All Three Main Wall Street Indexes Fell On Wednesday As News From The Federal Reserve Eyes 2023 Rate Hikes As Inflation Expectations Rise.”
June 6, 2021 By Art Fletcher & Leo Madison Reporting For: Englebrook Independent News,
WASHINGTON- Stocks fell after the U.S. Federal Reserve brought forward its projections for interest hikes, driving up U.S. Treasury Yields and the Dollar.
The U.S. Federal Reserve revealed its sooner than expected first post-pandemic interest rate hike to come in 2023, citing an improved health situation amid the vaccine rollout. Projections showed a majority of Federal Reserve Officials anticipating at least Two-Quarter Point Rate Increase in 2023, although the Federal Reserve said it would keep policy supportive for now to boost employment.
” The central case growth and inflation expectations for the next couple of years have not changed by much since March, but there is an explicit recognition that the vaccination program has reduced the risks to the economy from the health crisis,” said Brian Coulton, Chief Economist at Fitch Ratings.
” Against that backdrop the projections showed that the Federal Reserve will have achieved both its inflation and maximum employment goals by 2023, warranting a start to interest rate normalization.”
Markets dipped immediately following the statement, after investors had kept them wavering around record highs all week. Wednesday’s policy update from the Federal Reserve was highly anticipated as it was it’s first since the new data showed inflation beginning to appear amid the economic comeback.
The MSCI World Equity Index, which tracks shares in 45 Nations, fell 4.39 points or 0.61%. The Dow Jones Industrial average fell 217.13 points, or 0.63%, The S&P 500 lost 0.55% to 4,223.19 and The NASDAQ Composite 0.5%.
The Benchmark 10-Year Treasury Yield US10YT=RR jumped on the statement, rising to 1.5278%. The dollar index, which tracks the Greenback versus the Basket of Six Currencies, rose 0.402 points, or 0.44%, its highest level since May 7th.
Safe Haven Gold also took a hit on the Federal Reserve news, with spot gold prices falling 1.24% to $1,835.56 an ounce. And Oil Prices stepped back from earlier gains in the day, with Brent Crude last up 6 cents at $ 74.05 a barrel, U.S. Crude was last down 32 cents to $ 71.80 per barrel.
