Hawks dye Wall Street red. The inversion of the yield curve gives warning signals

Wall Street ended the day in negative territory, as investors digested the expectations left by the US Federal Reserve (Fed) in the minutes indicating the latest monetary policy meeting.

The Dow Jones Industrial Average fell by 0.38% 34,288.64 points, while the S&P 500 lost 0.20% to 4446.82 points.

The Nasdaq Technology Composite Index fell 0.18% to 13,791.65 points.

In the debt market, the yield on 2-year US bonds remained virtually unchanged at 4.940%, while the 10-year yield rose 7.5 basis points to 3.930%.

The market tends to read this inversion in the yield curve as a sign of the onset of an economic crisis.

The US Federal Reserve (Fed) maintains its belief that political interest rates will continue to rise this year, according to the minutes of the latest meeting. Thus, these words reflect the recent statements of the head of the central bank, Jerome Powell.

Almost all participants [do Comité] They considered that further increases in the key interest rate during 2023 would be appropriate in their expectations,” the minutes revealed.

At its last meeting, in the middle of this month, the Federal Reserve decided, for the first time since the beginning of the monetary tightening cycle, to pause interest rate hikes, with the federal funds rate currently set in a range between 5% and 5.25. %.

In addition, after this meeting, the “conspiracy point” was triggered, with the central bank pointing to the peak of the federal funds rate reaching a range between 5.5% and 5.75% this year.

Looking at the next meeting, which will take place in three weeks, the “swaps” market is betting on an 88.7% probability that the US monetary authority will raise interest rates by 25 basis points, against a probability of only 11. 3% that the fed funds rate is unchanged in the current range.

Investors closely watched Coinbase shares, which fell 1.98% after an investment firm downgraded its rating to recommend the cryptocurrency platform.