Stocks and Bonds Tumble After Series of Central Bank Decisions
2022.06.16 17:36
By Scott Kanowsky
Investing.com — Stocks and bonds around the world tumbled on Thursday, as investors digested a series of central bank interest rate rises aimed at cooling down red-hot inflation.
In a whirlwind day of monetary policy decisions, the Swiss National Bank issued a surprise 50 basis point hike, followed by a 25 basis point increase from the Bank of England. Both the SNB and BoE warned that inflation may remain stubbornly high, with prices in the U.K., in particular, estimated to soar to more than 11% this year.
The moves followed aggressive tightening from the Federal Reserve on Wednesday, with the U.S. central bank upping borrowing costs by 75 basis points – the most since 1994.
As of 0946 EST (1346 GMT), the pan-European STOXX 600 – which had climbed a day earlier after the European Central Bank unveiled a plan to bolster weaker economies from higher borrowing costs – declined by 2.34% at 403.42. Britain’s FTSE 100, Germany’s DAX, the CAC 40 in France, and the FTSE MIB in Italy also sold-off. In the U.S., the Dow, S&P 500, and Nasdaq all tumbled at the open as well.
Meanwhile, bond prices also slid, with U.S. 10-year Treasury yields rising 78 basis points to 3.421%. In Europe, the closely-watched German 10-year bond yield also jumped by more than 9%, while its Italian counterpart increased by 1.27%. Bond yields typically run counter to prices.
In currencies, the pound recovered from some initial losses to strengthen against the dollar by 0.66% to $1.22. The Swiss franc also made gains against the euro, up 2.09% to €0.98. Elsewhere, the dollar index – which tracks the greenback against a basket of currencies – fell by 0.59%, after it came off a 20-year high following the Fed’s decision.
