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Market Update | September 6, 2022

Since our last Market Update two weeks ago, the direction of the U.S. stock market and bond yields have been down and up, respectively. Global stocks were down -3.3% last week, led by U.S. markets. The 10-year U.S. Treasury bond is yielding 3.33% today, which is half a percentage point higher than one month ago.

The U.S. dollar is solidifying the ground it gained this summer on major international currencies. Today I bought some tickets to a sporting event in France. I paid less in U.S. dollars than the price that was quoted in Euros! The exchange rate was 1.00 Euro for $0.995. It was a phenomenon that I don’t remember experiencing, for the Euro is at a two-decade low compared to the U.S. dollar.

The recent trend in stocks, bond yields, and currency markets appear to have a common thread. Alicia Levine, market strategist at BNY Mellon Investment Management, suggested yesterday, “The lower risk sentiment was underpinned by an expectation of tighter monetary policy for longer. [It is] putting upward pressure on yields and the dollar.”

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