UK tax cuts deepen sell-off, dollar rises

Written by Amanda Cooper and Tommy Wilkes

LondonSept 23 – Stocks hit two-year lows on Friday, dollar hits two-decade high, bonds sold again as investors feared rate hikes to control inflation, while UK assets tumbled after the announcement of a massive debt-funded tax . cuts.

UK assets have already fallen but extended their slide after the new British chancellor unveiled a historic tax-cut agenda that would send government borrowing skyrocketing.

* UK bond yields were headed for their biggest daily rise in decades, as money markets anticipate Bank of England interest rates as high as 5% by May next year. The British pound lost 2%.

* The mood in the markets has been tense all week, with major central banks offering another 350 basis point interest rate hike to combat inflation, Japan’s intervention to prop up the yen, and downbeat managers’ index data shopping around on Friday, indicating a deepening in prices. slowdown in major economies.

* The US, UK, Sweden, Switzerland and Norway, among others, raised interest rates, but it was the Fed’s signal that it expects high rates to continue until 2023 in the country that caused the recent sell-off.

* World stock index for MSCI It hit its lowest level since mid-2020 on Friday, after losing about 12% in the month since Federal Reserve Chairman Jerome Powell made clear that inflation needed to be cut, despite the damage that could cause.

The euro fell for the fourth consecutive day after data showed that the German economic slowdown deepened in September as consumers and businesses faced an unprecedented energy crisis and spiraling inflation.

* European stocks traded in the red for the second day in a row, weighed down by losses in everything from banking to natural resources to technology stocks.

* Pan-European Index Stokes 600 decreased by nearly 2.2%, while Dax The Frankfurt Index is down 1.94%, making it one of the worst performing European indices.

S&P emini futures are down 1.15%, indicating a lower trading session on Wall Street.

* The FTSE The British pound fell 1.9%, as the British pound fell by 2%, hitting a 37-year low and reaching $1.1022 at one point.

With US interest rates expected to rise faster and stay higher for longer, the dollar hit a two-decade high, while 10-year Treasury yields rose as investors dumped inflation-sensitive assets like bonds.

* The yield on the 10-year note rose 5 basis points to 3.776%, another 11-1/2-year high, and is on track for an eighth consecutive weekly rise.

Eurozone bond yields also rose strongly, with Italy’s 10-year bond yield hitting 4.294%, the highest since late 2013, ahead of Sunday’s Italian elections.

– The euro hit another 20-year low, falling to $0.9736.

* The dollar rose 0.4% against the Japanese currency to 142.97 per dollar. Few believe that the yen’s rally will continue as the BoJ remains dovish.

* Gold, which carries no interest, came under pressure, especially during this quarter, due to higher yields. And it fell 1.55 percent to $ 1,644 an ounce, its lowest level in two years.