US Session (11/22/2021)
Following President Joe Biden's choice of Jerome Powell to lead the Federal Reserve for a second term, equities lost ground while Treasury yields soared. The dollar increased in value.
The S&P 500 fell more than 40 points in the final 45 minutes of trade in the United States. The index had spent the whole session higher before a sell-off in technology stocks drove it down for the day.
The NASDAQ 100 dropped more than 1%, with Peloton and Docusign both falling at least 5.5%.
The swaps market in the United States is now pricing in a full 25 basis point rate hike for the June Fed meeting, with a second increase expected in November. The dollar rose, while gold fell by more than 2% and oil rose.
Biden had been considering between Powell and Brainard who he nominated for the position of vice-chair. The Powell selection comes amid rising concern that the United States' central bank would fall behind the curve in tackling sticky inflation.
Consumer-price rise is accelerating at the strongest rate in decades, and price-growth forecasts are at their greatest since 2013.
Asia Session (11/22/2021)
Asia's equities were mixed on Tuesday after Treasury yields and the dollar rose in response to Fed's Powell's nomination to lead the Federal Reserve, fueling speculation about a faster removal of monetary stimulus.
A Hong Kong index of Chinese technology firms fell amid speculation about tougher regulations, while China's market rose. US market futures were volatile after the S&P 500 ended in the negative and the NASDAQ 100 underperformed amid a final hour Wall Street tech selloff.
Treasury yields fell in US trading hours. Markets anticipate a complete quarter-point rate hike at the June Fed meeting, with a strong possibility of a second hike in September and a third in December to combat inflation. The Fed, according to Powell, will use its instruments to boost the economy and labor market while preventing higher inflation from becoming entrenched.
House Democrats request that Biden ban oil exports, according to CNN.
Treasury futures fell somewhat. Due to a holiday in Japan, cash treasuries will not trade in Asia. The dollar was trading around its highest level since September 2020, while the yen went below 115 per dollar for the first time since March 2017.
Fed's Bostic: In my dot plot for 2022, I may be open to bringing ahead another rate hike if necessary, but I may also be open to pushing them back depending on how the pandemic plays out.
Europe Session (11/22/2021)
Treasury rates surged and US index futures pointed to a further selloff in technology stocks, as traders trimmed expectations on a more dovish Federal Reserve after Jerome Powell's re-nomination.
After a late-day selloff in technology companies on Monday, futures on the Nasdaq 100 index sank 0.3%. On Tuesday, the sector was Europe's weakest performance, dropping the region's benchmark to a three-week low. Turkey's currency crisis worsened, with the lira falling below 12 per dollar. Oil prices dropped as countries from the United States to India sought to tap their strategic supplies.
Following Powell's confirmation for a second term, investors are lowering their expectations for the Fed to take a more dovish posture. The chair himself attempted to find a compromise in his policy stance, stating that the central bank will utilize all of its capabilities to help the economy while also preventing inflation from becoming entrenched.
White House: Biden will make available up to 50 million BBL's of oil from the US strategic petroleum reserve.
BoE's Haskel: Before interest rates are raised, we need to see clear evidence of both an increase in the size of the economy and an increase in the strength of the labour market.
ECB's Knot: After 2022, ECB rates will likely have a lift-off.
Money Markets: Fully anticipating a 10 BPS ECB rate hike in December 2022 IRPR, as opposed to the roughly 50% chance forecast from Monday.
ECB's Schnabel: It's possible that inflation may fall below 2% in the medium term.
ECB's Schnabel: Inflation risks are skewed to the upside.