Bassanese Bites: Pause the pause – June 06 2022
Global equities had a modest pullback last week after a strong rebound the previous week, with bond yields also rebounding. U.S. 10-year bond yields have leapt back closer to 3% and have broken their downtrend line from their recent peak of 3.2% on May 9.
The key market driver was lingering nervousness over how far the Fed will raise interest rates given continued solid U.S. economic growth indicators – such as last week’s report on U.S. manufacturing and employment. Also notable was the range of Fed speakers who failed to validate market hopes that emerged in the previous week that the Fed was thinking of pausing the rate hike schedule in September – after two further 0.5% hikes this month and next month.