- The signal from Fed's Powell of higher-for-longer interest rates swept across markets, lowering equities and equity futures and raising 2-yr bond yields to levels not seen since 2007.
- An Asian stock index dropped more than 2%, the most in more than two months. The Nasdaq 100 and European futures both lost at least 1.5%. The reductions in China and Hong Kong were lesser due to progress in the US-China delisting dispute.
- Commodity currencies, including the yen, pound, and offshore yuan, were under pressure.
- Bonds fell as the yield curve in the US inverted further, raising the prospect of a recession under tightening monetary policy. The US 2-yr yield, which is sensitive to Fed policy forecasts, reached 3.45%.
- Fed's Powell warned against prematurely relaxing monetary conditions in his speech last week at the Fed's Jackson Hole Symposium, indicating the anticipated need for restrictive monetary policy for some time to limit excessive inflation. He also warned of the possibility of economic hardship for individuals and businesses.
