Markets increasingly nervous about rate hikes

Posted on Feb 27, 2019 2021 at 10:59Updated Feb 27, 2019 2021 at 11:11

It was a blow of tobacco that shook the world stock markets at the end of the week. The Nasdaq-100 ended the session Thursday, falling more than 3.5%. In its wake, it dragged the other major American indices. Asian markets followed suit, posting their largest decline in nearly a year. And on Friday, Europe ended up in the red.

Cause of this general rout? A sudden rise in the rate on Treasuries – US 10-year government bonds – which jumped to 1.6%. Unheard of since mid-February 2020, before the outbreak of the Covid crisis. The movement spread to most government securities, forcing the Bank of Australia in particular to announce the emergency purchase of 3-year government bonds for 3 billion Australian dollars (2 billion euros ) to counter the rate hike. ” The danger comes not from the absolute level reached by interest rates, but from the pace of the rise, explains Tangi Le Liboux at Aurel BGC. If it too fast, the markets adjust with a crash “.

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