Markets are ready for end of rate hiking cycle
2023-07-26
Summary:
Global equity markets and U.S. Treasury yields rose on Tuesday ahead of the Fed's expected interest rate hike and as markets awaited a stream of quarterly results from corporate heavyweights.
Global equity markets and U.S. Treasury yields rose on Tuesday ahead of the Fed's expected interest rate hike and as markets awaited a stream of quarterly results from corporate heavyweights.
The U.S. dollar weakened, losing earlier session gains. Most market participants expect the Fed to deliver a 25 basis-point rate hike on Wednesday.
Oil prices rose to three-month highs as signs of tighter supplies and pledges by Chinese authorities lifted sentiment. Gold prices strengthened as the dollar fell, increasing 0.5% to $1,964.34.
Commodities
China’s top leaders pledged to step up policy support for the economy, focusing on boosting domestic demand.
The crude benchmarks have already clinched four weekly gains in a row, with supplies expected to tighten due to output cuts from the OPEC+.
Earlier-loading Brent contracts are selling above later loadings, a price structure known as backwardation indicating traders see tight supply, with the six-month spread near a 2.5-month high.
Forex
Signs of an extremely resilient U.S. economy helped the dollar recover from a recent 15-month low, as well as persistent weakness in Europe.
Still the survey from the Conference Board offered mixed signals. Consumers remain fearful of a recession over the next year following hefty interest-rate hikes from the Fed.
The euro fell for a fifth successive session as evidence of a slowdown in Europe builds after a recent survey showed demand for loans in the euro zone hitting a record low in the second quarter.
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