The run of the American currency, which has now continued since March when the US Central Bank announced the first rate hike of 25 basis points, does not slow down and on the contrary has pushed the dollar index to a maximum for five years (+ 0.21% at 96.52). The situation shows no signs of changing, on the contrary, yesterday’s words of the Fed governor, Lael Brainard, and the president of the San Francisco Fed, Mary Daly, caused Wall Street to collapse below 1%, bringing the exchange between the euro and the dollar. Below 1.09, a one-month low, the cross is now trading at 1.0894 (-0.07). Also weighing on the single currency are the new 20 billion sanctions that the president of the EU Commission, Ursula Von der Leyen, presented yesterday to the European executive. The main ones include, for example, the stop on coal,
The dollar also strengthened against the Japanese currency, reaching a new 15-year high at 124 yen (+ 0.22%). Unlike the Fed, the Bank of Japan is keeping Japanese yields low and the growing gap between US and Japanese yields is weighing on the yen. In addition to equities and exchange rates, American government bonds also paid a heavy price. The US 2-year yield has risen to its highest level from 2019 to 2.569%, the 5-year yield is at its highest since December 2018 at 2.767% while the benchmark 10-year yield has risen to 2.6144% , the highest since March 2019.
If so there was even some doubt as to what the Federal Reserve’s monetary policy was on the key issue of the day, inflation, yesterday evening the two prominent Eccles Building officials brought even more clarity on Tuesday. The Fed Governor and Mary Daly both made comments that showed they both expect higher rates and, in Brainard’s case, an aggressive drawdown of the assets the central bank is holding on its balance sheet. “It is critically important to reduce inflation,” Brainard said during a Minneapolis Fed webinar. The Federal Open Market Committee ”
After these “reassurances”, the average rate on the popular US 30-year fixed loan also rose, exceeding 5%, reaching 5.02%, according to Mortgage News Daily. This is the first time it has crossed that threshold since 2011, save for two days in 2018, a key threshold that could slow down the housing market. What made the two officials’ comments more surprising is that they are considered to be in the Fed’s “dovish” camp, which means they usually favor low rates and less restrictive policies. The fact that they both see a rather urgent need to tighten underlines how seriously the Fed is taking the threat. The Federal Reserve Will Unveil Details In The Evening (20: 00 Italian time) of its likely plans to reduce its massive balance sheet with the publication of the minutes of the March meeting of the US central bank. (All rights reserved)

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