The Stock Market Got A Big Boost From The Bond Selloff. The Fed Could Change That.

Mar 27, 2022

The Stock Market Got A Big Boost From The Bond Selloff. The Fed Could Change That.

The Federal Reserve is speaking out forcefully against inflation—and the equity market is thrilled. Don't expect shares to be calmer if Powell & Co. follow through on their remarks.

The S&P 500 climbed 1.8%, continuing its week-long run, while the Nasdaq Composite jumped 2%. The Dow Jones Industrial Average was the only unchanged index to end the week, up 0.3%. The S&P 500 has risen by 8.1% in the last two weeks, the most since April 2020.

Avoid looking for the "positive news" that fueled the week's advances — there was none, at least not in the usual sense. Russia's attack on Ukraine seems to be far from over. Fed Chair Jerome Powell and several central bank officials have discussed the prospect of a half-point rate hike at forthcoming meetings. And bonds continued to face significant losses, with the 10-year yield completing the week at 2.491%, its highest level since May 2019.

https://liquidity-provider.com/app/uploads/2022/03/unnamed-82.png

With government bonds on track to suffer their weakest year since 1949, investors seek other investments — and they may have landed on shares. In recent weeks, stock and bond values have stopped moving in lockstep, as they did in early 2022. Thomas Mathews, a market economist at Capital Economics, observes that stock prices have fallen when bond prices have increased following Russia's invasion of Ukraine.

Now that investors seem to have accepted a protracted battle — but one that will have less economic damage than anticipated — bond prices are falling, and equities are surging. "We believe the divergence between the two this month is due, at least in part, to an improvement in investor sentiment regarding the Russia-Ukraine war's effects, resulting in increased demand for 'risky' assets (such as equities) at the expense of 'safe' assets (such as Treasuries)," Mathews comments.

Sentiment could hardly have worsened more. For the first time since March 2020, the BofA Bull & Bear Indicator dipped to "extreme bearish" this week, signaling the market was poised for a recovery. Since 2013, according to Michael Hartnett, chief investment strategist at BofA Securities, the MSCI All-Country World Index has risen an average of 7.9% in the three months after such a reading. He does not believe the rally will extend much longer than that, though, given the high level of inflation, rising interest rates, and the possibility of a growth shock. "Q2 presents a compelling selling opportunity," he writes.

That is entirely feasible. However, that does not necessarily mean the market will crash. According to J.P. Morgan technical analyst Jason Hunter, the S&P 500 might remain range bound for the next six months. He argues that the S&P 500 had historically moved within a 10% to 15% six-month range when the Fed began hiking rates in 1983, 1994, 2004, and 2015 and might do so again. "We expect the S&P 500 will maintain its early-2022 price extremes as the market adjusts to the end of loose monetary policy," Hunter says.

Perhaps trading this market will prove to be more difficult than anticipated.

Subscribe Our Newsletter

Netflix, HBO, Comcast: The Biggest Streaming Mistake of the Year
Netflix, HBO, Comcast: The Biggest Streaming Mistake of the Year

When it comes to understanding consumer behavior, streaming services ignore a significant detail. Let's find out which one.

Companies
Dogecoin price surges

Oto

Dogecoin Prediction: What’s Next for the DOGE Price After Recent Surge?

Dogecoin's recent surge shows strong momentum driven by whale accumulation and market recovery. Experts predict potential growth.

Crypto
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Oliver

What is Cryptocurrency CFD Trading?
A growing number of profitable opportunities emerged as crypto developed. Trading cryptocurrency CFDs is one such opportunity. The practice of day trading, which was first used in the stock market, has also spread to the crypto market. The only difference is that instead of using fiat money, crypto CFDs use cryptocurrencies. CFDs on cryptocurrencies are a fantastic method to trade digital currencies without needing to make a real purchase.

discover
How to Measure Liquidity in The Forex Market

Constantine

How Do You Measure Liquidity in Forex?

Learn what Forex liquidity is, what factors determine it and what metrics are used to measure it.

Forex Business
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alex

    Pi Network: Scam or Groundbreaking Crypto? The Full Analysis

    Constantine

    Triple Net Lease: Meaning, Benefits, and Strategies Explained

    Constantine

    Hanging Man Pattern: How to Identify and Trade It Effectively

    Hanging Man Pattern

    Alex

    5 Infinite Banking Mistakes That Could Cost You Thousands

    Infinite Banking Mistakes to Avoid

    Aleksander

    Solana Firedancer: Solving Solana’s Biggest Problems with a New Engine

    Solana Firedancer explained

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained

    Hazem

    After-Hours Trading: Can You Trade After Financial Markets Close?

    After-Hours Trading Explained

    Alexander

    How to Scale a Crypto Exchange Business and Stay Competitive

    how to scale crypto exchange business

    Constantine

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Alexander

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Hazem

    Megaphone Pattern​: What Is It? How to Use It In Trading

    Megaphone Pattern​: How to Read & Trade with It

    Constantine

    Top 5 Liquidity Bridge Providers in DeFi

    Top 5 Liquidity Bridge Providers in DeFi

    Hazem

    Max Funded IUL Explained: Is It a Legitimate Financial Strategy?

    Understanding Max Funded IUL

    Alexander

    Tax Refund Timeline: When Will You Get Your Tax Return?

    how long does it take for tax refund

    Constantine

    Crypto Liquidity — What is it, and How to Measure It?

    What is Crypto Liquidity and How to Measure It?

    Constantine

    AI in Finance: A Game-Changing Trend Shaping the Industry

    AI in Finance

    Hazem

    5 Ways to Make Money with ChatGPT and Build Your Wealth

    Make Money with ChatGPT

    Constantine

    Top AI Companies to Invest in April 2025

    Top AI Companies to Invest in March 2025

    DeepSeek vs ChatGPT: Which AI Technology is Better For You?

    DeepSeek vs ChatGPT: Feature-by-Feature AI Tool Comparison

    Constantine

    Top Solana Meme Coins in 2025: Best Presales and Where to Buy

    Solana Meme Coins 2025

    Alexander

    How Renewable Energy Stocks Can Supercharge Your Portfolio

    How Renewable Energy Stocks Supercharge Your Portfolio

    SEC Crypto Regulations: What Financial Advisors Need to Know

    SEC Crypto Regulations: Insights for Financial Advisors

    Hazem

    The Cup and Handle Pattern – How Trade Using This Bullish Indicator?

    Cup and Handle Pattern – How to Predict Price Breakouts?

    Hazem

    Year-Over-Year (YoY): What It Means? How It’s Used in Finance?

    Year-Over-Year (YoY): How to Calculate Business Performance?
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.