Stocks finished with sharp losses in the US on Thursday, dropping after the January consumer-price index showed a much hotter-than-expected 7.5% year over year jump. And Equities took another leg lower in afternoon trade after St. Louis Federal Reserve Bank President James Bullard told Bloomberg that he would like to see the central bank deliver 100 basis points, or 1 percentage point, worth of rate increases over its next three meetings.
The Dow Jones Industrial Average dropped 1.47%, to close near 35,242, while the S&P 500 fell 1.81%, to close near 4,504. The NASDAQ Composite tumble 2.1%, ending near 14,186.
The Treasury Yield shot higher, with the 10 year up 5.67% to 2.036 – cross the 2% level for the first time since 2019. The two year was up 18.62% to 1.599. The markets thinks rates are going higher faster.
US inflation hit a 40-year-high in January after food, electricity, and shelter drove a bigger than expected rise in the consumer price index and pushed financial markets to price in a higher chance the Federal Reserve will hike rates by 0.50 percentage points in just over a fortnight.
Excluding the volatile food and energy components, so-called core prices increased 6% from a year ago, the most since 1982, and 0.6% from a month earlier.
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– When I look at what the 3 month T-bil rate is (currently at 0.37%) I think one (1) FED rate hike is certain this month. But I am NOT willing to entertain the thought of 2 rate hikes (yet).
– With the rising US 30 year yield (currently at 2.3%) I expect that the US housing market will get hit by this rising rate.
– Keep in mind: RISING rates are DEFLATIONARY !!!!!!