By Jeffrey Smith
Investing.com – The dollar is giving everything else a hard and strong boost as global markets rallied to the prospect of the Federal Reserve raising interest rates further, even with the threat of a global recession. Sterling and UK assets are going through a particularly miserable time after the new government unveiled a drastic and – according to some – irresponsible plan to cut taxes. Boeing is paying $200 million to settle SEC fees that misled investors about the safety of the 737-MAX, and oil prices are testing new lows for the year as the dollar costs higher. Here’s what you need to know in the financial markets on Friday, September 23rd.
1. The dollar rises as Treasury yields suck life out of global markets
The dollar continued its dash higher, with the latest upward movement coming after opinion polls by purchasing managers in Europe showed both the economy and the economy slipping into recession.
The dollar, which measures the greenback against a basket of six advanced economic currencies, rose to a 20-year high above 112, as rising short and long-term interest rates on the dollar continued to suck up capital from around the world.
US Treasury yields continued to rise overnight as the market priced in the possibility of higher interest rates from the Federal Reserve. The yield on Treasuries, which is particularly sensitive to the Fed’s outlook, surged to a new 15-year high of 4.26% before rebounding slightly.
2. UK markets are in free fall after the government announced massive tax cuts along with energy subsidies
It was in free fall across the board on Friday after financial markets responded negatively to the new government aggressively in hopes of spurring growth.
The pair fell more than 1.2% against the dollar, hitting a new 37-year low at $1.1079, and also lost more than 0.5% against the US dollar.
In the stock market, the index was down 1.6%, while the more concentrated UK capital stock index was down 0.6%.
Government bond yields are at their highest levels in years across the entire yield curve, as traders priced in the prospect of much greater borrowing to fund a budget deficit set to widen sharply, as a result of tax cuts of £45 billion and energy subsidies that will cost around 60 billion. pounds over the next six months alone.
3. Set the stock to open weak. Dow Jones futures contracts
US stocks are set to open sharply lower, with a whiff of capitulation in the air as rising bond yields tighten financial conditions for the US and the global economy.
By 06:25 EST (10:25 GMT), it was trading below 30,000 points, down 290 points, or 1.0%, from Thursday’s close. It was down 1.1% and down 1.2%.
Stocks likely to be in focus later include Amazon (NASDAQ :), after a Wall Street Journal critical report on safety standards for its drivers, and Boeing (NYSE:), which to settle SEC fees it misled investors about the safety of its 737-planes. MAX.
Both the data and the earnings calendar are virtually empty.
4. Hong Kong and Thailand ease long-standing COVID restrictions
There was better news from Asia, where both Hong Kong and Thailand announced significant easing of their respective public health measures to control COVID-19.
Thailand will end a nationwide state of emergency that has been in place for two and a half years, reducing the degree of the virus from a “serious” infectious disease to one that only requires surveillance. The emergency regime has dealt a serious blow to an economy that depends more than most on international tourism revenue.
Meanwhile, authorities in Hong Kong have canceled hotel quarantines for incoming travelers and signaled the possibility of further relaxation.
5. Oil fell due to fears of destroying demand. Number of rigs, due CFTC
Crude oil prices this year as the dollar continues to rise is making the world’s most important commodity less expensive.
By 06:30 ET, futures were down 2.6% at $81.39 a barrel, while futures were down 2.3% at $88.40, unaffected by fresh news reports suggesting that OPEC and its allies may cut production to stop prices falling further. The bloc is already producing more than 3.5 million barrels per day below official production quotas, while a Russian government document reported by news agencies on Thursday indicated that Moscow expects its oil production to fall by about 6% next year under the impact of sanctions. .
Data for the next week.