US interest rate cut expectations drive markets higher – business live
Rolling coverage of the latest economic and financial news, including new healthchecks on the world’s service sector companies
- Wall Street posts best day in five months
- Dow Jones jumped over 500 points
- Fed chair vows to ‘act appropriately’ (ie cut rates?)
Government bond prices are also being driven higher, by the prospect of interest rate cuts.
This has pushed down the yield (effectively the rate of return) on Japan’s sovereign debt today. Two-year Japanese bonds are now deeper into negative territory, meaning an investors is guaranteed to lose money if they hold them until they mature.
#Japan’s 2-year bond yield falls to -0.22%, the lowest since March 2017. pic.twitter.com/u1lbmlSnuB
The #Fed leaning towards cutting rates isn’t just affecting #US markets. 10-year JGB yields have fallen to their lowest since August 2016 as #BOJ rate cut odds rise. https://t.co/4p6wZ9VR3f pic.twitter.com/SExdKncYYU
Japan’s stock market has matched last night’s Wall Street rally, by jumping by 2% as well.
How much truth there was in the big rally for markets yesterday and how much was dramatised is open for question.
Indeed, the last 24 hours has seen a marked change in sentiment and although it’s hard to completely attribute the move to Powell’s comments at the Fed conference yesterday, the fact that the Chair seemingly didn’t push back on very dovish market pricing did at least fill investors with a bit more confidence.