NEW YORK, June 14 — US equities tumbled yesterday, with the S&P 500 confirming it is in a bear market, as fears grow that the expected aggressive interest rate hikes by the Federal Reserve would push the economy into a recession.
The Fed is scheduled to make its next policy announcement tomorrow and investors will be highly focused on any clues for how aggressive the central bank intends to be in raising rates. Goldman Sachs late yesterday said it expects 75-basis-point increases in June and July. Expectations for a 75 basis point hike at the June meeting jumped to 96 per cent late yesterday from 30 per cent earlier in the day, according to CME’s Fedwatch Tool.
In addition, the two-year 10-year US Treasury yield curve briefly inverted for the first time since April, which many in the markets see as a reliable signal that a recession could come in the next year or two.
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