Inflation and monetary policy tightening continue to price in stocks. While the MSCI Asia Pacific index dragged its decline for the second day, the region's stock indices suffered wide losses.
The Nikkei 225 is leading the losses with 1.7 percent, while Shanghai Compound is down 0.6 percent. Futures in US indices, which closed Monday with heavy losses, indicate that the decline will continue.
S&P 500 and Nasdaq 100 futures are down 0.5 percent in the morning. The Bloomberg Dollar Index, which has risen for eight consecutive trading days, is at 2,108 points, on the way to the longest upward streak since 2020.
Deterioration of inflation expectations and expectations that the Fed will tighten at a high dose cause new yield thresholds in US bonds to be exceeded. The US 10-year benchmark bond yield exceeded 2.80 percent, reaching the highest level since December 2018.
Some organizations, including JPMorgan Asset Management and MUFG Securities Americas, warn that 10-year returns could exceed 3 percent. The Bloomberg index, which tracks the total earnings of US government bonds to investors, lost 8 percent this year, pointing to the steepest loss since 1973. According to GSFM Investment Advisor Stephen Miller, this situation in the bond market points to a new reality. “Once yields have been artificially suppressed, they have no choice but to go up,” Miller commented.
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