Bearish sentiment is dominating the markets as stocks, oils and metals are enduring large declines.
Stock markets in the US are driving higher today as government bond yields have retreated from their recent peaks.
Bond yields have been increasing recently as traders are starting to factor-in the possibility of higher interest rates in the months ahead, and typically the spikes in yields have sparked moves lower in stocks.
Equities are under pressure as the rise in US government bond yields suggests the markets are pricing-in an interest rate hike from the Federal Reserve. In recent weeks, there has been growing speculation the US central bank will hike rates three or possibly four times in 2022.
Stocks in Europe are up on the session as The People’s Bank of China cut the borrowing cost on 700-billion-yuan worth of one-year medium-term lending facility loans to 2.85%.
The hawkish tones from Federal Reserve members yesterday are still rippling through the markets today.
Volatility in the markets has drifted lower today as equities are trading within a relatively small range, and the currency market is calmer too. Equity markets in Europe are largely higher this afternoon as the rebound that began on Tuesday is still in play.
Traders are buying back into European equity markets as government bond yields are a little lower. At the start of the week, the US 10-year yield pushed above 1.80%, and that triggered a wave of selling in equities, in particular US stocks.
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