- Asian markets were mixed; U.S. futures were flat and oil prices marginally increased.
- Yoon’s senior presidential aides, including Prime Minister Han Duck-soo, tendered their resignations.
- Traders’ wagers that the Fed may start lowering rates in June were drastically reduced.
Due to a decline in American stocks, Asian markets were mixed on Thursday; U.S. futures were flat and oil prices marginally increased.
Following the catastrophic defeat of the ruling conservative party in a parliamentary election, which dealt President Yoon Suk Yeol a severe political blow, South Korean shares saw little movement. Yoon’s senior presidential aides, including Prime Minister Han Duck-soo, tendered their resignations.
Asian stocks
Bond prices dropped, and Treasury rates jumped, adding to the pressure on the stock market. The Federal Reserve has been holding off on raising its target rate of 2% for inflation until it has more proof.
The concern currently is that inflation might be stuck following an encouraging reduction last year, as seen by the fact that inflation figures for January, February, and March were all hotter than anticipated and by data on the overall state of the economy.
As soon as the inflation data was released in the morning, prices of everything plunged, including gold and bonds. The yield on the 10-year Treasury returned to its November level late on Tuesday, rising from 4.36% to 4.54%. The two-year yield, which fluctuates more in line with expectations for Fed policy, surged to 4.97% from 4.74%.
Traders’ wagers that the Fed may start lowering rates in June were drastically reduced. They had six or more cutbacks through 2024 in their forecast at the beginning of the year. Elevated interest rates impede economic growth and depress investment values in an attempt to outpace inflation. There is concern that an extended period of high-interest rates could trigger a recession.
Real estate investment trusts, utility firms, and other equities that are often most negatively impacted by high-interest rates were among Wall Street’s worst losers on Wednesday.
Out of the 11 sectors that comprise the index, real-estate stocks saw the largest decline, falling 4.1%, in the S&P 500 index. By making mortgages more expensive, higher interest rates might have a chilling effect on the housing market.
