Fed speakers this week supported 50-bps rate increases at the May 5th & 6th meeting.
US Treasuries ended the week higher amid Fed comments.
The US equity ended the week with significant losses. This is a reflection of a dark market mood, amid fears that the Fed will raise rates aggressively and high US Treasury yields. S&P 500, Dow Jones Industrial and tech-heavy Nasdaq Composite all suffered losses of between 2.6% to 2.8%. They were at 4,271.78, 33.811.40 and 12,839.29, respectively.
The Fed prepares the market for a 50-bps lifting
Market sentiment ended downbeat as the Federal Reserve prepared for a rate increase to the 1% threshold. Over the course of the week, US central bank officials expressed their support for a 50-bps increase in the Federal Funds Rate (FFR), at the May 4-5 meeting. It is likely to be unanimous as Fed Chair Powell said on Thursday that a 50-bps rise is “on the table”.
The greenback is still in control, as shown by the US Dollar Index. It rose 0.49% to 101.118. Meanwhile, US Treasury yields, led the 10-year benchmark note, remained flat at 2.903%.
The sector-specifics were less severe for Consumer Staples, Utilities, and Real Estate, which fell 1.59%, 1.68, and 1.78% respectively. Materials, Health, and Communication Services were the worst performers, with losses of 3.73%, 3.633%, and 3.00%, respectively.
The commodities compound saw the US crude oil benchmark WTI lose 2.22% and trade at $101.08 per barrel. Precious metals such as gold(XAU/USD), suffered losses of 1.04%. They traded at $1931.12 per troy ounce after being dragged down to $1931.12 by a US dollar.
The US docket
The US economic calendar would include March’s Durable Goods Orders, March’s US Gross Domestic Product for Q1, and March’s Core Personal Consumption Expensiture (PCE), based on monthly and annual readings.
