© . A trader works on the Frankfurt Stock Exchange in Frankfurt, Germany, Feb. 22, 2022. REUTERS/Timm Reichert A look at the markets ahead from Dhara Ranasinghe. The end of the week is in sight and one thing is clear, central banks seem to be moving in a different direction and investors are not quite convinced this is the right one. So even as the Federal Reserve entered its rate-raising cycle and signaled an aggressive plan to drive up borrowing costs to contain inflation, market prices suggest that such an action could trigger a potential recession. At just 24 basis points, the differential between two- and 10-year Treasury yields is near its tightest level since March 2020. That means the yield curve isn’t far from inversion — an indicator of a likely recession in the coming years. one to two years. It has a good track record. Meanwhile, the Bank of England raised interest rates for the third time on Thursday, but softened its language on the need for more hikes as households take a huge blow from rising energy bills. Christine Lagarde, head of the European Central Bank, said the ECB would be in no rush to hike rates (markets are still pricing in at least 4 rate hikes of 10 bp each by the end of the year), while the Bank of Japan on Friday maintained its massive stimulus and warned of the increasing risks of the crisis in Ukraine. Whether it’s raising rates and taming inflation, but risking sending the economy into recession, or doing nothing to steer the economy through the effects of the war in Ukraine and risking inflation to rise puts policymakers in a difficult position. Seaweed oil won’t help get crude oil back above $100. However, a first default on Russian external bonds in a century seems to have been averted for the time being. Sources say some creditors have received payment, in dollars, of coupons for Russian bonds maturing this week. European stock futures are generally flat, while US futures are lower, with global markets taking a breather after several days of gains. Key developments to give markets more direction on Friday: – S&P downgrades Russia’s rating to “CC” for default risk – Eurozone wages/jobs, trade balance data – Richmond Fed President Thomas Barkin, Chicago President Charles Evans and Federal Reserve Board – Governor Michelle Bowman speaks – Existing US home sales data – Emerging Markets Central Banks: Azerbaijan, Russia – Moody’s (NYSE:), DBRS to review Greek ratings Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.
