U.S. Government Bond Prices Dip as European Shares Rise
European shares rise; Global financial markets were mixed on Monday. U.S. government bond prices fell ahead of this week’s meeting of the Federal Reserve’s monetary policy. European stocks increased in hopes of talks between Russia-Ukraine. The 10-year interest rate on U.S. Treasury bonds goes in the opposite direction to the benchmark price of government debt securities; it also sets borrowing costs worldwide, rising to 2.05 percent, for a total of 0.04 percentage points. This is the top rate since February.
The Stoxx Europe 600 stock index, which dropped more than a tenth this year, added 0.5 percent. Investors were increasingly concerned about sanctions against Russia; Which stifled the supply of goods; Consequently causing a recession.
However, shares in China dipped on signs that a widespread lockout could again take place. The world’s second-largest economy deals with the enormous COVID-19 explosion since the pandemic started two years ago. At the March 16-17 meeting, the Fed will raise its fixed asset rate by at least a quarter of a point; Central banks may raise borrowing costs despite the economic danger of the Ukraine war.
Consumer price inflation in the U.S. rose to 7.9 percent year-on-year in February. This is the maximum recorded for 40 years. Price growth has also reached a record in the Eurozone. It should exceed 7 percent in the U.K. this spring. Powell signaled that the U.S. Federal Reserve would start hiking rates at 25 basis points; However, a 50 bp increase is not ruled out as inflation and expectations continue to rise.
Restrictions and Shares
The Hang Seng Index fell 5.3 percent. The CSI 300 index fell 3.1 percent; Since then, 17.5 million residents of Shenzhen have been locked up to increase the number of cases of the coronavirus variant of Omicron. Cases have also increased in Shanghai and other major cities. On Sunday, China announced more than 1,800 cases of COVID-19.
Experts estimate that if the closure continues in China, it will significantly impact the country’s economic growth. Week-long closure of the affected region could cut the country’s economic growth by about 0.1 percentage points this year. The Hang Seng Tech Index fell more than 11 percent.
The oil criteria also fell because Russia was more willing to engage in serious negotiations with Ukraine. According to reports, the delegations’ positions at the beginning of the talks and now are significantly progressive.
Brent oil, the international benchmark, fell 3.3 percent to $109. West Texas Intermediate was down 3.6 percent to $105. Analysts say oil prices continue to demonstrate volatility outside Russia. This is due to the uncertain additional supply background and the post-war geopolitical risks.