Nowhere to hide as aggressive rate bets spark rout across assets
BNN Bloomberg
“You can summarize [Friday's] market in three letters: B-A-D”
Friday is proving a washout for investors as increasingly bigger bets on Federal Reserve tightening prompted traders to offload risk and haven alike before the weekend.
The technology-heavy Nasdaq 100 is on track for its worst month since 2008, short-dated Treasuries sold off and oil prices tanked as traders priced in four half-point Fed hikes by year-end. Even gold is falling. The U.S. dollar was the lone gainer, rising 0.7 per cent to touch the highest since June 2020.
“You can summarize today’s market in three letters: B-A-D,” said Mike Bailey, director of research at FBB Capital Partners. “My sense is investors are flip flopping between Fed stress and earnings, and today seems more focused on the Fed.”
The IPOX SPAC Index, which tracks the performance of a broad group of special-purpose acquisition companies (SPACs), has lost more than 3 per cent this week, while a basket of newly public firms has shed roughly 10 per cent. To Art Hogan, chief market strategist at National Securities, it makes sense that tech stocks were among the hardest-hit because rising rates put pressure on their valuations.
“We’re back to the old playbook of when yields move aggressively, when they have a parabolic day, everyone exits all risk assets and the high-growth names in particular,” he said by phone.
