Markets are waging war against central bankers.
After initially rising, U.S. stock futures sold off sharply as selling returned to emerging markets, reversing gains in currencies that were boosted by the Turkish central bank’s sharp rate hike.
“I think that on the flip side of the rate hikes, where people thought this would stabilize things, the extent of the hikes are now freaking people out. The Turkish lira is getting slammed now and the South Africa is getting slammed now,” said Peter Boockvar, chief market analyst with the Lindsey Group.
South Africa on Wednesday followed Turkey’s rate hike with a half percentage point boost, taking its repo rate to 5.5 percent. Turkey surprised markets with a massive hike, taking its benchmark to 12 percent from 7.75 percent late Tuesday. This came on the heels of a rate hike in India on Tuesday, which helped steady markets ahead of Turkey’s rate decision.