While US market futures and Europe’s Stoxx 600 remained almost unchanged, 10-year Treasury rates increased by two basis points to 4.6%. With the oil price slide gaining pace, West Texas Intermediate crude futures fell below $77, almost to a three-month low. For the third day in a row, the dollar strengthened.
Traders have been attempting to predict the degree to which central bankers across the world would resist the decline in government bond rates, which might impede attempts to control inflation. Ahead of any talk of rate reduction, Bank of England Governor Andrew Bailey cautioned on Wednesday, while three other rate-setters in the euro zone gave indications that tight policy will continue.
Meanwhile, Fed Governor Lisa Cook warned that rising global tensions might have unfavourable effects, such as increased inflation. Powell and John Williams, the president of the New York Fed, are next. It is widely anticipated that they would downplay the possibility of policy easing, much like other officials.
Fed speakers “will try to jawbone and cool market expectations for rate cuts,” according to Bank of Singapore senior fixed-income analyst Todd Schubert, who is based in Dubai. “Until there is more concrete evidence of a sharply declining trajectory in inflation, the market is underestimating the Fed’s resolve to bring down inflation to 2%. As a result, we would not expect a sustained rally in risk assets.”
HSBC Holdings Plc strategists believe that global stocks might be set for a double-digit gain in 2024 if the Fed executes a monetary policy shift and prevents a recession in the economy. Markets are pricing close to 100 basis points of rate reduction for 2024, swaps reveal.
Marks & Spencer Group Plc, a retailer based in Britain, surged 10% to become one of the top gainers in Europe among individual stock movers on Wednesday following the business’s strong earnings and dividend reinstatement announcement. A weaker-than-expected earnings prediction caused shares of ebay Inc. to fall in US premarket trade, while shares of Coupang Inc., another online retailer, also fell due to dismal quarterly profits.