- Tuesday’s declines on Wall Street infected Europe on Wednesday.
- Negative climate prevails due to increase in Treasury bond yields.
- Volatility rises, dollar strengthens, metals under pressure.
TAfter falling 1.26% on Tuesday, S&P 500 futures fell 0.90% and point to a low opening in two weeks. European markets fall on average 1.85%. The negative climate in the markets began with comments from Federal Reserve officials, who expressed support for a more rapid adjustment in monetary policy.
The governor of the Fed, Lael Brainard, declared a position in favor of a “accelerated reduction of the balance of central bank, surprised by the tone. This raised the expectations of increases in interest rates in the US and generated a sharp drop in Treasury bonds.
The 10-year rate reached 2.66%, the highest since 2019. The curve with respect to the two-year rate is no longer inverted. A key event on Wednesday will be the publication of the minutes of the last meeting of the FOMC when the Fed raised the interest rate.
The dollar it is favored by the rise in yields and although Wednesday does not register important variations, it is validating Tuesday’s advance. The DXY it closed at 99.50, the highest since May 2020, and on Wednesday it rises 0.02%, far from the new maximum that it marked hours ago at 99.75.
The mood of the markets does not help the previous announcement of more sanctions against Russia. NATO, the US and the European Union are preparing more sanctions. In this context, oil rises 1.40%.
The declines in the stock markets have a correlate in the VIX, the volatility (or fear) indicator, which rises sharply for the second day and reaches its highest since the end of March.
Technical levels
Source: Fx Street

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