Stocks keep sliding as dollar hits two-decade high on rates fears

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Fed chair Jerome Powell's promise of policy “pain” to contain inflation quashes hopes of the central bank rescuing markets

Sydney — Asian shares slid on Monday as the mounting risk of more aggressive rate hikes in the US and Europe shoved bond yields and the dollar sharply higher, and tested equity as well as earnings valuations.

That triggered a sharp fall in Euribor futures as markets priced in the risk the ECB could hike by 75 basis points next month. Futures are now pricing in about a 64% chance the Fed will hike by 75 basis points in September, and see rates peaking in the 3.75%-4.0% range. Two-year US yields rose seven basis points to 3.466%, the highest since late 2007 and far above the ten-year at 3.10%. Yields have also climbed across Europe with double-digit gains in Italy, Spain and Portugal.

 

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