Equity markets shed off the burden of a rising yield and pare all losses decisively towards the closing, potentially averting a breakdown of an uptrend. It was a night of turbulence. First, we saw the 10-year Treasury yield rise above 4%. Then, the 2-year treasury yield rose sharply to 4.9%, a 52-week high.
Without a doubt, the latest US jobless claim stood at 190K, which is still a resilient labour market. For the past few weeks, the firmer economic data with hawkish commentary from many Fed officials had dampened sentiment of any pivot or slowing of the interest rate hike. Now, market participants are pricing in a 26.2% chance that the Fed will boost the rate hike by 50 basis points during the March meeting.
💰One comment, One boost- MVP goes to Bostic🗽
Federal Reserve President Bostic believed a cautious stance was appropriate given the current restrictive monetary policy. Therefore, he supports a 0.25% hike which appeared to relieve the market. With that, the market breathed a sense of life, and we saw equity markets return to a solid footing.
Nonetheless, we remain cautious of further headwinds as we welcome more critical data today.
📮What are our dishes today? 📖
At 10.45 pm, we will have the S&P 500 Composite PMI for February, which is expected to climb to 50.5 from a contraction of 46.8.
Next, at 11 pm comes many strings of data. The most important will be the ISM Non-Manufacturing PMI data which is expected to moderate slightly to 54.5 from 55.2.
FOMC Member Bostic is expected to speak at 12.45 am. So it might be yet another market mover again.
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All is well.