Bond yields fell before and after Fed chair Powell’s testimony, which was less hawkish than expected. That appeared to help equities, the S&P500 up 0.4%. The US dollar fell.

US markets returned from a long weekend in a bullish mood, the S&P500 up 2.7%. Bond yields rose slightly, while currencies were again contained.

Risk sentiment improved slightly during the US holiday. The Eurostoxx index is up 0.9%, and S&P500 futures are up 1.1%. Bond yields rose slightly, while currencies were contained. There were hawkish comments from ECB and BoE officials.

Risk sentiment appeared to stabilise on Friday, the S&P500 closing up 0.2%. Bond yields were also relatively stable. The US dollar rose.

Markets were in a risk averse mood, concerned about the impact on the economy from aggressive tightening. The S&P500 is down 3.2% and bond yields are lower. The US dollar underperformed, weighed down by US recession fears as well as yield spreads, with the UK and Swiss central banks delivering hawkish surprises overnight.

The Fed hiked by 75bp, as was widely expected following last Friday’s strong inflation data. With markets well positioned for the move, the US dollar and bond yields fell in response, and the S&P500 is up 1.5%.

The risk averse mood continued on the eve of the Fed’s rate decision. The S&P500 is down 0.4%, and at the lowest level since March 2021. The defensive US dollar made a fresh 20-year high, and bond yields rose further to decade highs.

Risk sentiment fell sharply after a surprisingly strong US inflation update which indicated the Fed may need to tighten even faster. The S&P500 closed down 2.9%, the defensive US dollar rose, and bond yields rose.

Risk sentiment continued to deteriorate on concerns central bank tightening will slow economies and hurt assets. The S&P500 is down 3.9%, and at the lowest level since March 2021. The defensive US dollar rose to a 20-year high, and bond yields rose to decade highs. There was no fresh news of note, markets still reeling from Friday’s strong US inflation data.

A risk averse mood prevailed, the S&P500 down 2.4%. The defensive US dollar is higher, as are bond yields following the hawkish ECB.