Long-term funds such as the iShares 20+ Year Treasury Bond ETF (TLT) and the T. Rowe Price US Treasury Long-Term (PRULX) fell 1.6% each for the week ended May 20, 2016.
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The odds of a move next month have more than doubled to 32% since the start of May, according to futures bets tracked by Bloomberg. U.S. interest rates being kept too low for too long could cause financial instability in future and stronger market expectations for a rate rise are “probably good”, he added.
In the United States, an imminent rise in interest rates was looking more probable.
San Francisco Fed chief John Williams said, “Over the rest of the year two or maybe three rate increases, maybe one or two more (than that) next year so maybe three or four next year – I think that’s still about right”.
St. Louis Federal Reserve President James Bullard also said a relatively tight labor market may put upward pressure on inflation, raising the case for higher interest rates. The minutes from the Fed’s late April meeting showed that policymakers at the nation’s central bank seem to believe the US economy has improved enough to warrant higher interest rates.
The benchmark S&P/ASX 200 Index dropped 23.30 points or 0.44 percent to 5,295.60 and the broader All Ordinaries Index shed 23.00 points or 0.43 percent to close at 5,361.90.
Global stock markets were little changed and the US dollar gained on Monday as investors weighed the possibility that USA interest rates could soon be raised.
“Rates need to normalize, and the Fed needs to give itself room to lower again in the event of another financial crisis”, Ghriskey said. The Standard & Poor’s 500 index fell 4.28 points, or 0.2 percent, to 2,048.04 and the Nasdaq composite lost 3.78 points, or 0.1 percent, to 4,765.78.
Shares of Monsanto were up 4.6 per cent in late morning NY trading after Bayer unveiled a $62-billion bid for US seeds company Monsanto.
European markets have shown a notable move to the upside during trading on Tuesday after moving to the downside in the previous session.
Several Fed officials struck hawkish tones in separate speeches on Monday, calling for two-three rate hikes in 2016 if the economic data supports it.
Investors also digested economic data that showed euro zone private-sector growth in manufacturing and services slowing a little in May, even though Germany continued to power ahead.
Back in December, the spot dollar index – which measures the relative strength of the dollar compared to other currencies – was at a high of 100.5, while the gold price was hanging in the US$1,050.
The biggest loser among currencies in developed markets was the Australian dollar, which slid by more than 1 percent to its weakest since early March.
Oil prices gained as investors anticipated a weekly drawdown in USA crude inventories that they hoped would boost prices closer to $50 a barrel.
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Fed Hints at June Rate Hike: Why Is the Market Divided on Timing?
