Sector movers: Banks and insurers track gains in government bond yields

22nd Mar 2022 18:36

(Sharecast News) - Lenders' and insurers' shares paced gains on Tuesday as a top US central bank official laid out the case for moving "faster" to hike short-term interest rates.

In remarks to Bloomberg TV, Federal Reserve Bank of St.Louis President, James Bullard, said rates needed to go up by a fair amount.

And while the aim was not to be "too disruptive", 50 basis points hikes should definitely be in the mix, he said.

Bullard, a well-known policy hawk at the Fed, said rates needed to get return to neutral "at least" so that the central bank wasn´t adding to inflation.

His estimate of the so-called neutral interest rate was 2.0%, although he reiterated a call for them to be hiked to 3.0% as soon as 2022.

The median projection of top Fed officials was for the target range for the Fed funds rate to rise to 2.8% by the end of 2023.

The day before, Fed chairman, Jerome Powell, had left the door open to 50 basis point interest rate hikes both at the 3-4 May meeting of the Federal Open Market Committee and at future meetings "if we conclude that it is appropriate to move more aggressively".

On a related note, on Tuesday, equity analysts at Bank of America reiterated their recommendation to clients to 'overweight' US financials, despite the recent inversion in the 3-10 year Treasury yield curve.

Automobiles & Parts also sped higher, even as S&P Global took an axe to its projections for light vehicle sales worldwide in 2022 from a previous increase of 4.0-6.0% to as low as -2.0%.

"The consequences will likely be more pronounced for the European region and could well spread to other markets in the event of a prolonged conflict," said S&P Global Ratings credit analyst Vittoria Ferraris.

"In particular, disruption of critical automotive parts from the region, including wire harness manufacturing in Ukraine, potential shortages for materials such as palladium, and price hikes for steel, copper, aluminum, and nickel pose key risks to the industry for 2022."

Top performing sectors so far today

Automobiles & Parts 2,664.05 +3.57%

Life Insurance 7,242.28 +3.39%

Banks 3,289.53 +3.06%

Real Estate Investment Trusts 3,315.25 +1.88%

Non-life Insurance 2,946.49 +1.31%

Bottom performing sectors so far today

Precious Metals and Mining 10,624.90 -2.90%

Construction & Materials 7,280.16 -1.64%

Leisure Goods 17,608.87 -0.98%

Industrial Transportation 4,095.45 -0.94%

Industrial Engineering 16,068.43 -0.92%