August 10, 2022
Futures Surge, Yields Sink as Fed-Hike Bets Recede: Markets Wrap
Stock futures surged, while bond yields tumbled after softer-than-estimated inflation figures suggested that prices may have peaked, bolstering speculation on a smaller pace of Federal Reserve hikes.
S&P 500 contracts jumped, indicating the benchmark gauge will halt a four-day losing streak. The dollar fell against all of its Group-of-10 peers. Treasury 10-year yields plunged below 2.7%. The two-year rate briefly reached more than 58 basis points above the 10-year yield — a level last seen in the early 1980s, according to Bloomberg data — before shifting back to around 41 basis points.
ECB Inflation Response Was ‘Firmly Grounded’ in Strategy Revamp
The European Central Bank’s response to unprecedented inflation is “firmly grounded” in the strategy it adopted last year, helping to anchor expectations for price gains “more solidly,” according to a blog post on the institution’s website.
Current “undesirably high inflation” follows a long battle against deflationary trends in the 19-member euro zone, with the transition from record-low interest rates needing to be “gradual,” authors Ursel Baumann, Christophe Kamps and Manfred Kremer said.
China’s Central Bank Warns of Inflation Risks as CPI Climbs
The People’s Bank of China said it will safeguard the economy against inflation threats, pledging to avoid massive stimulus and excessive money printing to spur growth.
The central bank will both support economic growth and ensure stable prices, the PBOC said in its quarterly monetary policy report released Wednesday. At the same time, it will provide stronger and higher-quality support to the real economy, it said.
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