By Isabelle Lee and Emily Graffeo
April 8, 2022 — 5.29am
Markets stabilised on Thursday in New York as traders weighed comments from Federal Reserve officials following minutes from the central bank’s latest meeting, which provided more clarity on the central bank’s campaign to quell rampant inflation.
US equities rebounded from an earlier decline while the US Treasury curve steepened with 10- and 30-year yields rising to the highest level since 2019.
Wall Street has rallied higher in the afternoon.Credit:AP
In late trade, the S&P 500 is 0.7 per cent higher the Dow Jones has added 0.4 per cent and the Nasdaq has gained 0.4 per cent. The Australian sharemarket is set to rise, with futures at 5.11am AEST pointing to a jump of 52 points, or 0.7 per cent, at the open.
St. Louis Fed President James Bullard said he favours raising rates to 3 per cent to 3.25 per cent in the second half of 2022. Meanwhile, the Fed’s Charles Evans and Raphael Bostic have begun speaking at separate events, with traders parsing comments for future hints on Fed policy.
“The soft landing that the Fed so desires is easier said than done, especially in an environment when inflation is so high and energy prices are through the roof. And when you consider the kind of tightening that’s being proposed, the economy is going to have to display incredible resilience to weather the storm,” Craig Erlam, senior market analyst at Oanda, wrote in a note.
Data Thursday showed applications for US state unemployment insurance fell last week by more than forecast, backing the Fed’s contention that the economy is strong enough to withstand rate increases. Meanwhile, crude oil fell in New York, lessening some price fears, after the International Energy Agency announced they would be adding 240 million barrels of oil to the global supply given the crisis in Ukraine. The dollar strengthen against major peers.
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The Fed minutes Wednesday showed officials were focused on tamping down inflation and outlined plans to pare its balance sheet by more than $US1 trillion ($1.3 trillion) a year. Though hawkish, the minutes provided some clarity for investors who were concerned that a too-steep tightening path could stall economic growth.
“With a clear vision of the cadence and tempo of both rate hikes and balance sheets reduction, the market’s reaction function to hawkish commentary should be far less volatile,” wrote Art Hogan, chief market strategist at National Securities.
The Europe Stoxx 600 declined on Thursday while shares of Atlantia SpA, the billionaire Benettons’ highway and airport group, held on to gains after a non-binding bid from Global Infrastructure Partners and Brookfield Asset Management. The European energy sector ended in the red as Shell’s hit from its withdrawal from Russia weighed on oil producers.
Bloomberg
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