as traders rapidly shift their expectations of central bank tightening, sparking a sell-off in government bonds.P 500 Index has climbed 3.9 per cent, while the US 10-year bond yield has surged 64 basis points to 2.47 per cent. The SP/ASX 200 has risen 5.1 per cent this month, and gained a further 0.2 per cent in early Monday trading.
The intensifying bond sell-off portrays the market’s swift recalculation of the Fed’s tightening path, with an average of 8.2 one-quarter of a percentage point increases now priced in for the central bank’s six remaining meetings in 2022, up from 7.7 on Thursday. “If even a hawkish Fed leaves real rates low, then equities should have little to fear,” said Citi’s chief economist, Andrew Hollenhorst.
Another boost for equities has been institutional investors covering their short positions in speculative technology stocks, highlighted by the ARK Innovation exchange-traded fund gaining 23 per cent since mid-March. Macquarie revealed it has made wholesale changes to its strategy to increase exposure to resources and value, while reducing its exposure to offshore earners, advising investors to position for a commodity boom.
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Source: FinancialReview - 🏆 2. / 90 Read more »
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