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Yellen unexpectedly talks about "raising interest rates" and clarifies after the biggest drop in a month.
May 5,2021 07:41CST
translation
[Yellen unexpectedly talked about "raising interest rates". The Nasdaq index posted its biggest drop in a month.) influenced by US Treasury Secretary Yellen's unexpected reference to interest rate hikes and the approaching non-farm report, investors again sold large-cap technology weights to the defensive sector on Tuesday. At the same time as the Nasdaq recorded its biggest one-day decline since March 24, trading volume reached 12.21 billion shares on the US Stock Exchange, a new high in nearly a month. The opening slump in US stocks also triggered weakness in the European market at the end of the day. Perhaps given that the comments sparked a heated debate in the market, Ms Yellen made it clear at an after-hours meeting that she was not predicting or recommending a Fed rate hike.
The content below was translated by Tencent automatically for reference.

Overnight stock market

Affected by Treasury Secretary Yellen's unexpected mention of interest rate hikes and the imminent non-farm report, investors again sold large-cap technology weights to the defensive sector on Tuesday. At the same time as the Nasdaq recorded its biggest one-day decline since March 24, trading volume reached 12.21 billion shares on the US Stock Exchange, a new high in nearly a month. The opening slump in US stocks also triggered weakness in the European market at the end of the day.

Randy Frederick, vice president of trading and derivatives at Charles Schwab, commented that when there is a pause or correction in the market, investors are more likely to withdraw from growth stocks and switch to defensive ones.

Other targets

International oil prices rose significantly by more than 2 per cent on Tuesday as the US relaxed epidemic restrictions, the EU tried to restart travel and API crude and fuel stocks fell. Also in response to inflation expectations, spot palladium and Malaysian palm oil continued to hit record highs on Tuesday, while industrial metals such as copper and aluminum and agricultural products such as corn rose to near-decade highs. The fall in gold and silver has more to do with Yellen's speech driving the dollar stronger.

There is a trend of divergence in the field of cryptocurrencies, with Ethernet breaking through the $3500 mark for the first time in its history as Bitcoin continues to fall, while dog coins continue to soar 23% before the market capitalization exceeds $70 billion, ranking fourth among all cryptocurrencies.

Market news

[Yellen unexpectedly talked about raising interest rates and causing market panic]

In response to a question about whether an increase in government spending as a share of GDP could pose a risk to the economy as a whole, Ms Yellen said that "to ensure that the economy does not overheat, interest rates may need to be raised", adding that even if the extra spending is relatively small compared to the economy, it is still possible to trigger a moderate increase in interest rates. Yellen also stressed that these investments are necessary for the economy to maintain competitiveness and productivity.

It is important to note that while Ms Yellen's speech was intended to defend the US government's economic stimulus and market-driven interest rates, as the current Treasury Secretary and former Fed chairman, Ms Yellen should have avoided such sensitive expectations of taking the initiative to raise interest rates. In a follow-up speech, Yellen also said that the low interest rate environment is still likely to continue for some time, but still need to ensure that the deficit is under control.

Although it is not Yellen's job to communicate with the market on raising interest rates, the market's performance on Tuesday previewed what might happen when Powell talked about raising interest rates or reducing QE in the future. At present, the market has high expectations for Powell to talk about reducing QE at the Jackson Hole annual meeting at the end of August.

Perhaps in view of the heated market debate caused by the comments, Ms Yellen clarified at the after-hours meeting that she was not predicting or recommending a Fed rate rise, saying that inflation was only temporary and did not think it would be a problem for the US economy.

[Biden puts forward a new goal of immunization: 70% of American adults before Independence Day finish the first injection.]

U.S. president Joe Biden announced a new vaccination target on Tuesday to achieve 70 percent of American adults' first shots by the Independence Day holiday on July 4. A total of 105 million adults in the United States have been immunized, accounting for about 56 percent of all adults, and a total of 147 million have been vaccinated with at least one dose, according to White House officials.

[the US trade deficit hit an all-time high in March]

The country's trade deficit hit an all-time high in March, widening to $74.4 billion from $70.5 billion in February, according to data from the Commerce Department on Tuesday. The trade deficit between the United States and China was the largest in March, rising by $6.7 billion to $36.9 billion. Of this total, exports increased by US $900 million to US $11.3 billion, while imports increased by US $7.6 billion to US $48.2 billion.

[IMF supports the establishment of a global minimum corporate tax rate to avoid a potential trade war]

Georgiyeva, managing director of the International Monetary Fund ((IMF)), publicly expressed support for the proposal put forward by US President Joe Biden in April to implement the world's lowest corporate tax rate, and warned that in order to avoid a potential trade war, there is an "urgent need" to reach the global tax agreement. Orchieva also said she was optimistic about reaching a global corporate tax agreement in 2021.

[tightening prevention and control measures for cases of Indian variant virus detected in Singapore]

The Singaporean government said on Tuesday that it had detected 10 cases of Indian "double variant" as of Monday and announced enhanced epidemic prevention and control measures. Starting from May 8, the quarantine period for all passengers entering from high-risk countries will be increased from the current 14 days to 21 days. At the same time, local epidemic prevention and control measures will also be tightened by the end of May, and the upper limit of the number of people gathered by the public and the density of people in social places will be reduced.

[European Drug Administration begins to review Cushing vaccine]

The European Drug Administration ((EMA)) said in a statement on Tuesday that it had begun a rolling review process for the vaccine and would continue to evaluate the data until there was sufficient evidence that the vaccine met the conditions for approval. EMA said the review process would be "assessed more quickly", but it was not yet possible to give a specific timetable.

[Pfizer significantly increased its annual sales guidance for novel coronavirus vaccine to $26 billion]

Before trading on Tuesday, Pfizer reported better-than-expected first-quarter results, with overall revenue of $14.582 billion, up 45 per cent from a year earlier and significantly higher than the same period in 2019, with market expectations of $13.62 billion and EPS of 93 cents, up 47 per cent from a year earlier. Under a contract signed between March and April this year, Pfizer sharply raised its annual sales guidance for novel coronavirus vaccine from $15 billion to $26 billion, corresponding to the delivery of 1.6 billion doses this year.

[Stellantis declared that he could achieve the carbon emission target without Tesla]

According to an exclusive interview published by French media on Tuesday, Stellantis CEO Tavares said that with the introduction of the combined Peugeot-Citroen electric vehicle technology into the group, it is expected to meet the legal requirements on carbon emissions as soon as this year, which also means that it is no longer necessary to buy environmental points from Tesla. Between 2019 and 2021, Stellantis bought nearly 2 billion euros of environmental credits from Tesla.

Yellen
raising interest rates
Nasdaq
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