- After the chaos caused by hotter-than-expected American inflation that caused investors to re-evaluate the outlook for interest rates and economic growth, the markets appeared to be returning to normal on Wednesday.
- After shares saw their largest decline in more than two years on Tuesday, with the S&P 500 plunging more than 4% and the Nasdaq 100 falling more than 5%, US equity-index futures increased by approximately 0.5%. After rising the most in three months on Tuesday, a barometer of the dollar fell. The 10-year Treasury yield increased a fraction, remaining close to a decade peak.
- Despite the size of Tuesday's stock market decline, the S&P 500 only erased gains from the previous four sessions, which had been boosted by hopes that inflation would slow and allow the Federal Reserve to ease up on its tightening policy.
- Swaps traders are now pricing in a three-quarters of a percentage point hike for next week, with some bets suggesting a full point increase. The most sensitive to changes in policy, the two-year treasury yield, increased by two basis points after rising as much as 22 basis points on Tuesday. This increased its premium over the 10-year rate to more than 30 basis points and deepened an inversion, which is typically a recession indicator.
- The Stoxx Europe 600 index fell by 0.4%, though it pared a deeper drop as retailers gained, headed by Inditex SA, after the owner of the Zara fashion brand announced a rise in profit. The European Commission is considering proposals to limit the energy crisis, some of which may include income caps. Utilities were among the sectors that performed the poorest.
- After a Nikkei report that the Bank of Japan performed a so-called rate check with traders to see the price of the currency against the dollar, the yen retreated from a drop into the crucial 145 level vs the dollar. If existing patterns persisted, the finance minister warned, he wouldn't rule out taking action.