Fed Credibility Soars Amid Rate Hike Bets
Investors are pricing in a more credible Federal Reserve after Chairman Kevin Warsh's speech at the annual economic symposium in Jackson Hole, Wyoming.
The bond market swung on Friday as traders bet on a nearly 58% probability of a Fed rate hike next month, up from 35% the day before.
This is a significant move for the bond market, with the two-year Treasury yield jumping to 4.35% from 4.22%, indicating expectations that the Fed will increase interest rates soon to combat inflation.
The S&P 500 fell 0.2% after flipping between modest gains and losses throughout the morning, while the Dow Jones Industrial Average dipped 9 points or less than 0.1% and the Nasdaq composite slipped 0.5%.
Gap stock jumped 12.9% after reporting stronger profit for the latest quarter than analysts expected.