Bonds put pressure on stocks. Federal (Fed), with benchmark 10-year sovereign bond yields reaching 4% and the two-year yield at its highest level since 2007. 6-month and 12-month bills well above the 5% level, staging the inverted curve with higher short-term rates than long-term ones, a negative sign for investors.
Inflation data from last Friday in the US and this week in Europe, as well as US manufacturing (ISM) figures, specify fueling concerns that rates could continue to rise for longer than expected. Bank of America and Goldman Sachs have revised their forecasts for the Fed and the ECB up twice in the last month.
Yields, which rise as bond prices fall, are back to levels not seen since November and they forecast a more aggressive tightening of financial conditions to combat inflation.
The big news is that almost no one in the market expects rate cuts by 2023 despite the fact that in December or even mid-January it was the dominant opinion. The reactivation of the economy after the opening of China and the resistance to lowering inflation augur more movements by central banks to control prices.
