zerohedge.com / by Tyler Durden / Aug 29, 2016
The dollar index rose to a two-week high on Monday, while bond yields jumped to their highest since June and global stocks sold off after senior Federal Reserve officials indicated a U.S. interest rate increase was on the cards in the near term. The Fed effect – and the stronger dollar – reverberated through markets, pressuring stocks in Europe and emerging markets, pushing oil below $47 and the commodity complex lower.
In the past few months, the Fed has been swaying back and forth on whether to raise rates this year, keeping investors across the globe on tenterhooks. But on Friday, at the Fed’s annual gathering for global central bankers in Jackson Hole, Wyoming, Fed Chair Janet Yellen gave one of the clearest indications that a rate hike was probably round the corner, Reuters reported.
As Bloomberg reports, stocks and currencies in developing economies sank to their lowest levels in at least three weeks after Federal Reserve officials once again spurred bets on a U.S. interest-rate increase in September. The Bloomberg Dollar Spot Index extended its biggest jump since June, while oil led declines in commodities. Japan’s Topix index of shares rose after central bank chief Haruhiko Kuroda reiterated a pledge to boost monetary stimulus if needed.
With hardly any rate hikes expected in 2016 just a few months ago, the prospect of a rate increase next month is now back on the table, with the probability rising to 42% from 22% in the space of a week. December rate hike odds jumped to 65% after opening at 57% on Friday morning before Jackson Hole and Yellen and Fischer’s comments.
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