US Session (11/03/2021)
Stocks climbed to a record after the Fed signaled that monetary policy will remain accommodative even as the central bank starts reducing its massive bond-buying program this month.
The S&P 500, Dow Jones, NASDAQ 100, and Russell 2000 all closed at all-time highs for the second straight session, a feat not seen since January 2018. The yield curve steepened after Fed Chair Jerome Powell sought to emphasize that the tapering decision does not imply that rate rises are imminent. He stated that officials can be patient with tightening, but will not hesitate to act if inflation warrants it. The dollar dropped.
Traders mostly kept their bets on the timing of interest-rate hikes at the level they were at before the decision. Rate rises of around 55 basis points are predicted by money-market derivatives by the end of 2022. According to overnight index swaps, the first raise is expected around July, with a roughly 70% likelihood of occurring the month earlier.
On Wednesday, the Treasury revealed the first decline in its quarterly sale of longer-term debt in more than five years, showing reduced borrowing needs as the wave of pandemic-relief spending recedes.
Companies in the United States created the most jobs in four months, indicating that employers are making headway in filling a near-record number of unfilled positions. The figures come ahead of the Labor Department's monthly employment report, which is expected to indicate that private payrolls climbed by 408,000 in October. In October, service providers expanded at a record pace, fueled by solid demand and increased business activity.
Asia Session (11/03/2021)
Global equities hit a new high on Thursday as the Federal Reserve announced an expected drawdown of stimulus and stated that it will be careful in rising interest rates. Treasury yields were stable.
Futures in the US fluctuated in the aftermath of all-time highs for the S&P 500, Dow Jones, Nasdaq 100, and Russell 2000. The Fed stated that it is concerned about inflation concerns, but believes they are likely to be transitory because of pandemic-related supply and demand mismatches. The dollar recovered from a decline.
The treasury yield curve remained steeper than it was before the Fed announcement. Bond-market inflation forecasts have risen, indicating that there are still concerns about containing price pressures. Traders mainly maintained predictions on the timetable of rate hikes: the first boost is expected in July, with an additional 55 bps added by the end of 2022.
Oil fell as a result of increased US stocks and progress toward nuclear talks with Iran, which could result in greater supplies. Thursday's meeting of OPEC+ is to evaluate output plans. After another strong drop that was swiftly reversed, Bitcoin was trading around $62,500.
Japan, Hong Kong, and China increased their market share, MSCI's share gauge reached a new high.
Europe Session (11/03/2021)
As traders waited for the Federal Reserve's widely expected step toward policy tightening, global equity markets fluctuated between gains and losses, and bond yield curves flattened.
After underlying gauges surged to new highs on Tuesday, futures for the S&P 500 and the Dow Jones Industrial Average both fell 0.1%. The yield on two-year treasuries remained unchanged, while the 30-year rate fell 2 BPS. The dollar lost less than 0.1% while European markets battled to find direction.
Traders are in for a widely anticipated yet game-changing moment, as the Federal Reserve may begin reducing stimulus as the first step toward raising interest rates. With bond and currency markets pricing in faster-than-expected rate rises, policymakers like ECB's Vasle and de Cos have been pressed to reconsider their judgment of inflation being temporary.
ECB's de Cos, on underlying inflation factors: This might lead to quite high inflation rates in the following months.
ECB's President Lagarde: The European Central Bank will unveil post-crisis bond-buying parameters in December.
ECB's President Lagarde believes that the conditions for a rate hike are unlikely to be met next year.
ECB's Vasle: Rising potential that inflation will remain high.
Traders now expect an ECB rate hike of 10 basis points in December 2022 vs October 2022.
Iran's Top Security Official Shamkhani: If the US does not agree to grant guarantees on the 2015 nuclear agreement, the conclusion of discussions is obvious - Twitter.