Global Markets: Dollar, U.S. short-end bond yields rise after Powell comments; ECB raises rates

Cato

08/09/2022 16:22

* U.S. stocks higher in late morning trade
    * ECB raises rates by a record 75 basis points
    * Dollar index rises after Powell comments 

 (Updates with early U.S. markets activity, previous dateline
LONDON)
    By Caroline Valetkevitch
    NEW YORK, Sept 8 (Reuters) - The dollar index and
shorter-dated U.S. Treasury yields rose on Thursday after
Federal Reserve Chair Jerome Powell said the central bank was
"strongly committed" to controlling inflation, while euro zone
government bond yields jumped after the European Central Bank
raised interest rates by a record 75 basis points.
    The ECB also signalled further hikes to fight inflation,
even as the bloc's economy is heading for a likely winter
recession.  urn:newsml:reuters.com:*:nL1N30F0AA
    Euro zone government bond yields rose in the wake of the
news.  urn:newsml:reuters.com:*:nL8N30F3CG Germany's two-year bond yield touched the
highest since June at 1.305%.  DE2YT=RR   DE10YT=RR 
    At a Cato Institute conference, Powell also said inflation
can be controlled without the "very high social costs" involved
previously.  urn:newsml:reuters.com:*:nW1N2YE00Y
    "It's important to remember the lesson we all learned years
ago, and that's don't fight the Fed," said Oliver Pursche,
senior vice president at Wealthspire Advisors in New York. "And
the Fed is telling us that they're laser-focused on inflation." 
    Fed officials are heading into a blackout period before
their Sept. 20-21 meeting, when they are expected to raise the
fed funds rate by another 75 basis points, increasing it to 3.0%
to 3.25%.  FEDWATCH   USONFFE= 
    Worries that central banks will remain hawkish and inflation
will remain persistently high has sent government bond yields
higher globally in recent weeks.
    The benchmark U.S. 10-year note yield  US10YT=RR  was last
at 3.264%. It has risen from a four-month low of 2.516% on Aug.
2, but is holding below the 11-year high of 3.498% reached on
June 14. The two-year yield  US2YT=RR  was last 3.493%, below
the 3.551% hit last Thursday, which was the highest since
November 2007.  urn:newsml:reuters.com:*:nL1N30F1JT
    Global stocks rose, with the S&P 500 index  .SPX  up after
initially falling on Powell's comments.  urn:newsml:reuters.com:*:nL4N30F2VA
    On Wall Street, the Dow Jones Industrial Average  .DJI  rose
108.77 points, or 0.34%, to 31,690.05; the S&P 500 gained 16.13
points, or 0.41%, ato 3,996; and the Nasdaq Composite  .IXIC 
added 51.99 points, or 0.44%, at 11,843.89.
    The pan-European STOXX 600 index  .STOXX  rose 0.44% and
MSCI's gauge of stocks across the globe  .MIWD00000PUS  gained
0.57%.
    The dollar index  =USD  rose 0.228%, with the euro  EUR= 
down 0.38% at $0.9961.
    The Japanese yen weakened 0.20% to 143.99 per dollar.
    Japan is ready to take action to deal with swift moves in
the yen, Deputy Chief Cabinet Secretary Seiji Kihara said on
Thursday, repeating the government's warnings as the currency
hovered around 24-year lows.
    Sterling  GBP=  was last trading at $1.1493, down 0.28% on
the day.
    On Wednesday, Britain's battered pound fell to its lowest
against the dollar since 1985.
    New UK Prime Minister Liz Truss announced a 100 billion
pound ($115 billion)-plus package of measures to cap soaring
energy bills.  urn:newsml:reuters.com:*:nL1N30E2VJ
    U.S. crude  CLc1  rose 1.61% to $83.26 per barrel and Brent
 LCOc1  was at $88.79, up 0.9% on the day.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates YTD    http://tmsnrt.rs/2egbfVh
Global asset performance    http://tmsnrt.rs/2yaDPgn
Asian stock markets    https://tmsnrt.rs/2zpUAr4
ECB set for a second big rate hike ECB set for a second big rate
hike    https://tmsnrt.rs/3dYkn06
Pound and UK gilts    https://tmsnrt.rs/3cV5g7w
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Additional Reporting by Marc Jones in London and Stephen Culp
and Karen Brettell in New York; Editing by Raissa Kasolowsky,
Mark Porter and Richard Chang)
 ((caroline.valetkevitch@thomsonreuters.com))
 
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