Markets were muted Wednesday with investors mostly sidelined before another expected rate hike from the Federal Reserve. Treasuries and the dollar jumped on haven flows after Russian President Vladimir Putin stepped up his war against Ukraine.
(Bloomberg) — Markets were muted Wednesday with investors mostly sidelined before another expected rate hike from the Federal Reserve. Treasuries and the dollar jumped on haven flows after Russian President Vladimir Putin stepped up his war against Ukraine.
European equities swung higher after posting early losses in the run-up to the Fed meeting. US equity futures steadied after the S&P 500 slid on anxiety policy makers are risking recession in their zeal to subdue price pressures. Benchmark Treasury yields slipped 3 basis points to 3.53%.
Officials are widely expected to boost rates by 75 basis points for the third time in a row, according to the vast majority of analysts surveyed by Bloomberg. Only two project a 100 basis points move.
The dollar headed for a fresh record while the euro fell as investors reacted to Putin’s announcement of a “partial mobilization” as he pledged to annex the territories his forces have already occupied, vowing to use all means necessary to defend Russia.
The escalation of the Russian war is likely to reverberate across markets, deepening the energy and food crisis as well as American exceptionalism, according to Ales Koutny, portfolio manager at Janus Henderson Investors.
“This will continue to put risk assets under pressure, with sentiment playing a significant part for both equities and credit,” Koutny said by email. “We believe the USD will continue to benefit as the US is isolated from a geographic perspective and more resilient due to the make-up of its economy.”
A dollar gauge traded near a record high amid the market jitters while bitcoin dropped below $19,000. The offshore yuan fell to the lowest against the greenback since mid 2020, even after the People’s Bank of China set the daily reference rate for the currency stronger-than-expected for a 20th day.
Key events this week:
- Federal Reserve decision, followed by a news conference with Chair Jerome Powell, Wednesday
- Big-bank CEOs testify before US Congress in a pair of hearings on Wednesday and Thursday
- US existing home sales, Wednesday
- EIA crude oil inventory report, Wednesday
- Bank of Japan monetary policy decision, Thursday
- The Bank of England interest rate decision, Thursday
- US Conference Board leading index, initial jobless claims, Thursday
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Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.2% as of 10:10 a.m. London time
- Futures on the S&P 500 were little changed
- Futures on the Nasdaq 100 were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 1.5%
- The MSCI Emerging Markets Index fell 1.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.7% to $0.9906
- The Japanese yen was little changed at 143.83 per dollar
- The offshore yuan fell 0.4% to 7.0578 per dollar
- The British pound fell 0.4% to $1.1339
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.53%
- Germany’s 10-year yield declined five basis points to 1.87%
- Britain’s 10-year yield declined two basis points to 3.27%
Commodities
- Brent crude rose 1.5% to $91.97 a barrel
- Spot gold rose 0.5% to $1,673.22 an ounce
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