US Market Wrap

23 Jun 2022 20:15Agriculture Energy Metal US Bonds US Indexes USD

As concerns that the economy is headed for a recession increased due to weaker-than-expected statistics and a renewed hawkish tone from federal reserve officials, US stocks increased and Treasuries surged.

On Thursday, the S&P 500 resumed its upward trend, finishing the day up almost 1%. The tech-focused Nasdaq 100 also increased. The 10-year yield is currently hovering at 3.08% as treasury yields decreased. Oil, copper, and wheat were among the commodities that remained under pressure as indicators of dwindling demand increased.

Data released on Thursday didn't do much to improve perceptions of a world economy struggling under a wave of central bank interest rate increases. In addition, manufacturing and services activity in the US dropped in June, falling short of expectations and raising concerns that the Fed's attempts to battle inflation may undermine growth, while jobless claims lingered near a five-week high.

Federal Reserve Chair Jerome Powell stated that his commitment to reducing price increases is "unconditional" in testimony to the US House, contradicting a statement he made before lawmakers on Wednesday but left out at last week's Fed meeting. Fed Governor Michelle Bowman also stated that she is in favor of another 75 basis-point increase in interest rates in July, followed by a couple more half-point increases.

After two consecutive weeks of losses of more than 5% each, which reset valuations in accordance with the Fed's policy decisions, the S&P 500 increased by more than 2% on Tuesday. However, volatility is still high across all asset classes as analysts question whether the world's largest economy can withstand a fed that appears ready to increase rates by at least 50 basis points each at its next three meetings.

With the most recent data indicating an extra 175 basis points of raises priced before that meeting, traders are now beginning to price out any action on rates beyond the December meeting.