US bond yields rise to highest level since 2011 and Spain’s exceed 3% following Sweden’s decision to raise interest rates by 100 basis points
Day of more to less for the Ibex-35, which wiped out its initial gains with the stroke of a pen, confirming the tension investors are experiencing in the context of widespread central bank rate hikes. That same Tuesday, the meeting of the US Federal Reserve (Fed) began, which will release tomorrow a decision that could be historic if eventually, as some voices have pointed out, the body raises interest rates by 100 basis points, compared to 75 expected by the US government. market.
Awaiting the important decision, investors are already fearing the worst following the decision of the Swedish Central Bank. The world’s oldest central bank has decided to stay ahead of the US body by raising interest rates by the dreaded 100 basis points. They see no other option in their fight against inflation.
And the reaction is not long in coming in the market. Nervousness is driving red numbers in major European stock markets, with the Capricorn losing 0.8% and overcoming the 8,000 points it had managed at the start of the session. “Once again, the global economy and markets are in the hands of the central banks,” explains Pedro del Pozo, director of financial investment at Mutualidad de Abogacía.
“The problem at the moment is that we still don’t see any clear signs that the first monetary measures by the Fed or the ECB are having a clear effect on inflation,” the expert warns. And he adds, “Today, an error in the calculation of containing prices can be key to determining the medium-term cycle.”
The most notable reaction is in the fixed income market, where bond yields are skyrocketing. The ten-year Spanish bond is above 3% for the first time since June last year, when tensions were at their peak over fears of a recession. Previously, that level was only seen in 2014.
In the case of the ‘treasury’ (ten-year US bond) yield, it has remained above that barrier since August 21 last year, on an upward path that this Tuesday placed the figure at 3.553%, the maximum since 2011.
Barely a dozen Ibex-35 stocks remain positive, and banks are among the few to benefit from the prospect of further rate hikes. CaixaBank, Banco Sabadell and Bankinter lead the roster with gains of around 1%, while BBVA and Santander also struggle in what little greenery is left of the table.
The Fed’s monetary policy is also being felt in the price of the euro against the dollar. The dollar is showing muscle in light of the open gap between the Fed and the ECB in the pace of rate hikes, and the euro is once again fighting for parity with the dollar.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
