Global stock indices plunged from peaks while U.S. Treasury yields soared to a several-year high following comments by Federal Reserve (Fed) Governor Lael Brainard on aggressive monetary policy tightening.
Brainard in comments noted the possibility of an immediate combination of interest rate hikes and balance sheet cuts is necessary to bring US monetary policy to a ‘more neutral position’ by the end of the year and further tightening will be made as needed.
Meanwhile, Mary Daly, President of the San Francisco Fed estimates the next meeting scheduled for May 3 to 4 as a possible start to balance sheet cuts.
The Fed is expected to release the minutes of the FOMC meeting early Thursday morning local time while the European Central Bank (ECB) will publish the same minutes on Friday.
Meanwhile, technology and growth stocks led the decline on Wall Street with higher rates seen as negative for growth stocks.
The Dow Jones Industrial average fell 280.7 points or 0.8% at 34,641.18, the S&P 500 lost 57.52 points or 1.26% at 4,525.12 and the Nasdaq Composite was down 328.39 points or 2.26% at 14,204.17.
According to Peter Tuz, President of Chase Investment Counsel Virginia, the market will be affected by interest rates and Fed comments throughout the week.
The pan -European STOXX 600 index was up 0.2% and the worldwide MSCI stock gauge was down 0.97%.
As for the Treasury, the yield of the 10 -year note rose 13.1 basis points at 2.5422% while the yield of the 2 -year note rose 7.2 basis points at 2.500%.
One more thing, investors are also seen focusing on Russian-Ukrainian developments with the West said to be preparing to extend restrictions on all new investments in Russia.
Summary on the currency market, the dollar index rose to 99.526 while the Euro was down 0.6% at $ 1.0900 with the focus going on elections in France.
The Australian dollar was up 0.4% at US $ 0.77521 and the New Zealand dollar was up 0.2% at US $ 0.6937.
