- The gain in US equities accelerated as a treasury selloff eased, providing relief to markets that had been tossed around in recent weeks by concerns about monetary policy tightening.
- The broad-based rise in the S&P 500 continued on Tuesday, with tech stocks recouping roughly half of their losses this year. After a four-day slump knocked roughly a third off its market value, megacaps led the Nasdaq 100 higher, with dip-buying in Meta Platforms. This month, the S&P 500 and the Nasdaq 100 both had their best daily gains.
- After robust demand at an auction of similar-maturity notes, the 10-year US Treasury yield fell to levels last seen in 2019 and hit session lows of roughly 1.9 %. Rates fell across Europe as France's central banker suggested that markets were pricing rate hikes for this year too early. A dollar index dropped.
- Investors are weighing the prospect of a quick withdrawal of pandemic-era stimulus against the prospect of still-strong profitability. Approximately 76% of the 317 S&P 500 companies that have reported results have outperformed expectations, with profits nearly 6% higher than expected. However, data due out this week is expected to reveal that US inflation remains high, thus fuelling betting on a more aggressive Fed rate hike in March.
- Since the January Fed meeting, predictions on the rate hike pace have risen, with policymakers now seeing five rises this year, up from three in December.
- Fed's Mester said on Wednesday that she believes it will be acceptable for policymakers to raise rates more quickly, repeating her support for a first hike in March from January. Earlier, Fed's Bostic stated that 'Every option is on the table'.
