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Inflation jitter caused by Reuters causes stock prices to fall and long-term yields to rise

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© Reuters. FILEPHOTO: Investors are sitting on December 7, 2018, in front of a board of directors showing stock information for a securities firm in Beijing, China. REUTERS / Thomas Peter

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Herbert Rush

New York (Reuters)-Friday as US labor data show a slowdown in wage growth in April, but investors are concerned that federal reserves may not be able to curb inflation over the next few years. Long-term US Treasury yields soared and global stock markets fell further.

The unemployment rate fell to 3.5%, the pre-pandemic low, last month, according to data from the Ministry of Labor on Friday. This is because employment growth has slowed and average hourly wages have fallen to 5.5% year-on-year.

But data face when the Fed and other central banks are fighting rising inflation, China’s lockdown causes persistent supply chain disruption, and the war in Ukraine is putting pressure on food prices. Emphasized the challenges.

Jim Vogel, interest rate strategist at FTN Financial, said inflation outlook for the next two years is beginning to become uncertain for fixed income, or at least fixed income traders.

“We take into account that the Fed can’t fight inflation, but for now it’s an inflation problem that’s restless for the rest of the decade beyond the central bank. It’s pretty dark,” Vogel said. ..

Benchmark yields rose 5 basis points to 3.119%. This is the last rate seen in November 2018 after a surge from about 1.5% at the end of 2021.

The Federal Reserve wants to slow inflation by tightening monetary policy. If the tightening is too great, the market is volatile because of the risk of a recession in the economy.

Wall Street stocks fell due to volatile trading, and major indices were temporarily pushed up to the green, falling for the fifth straight week. Nasdaq fell 2.66%.

Keith Lerner, Chief Market Strategist and Co-Chief Investment Officer at Truist Advisory Services, said:

The Fed will raise rates by 75 basis points at the Fed’s policy meeting next month, even after US Federal Reserve Chair Jerome Powell said Wednesday that the U.S. central bank is not considering such a move. Fed futures priced with about 75% chance. [FEDWATCH]

The Pan-European index fell 1.91% as regional stocks recorded the worst week in two months. MSCI’s global equity performance gauge fell below 1.39% and emerging market equities fell 2.61%.

On Wall Street, it decreased by 1.08%, decreased by 1.14%, and decreased by 1.65%.

Russell Price, chief economist at Ameriprise Financial (NYSE :), said the unemployment report shows that the US labor market is strong.

“In recent months, we’ve seen the pace of average hourly wages start to slow slightly, which is a positive indicator that this surge in hourly wages we’ve experienced may finally ease.” He said.

After two volatile days, the dollar fell against a basket of currencies as investors focused on how aggressive the Fed would be to raise rates.

The day after the sharp stock sales due to rising US interest rates and weakening European currencies due to concerns about growth in the region, demand for safe shelters hit a 20-year high overnight.

The dollar index rose 0.077% and the euro rose 0.07% to $ 1.0547. The yen fell 0.35% to $ 130.56 per dollar.

French Central Bank Governor François Billroy de Garhow said the European Central Bank should return deposit rates to the positive territory this year and said it supported at least three rate hikes in 2022. As expected, two policy makers warned about future rate hikes.

Imminent European Union sanctions on Russia’s oil have raised the outlook for tight supply, raising oil prices three times in a row, evading concerns over global economic growth.

Futures rose $ 1.51 to $ 109.77 a barrel and $ 1.49 to $ 112.39.

Gold rose due to the weaker dollar, but bullions fell for the third straight week due to the Fed’s outlook for aggressive rate hikes.

The US settled at $ 1,882.80 an ounce, up 0.4%.

It was down 1.64% to $ 35,933.47.

Germany’s 10-year government bond yield rose to 1.082%, the highest since 2014.

Graphics-Correlated Global Equities and Bonds: https: //fingfx.thomsonreuters.com/gfx/mkt/xmpjoyxxavr/correlations%20global%20stocks%20and%20bonds.JPG

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