February 23, 2024

US Stocks Shed Gains Early, Bonds Slide

Stocks in the US shed gains while Treasury bonds managed just to steady on Wednesday. It was the aftermath of the producer price report that put pressure on the Federal Reserve. The markets in the UK were also disturbed by policy fears once again.

The UK is Still Rocked Hard

The S&P 500 index traded away its session high while it tried to stage a recovery. The index had suffered a losing streak for five consecutive days. Consumer goods and healthcare were on top of the upbeat items led by Pepsi and Moderna.

Nasdaq 100 also shed gains. Treasuries changed just a little bit as the two-year yields held close to 4.3%. The US Dollar remained steady through it all.

Shares of Pepsico. rose higher after it increased its annual forecast. It came on the back of profits for the third quarter which came in better than expected. Moderna also rose following announcements from Merck and Co. on ways to work with Moderna on a cancer vaccine.

Reports show that prices paid to producers in the US increased in September more than expected. It was released ahead of the consumer price index expected to be published on Thursday. The consumer price index is expected to get back to a forty-year high.

The thirty-year bond yield increased by over 5%. This followed the Bank of England’s confirmation of its means of ending the emergency bond-buying. The Pound, however, rallied over $1.10.

More Rate Hikes Ahead

The Bank of England also gave signs that interest rates might rise yet again in November. It also noted that households might get strained over debt repayment. The repayments might be as huge as the pre-2008 financial crisis.

State Street’s Global Head of Macro Strategy, Michael Metcalfe, said the BOE is a hawkish test case. He said central banks can be that way without damaging financial stability.

Kristina Hooper also said via a recent note that inflation is yet to see a meaningful decline. This is despite the fact that the global economy has slowed following rate hikes.  She said this is a rare monetary policy situation and everyone is waiting to see if something happens.

Credit Suisse Group’s shares are still down. It started to slide after it came under US investigation for helping customers hide their assets. LVMH jumped higher after it increased its quarterly sales as a result of the strong Dollars.

Crude prices still fluctuated. OPEC+ reduced the production quota for its members this quarter. Meanwhile, President Putin said energy infrastructures around the world are at risk after the Nord Stream vandalization.  

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