Stocks Selloff Deepen as Trader Modify Rate Bets – Europe Market Wrap

The market’s forecasts on interest rate cuts were further rebuffed by central bankers, intensifying a global selloff of bonds and stocks.- The Treasury two-year yield, which is among the most sensitive to changes in monetary policy, increased six basis points to 4.29%, and the dollar continued its rally for a fourth day. The CBOE Volatility Index, or Wall Street’s “Fear Gauge,” rose to a two-month high. Futures on the Nasdaq 100 and S&P 500 fell around 0.5%, indicating another weak day ahead for US equities.

Money markets pushed back bets on the timing of the ECB’s first quarter-point cut to June from April, while swaps market pricing for a Fed rate decrease in March plummeted to about 65% from 80% on Friday.

CPI data was stronger than expected. UK CPI YoY Actual 4% (Forecast 3.8%, Previous 3.9%) [Sterling Strengthened]

Traders pare Bank of England bets after UK CPI. 119 BPS cuts priced in 2024.