the first time in two years, while the yield on the two-year bond settled above 1%, up 30 basis points since the beginning of the year.
Asian markets followed suit this morning, with the Nikkei in Tokyo ending 2.8% lower, while China’s CSI 300 index fell 0.8% despite expectations of monetary easing from the country’s central bank.
The German 10-year yield is in positive territory
It now appears that the market has anticipated the possibility of four Fed rate hikes this year. Speculation is rife about an initial rally of half a point in March, versus a previously estimated quarter of a point.
Outside the US, the risk of lower inflation, fueled by tensions in supply chains and rising energy prices, is particularly evident with the increase to 5.4% over one year of UK consumer prices in December, the highest level since March 1992 after 5.1% in November. In Germany, the increase was confirmed at 5.7%. The 10-year bond yield is trending slightly higher at 0.040%, its first move into positive territory since May 2019.
These price tensions are adding to pressure around central banks. ” If inflation proves to be more stable, there is no doubt that we will have the will and ability to adjust our monetary policy more quickly, to ensure a return to our 2% target. This was stated by François Villeroy de Gallo, Governor of the Bank of France and member of the Council of the European Central Bank, during a conference organized by the University of Dauphin on Tuesday.
North Sea Brent oil is still above $88, the highest in seven years, after a pipeline between Iraq and Turkey was cut off after an explosion, and tensions in the Middle East.
On the corporate front, Morgan Stanley and Bank of America will release pre-opening fourth-quarter results. Procter & Gamble and UnitedHealth Group, both components of Dow Jones, will do the same, ahead of Intel, which is in the three major indexes, after the shutdown.
New deterioration in EDF
Sanofi announced that a Phase II, Phase III trial evaluating its drug Dupixent (brand name for dupilumab) in adults with uncontrolled nodular pruritus achieved the primary endpoint and the major secondary endpoints.
Stilants. Managing Director Carlos Tavares wants to avoid plant closures in Europe but warns of the impact of electrification of the auto sector on the group’s competitiveness, he said in an interview published by reverberation.
Among analysts’ ratings, Morgan Stanley raised its recommendation for saffron From “underweight” to “line weight”. JPMorgan’s downgrade EDF From “overweight” to “underweight”. RBC has gone from “superior performance” to “embedded performance” in Schneider Electric.