The New York Stock Exchange is set to open lower on Thursday morning, continuing its decline of recent days, as investors gave a muted welcome to the second estimate of US growth in the first quarter, which came out in line with expectations.

Half an hour before the opening, futures contracts on the major New York indices were down between 0.2% and 0.8%, heralding an opening in the red.

Due to the tensions currently at work on bond yields, Wall Street posted its fifth decline in seven sessions on Wednesday.

The sharp rise in US government bond yields has some traders fearing a correction in stock market indices, similar to that seen last autumn.

The drastic shock on bonds is easing somewhat this morning, with the yield on ten-year Treasuries easing to around 4.57%, from a peak of over 4.63% last night.

The decline in equities is taking place against a backdrop of heightened volatility: at 14.8 points, the CBOE's VIX index - often referred to as the fear index - reached a three-week high yesterday.

The fear of a reawakening of inflation likely to push the Federal Reserve to keep rates high for an extended period is being felt at all levels.

According to CME's Fedwatch tool, traders now estimate the probability of a 25bp rate cut in September at just 47.9%, down from 52.5% yesterday.

As a corollary, investors are wondering whether the Fed's continued restrictive policy might cause the US economy to stall.

If history is anything to go by, central banks often make the mistake of waiting too long before changing direction", point out the teams at Muzinich & Co.

Some observers are even beginning to think that the best way to temper inflation would be to lower rates rather than keep them at high levels any longer.

As if to prove them right, economic growth clearly ran out of steam in the US in the first quarter, with the downturn in federal spending in particular acting as a brake on activity.

Gross domestic product (GDP) grew at an annualized rate of 1.3%, lower than the 1.6% estimate provided last month, according to the Commerce Department.

By way of comparison, growth had been 3.4% in the fourth quarter of 2023.

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