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Rising Rates Push Stocks Down in February


The Dow fell Tuesday, wrapping up February with a monthly loss as surging rates battered stocks after a string of data pointing to underlying strength in the economy forced investors to price in higher for longer Federal Reserve interest rates.

The Dow Jones Industrial Average fell 0.65%, or 214 points, taking losses for February to about 4%. The S&P 500 fell 0.29%, and the Nasdaq Composite was down 0.10%.

Tech, which is down about 5% from its peak earlier this month, pared earlier gains despite a jump in Meta. On the economic front, meanwhile, consumer confidence in February fell to its lowest reading since November, pointing to signs strong consumer spending, which has underpinned strong growth so far this year, may be starting to slow.

The yield on the benchmark 10-year Treasury note was last lower by 1 basis point at 3.912%. Earlier, it touched a high of 3.983%, its highest level since Nov. 10. Meanwhile, the yield on the 30-year Treasury bond rose less than 1 basis point to 3.922%. Tuesday marks the final day of trading in February. The 10-year Treasury yield has advanced more than 50 basis points for the month, and the 2-year yield has gained more than 70 basis points. Those gains come as traders increasingly bet on Federal Reserve rates staying higher for longer, as recent data points to persistent inflation. The core personal consumption expenditures price index rose 4.7% in January from the year-earlier period, beating expectations. The overall PCE index advanced 5.4% year over year, also more than expected.

Main Pairs Movement

DXY bulls flirt with the 105.00 hurdles during Wednesday’s sluggish Asian session, following a stellar rebound marked a few hours ago. In doing so, the US Dollar’s gauge versus the six major currencies portrays the market’s cautious mood as traders brace for the key data/events lined up during the all-important March month, comprising Federal Reserve Chairman Jerome Powell’s speech and Fed’s monetary policy meeting. At the time of writing, the price traded at 105.042.

West Texas Intermediate futures on NYMEX, have corrected firmly after facing firmer barricades above $77.50 in the late New York session. The oil price has dropped $76.60 and is expected to remain on the tenterhooks as investors are awaiting the release of the Caixin Manufacturing PMI data for fresh impetus. At the time of writing, the price is trading at 76.65.

The AUD/USD pair has slipped sharply to near 0.6700 as the Australian Bureau of Statistics has reported mixed Gross Domestic Product (GDP) (Q4) data. The GDP data landed at 0.5% in Q4, lower than the consensus of 0.8% and the Q3 figure of 0.6%. At the time of trading, the price traded at  0.6700.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
AUDGDP (QoQ) (Q4)08:300.8%
CNYManufacturing PMI (Feb)09:3050.5
CNYCaixin Manufacturing PMI (Feb)09:4550.2
EURGerman Manufacturing PMI (Feb)16:5546.5
EURGerman Unemployment Change (Feb)16:559K
GBPManufacturing PMI (Feb)17:3049.2
GBPBoE Gov Bailey Speaks18:00 
EURGerman CPI (YoY) (Feb)21:008.5%
USDISM Manufacturing PMI (Feb)23:0048
USDCrude Oil Inventories23:300.457M