NEW YORK, March 26 — Shares on Wall Street took a breather yesterday after a tech-driven rally and US Treasury yields rose to fresh heights as markets evaluated a world of elevated interest rates and the effects of Russia’s war in Ukraine.
Share prices have been supported by global flash Purchasing Managers’ Index data for March this week showing the world economy was broadly resilient, but the longer-term economic outlook is making investors cautious. Barclays, for example, cut its 2022 world economic growth forecast this week to 3.3 per cent while traders have ramped up short bets.
Bank of America joined a small but growing number of top investment banks calling for more aggressive interest rate increases from the Fed against a backdrop of soaring inflation data. The bank now expects two hikes of 50 basis points each at its June and July meetings with “risks” of those expectations being pulled forward into May and June respectively.
“While a disorderly tightening of financial conditions remains a risk to the outlook, particularly in areas like credit, our baseline growth outlook remains constructive,” they wrote. “We think helps contain risks that financial conditions become too dislocated in response to the Fed’s actions.”Oil prices turned positive yesterday after reports of a missile strike and a fire at Saudi Arabia’s state-run oil company Aramco’s facility.