Why Threats to Bond Markets Are Here to Stay
The real threat from rising rates is for bond markets.
The FOMC January meeting minutes were the most awaited event of the week, and the market reaction to their release was more than dramatic.
FOMC members have cited several factors that could increase inflation (VTIP) in the medium term.
The FOMC staff review indicated that the US investor sentiment has improved in the inter-meeting period.
As per the FOMC staff report, inflation (TIP) in the US remained below the 2% target.
The recent market turmoil was related to the possibility that the US FOMC could increase interest rates sooner than expected.
After starting this week on a weaker note and declining for two days, the S&P 500 regained stability on Thursday.
After pulling back last week, the US Dollar Index started this week on a stronger note and rallied to ten-day high price levels.
At 5:35 AM EST on February 22, the FTSE 100 Index was trading at 7,221.50—a fall of 0.82%. EWU fell 0.28% to 35.14 on February 21.
The Shanghai Composite Index rose 2.2% and closed the day at 3,268.56 on February 22. GXC rose 0.9% on February 21.