Fed fearful investors
The highest inflation of the past 40 years in the United States has sparked all fears of investors, who now expect the Federal Reserve to take a tougher stance to try and control it. This Monday, there is a real Black Monday for Wall Street stocks, with drops that exceed 3% since the opening, as in the case of the Nasdaq technology index.
Share prices plunged Monday morning as trading on the New York Stock Exchange began on fears of inflation. With a drop of more than 2.5% in the S&P 500 index, the market entered bearish mode, what happens when you have managed to lose more than 20% of your peak in the year.
The Federal Reserve meets this week and investors expect it will announce more aggressive measures to keep inflation at bay. But there are also fears that the US central bank will take too strong measures to cool the economy and accidentally cause a recession. As reported by the AP agency, bond yields were on the rise.
This adverse environment had an impact even before the opening of the local market to dollar sovereign debt instruments., which reached new lows again with falls of more than 2.5%. Country risk as measured by bank JP Morgan climbed to a high of 2,044 on Friday, a ceiling it hadn’t seen since before the September 2020 debt restructuring.
“The emerging universe accompanied global pessimism after the release of inflation data in the United States, where monthly inflation hit a new record (1%) and annualized inflation reached 8.6% (annualized core : 6%), relaunching the fear of inflationary dynamics “, explained a PPI analyst. “
“Whether the Fed raises rates is no longer up for discussion and given these new indicators, the market is already pricing in an escalation of 75 basis points for the next Committee in June,” they added in the advisory. “This volatility is no stranger to an Argentina without an economic course and with political weaknesses,” they added.
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Source: Clarin
