The Federal Reserve has made it clear that its fight against surging inflation is currently its most important mission, and it would be continuing with big interest rate increases even at the potential expense of sending the country’s economy into recession. This tone pushed benchmark U.S. 10-year Treasury yields above 4% for the first time since 2010, before edging back to the current 3.982%. There are expectations for higher rate hike, a strong US dollar and higher real interest rates.

- ECB President Christine Lagarde said on Wednesday that The European Central Bank must keep raising interest rates to tame inflation, even if the side effect of tighter policy will be weaker growth. She added that the "first destination" of rate hikes will be to reach the neutral rate, which neither stimulates nor slows growth.

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Equities:

- Wall Street sank deeper into a bear market on Tuesday, with the S&P 500 recording its lowest close in almost two-years as Federal Reserve policymakers showed an appetite for more interest rate hikes, even at the risk of throwing the economy into a downturn.

- The S&P 500 has declined for six straight sessions, its longest losing streak since February 2020. Seven of 11 S&P 500 sector indexes fell, with utilities and consumer staples each down about 1.7% and leading declines.

- The Nasdaq Composite climbed 0.44% to 11,289.8, while the S&P 500 lost 0.21% to 3,647.28. The Dow Jones Industrial Average fell 0.31% to end at 29,193 points.

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Currency Market:

- The safe-haven U.S. dollar soared to a new 20-year high as more hawkish Fed speak and rising Treasury yields spurred fresh recession fears.

- The Dollar Index rose 0.5% to 114.597, after hitting a fresh two-decade high of 114.653 earlier this session.

- EUR/USD fell 0.5% to 0.9545, not far off from its recent 20-year trough of 0.9528, with the single currency weighed by the recent escalation of the Eurozone's energy crisis. GBP/USD fell 0.8% to 1.0649, remaining near all-time lows as the repercussions following the new U.K. government’s radical tax cut plans continue to be felt within the markets.

- USD/JPY edged higher to 144.79, remaining near the crucial 145 level even after Japan's intervention to prop up the fragile currency last week.

- AUD/USD fell 1.1% to 0.6366, near its lowest level since May 2020, while USD/CNY rose 0.7% to 7.2301.

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Commodities: Gold:

- Gold fell 0.3% as the dollar remained pinned to 20-year highs amid growing concerns over a looming economic slowdown.

- Spot gold fell to $1,615 from its previous close at $1,628.67 an ounce.

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Commodities: Oil:

- Oil prices fell more than 1%, pressured by a strengthening dollar and crude storage builds that offset support from U.S. production cuts caused by Hurricane Ian.

- Brent crude futures fell 1.2%, to $85.25 per barrel, while WTI crude futures were down 1.2%, at $77.53 per barrel.
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