U.S. debt rates soared triggered a global stock market crash! Reflecting the overall financing costs of the 10-year U.S. bond yield rose to 1.614% on Thursday, a new high since February last year, although the market closed back to 1.53%, but still higher than the 1.5% stock market revaluation watershed, dragging the U.S. Dow sharply down 559 points on Thursday, the Nasdaq also fell 478 points, the largest one-day decline since October last year, and Asian and European stock markets were under pressure on Friday. Market analysis warns that the further rise in debt interest rate potential may trigger market turmoil and even burst the current giant bubble!
[Britain, France and Germany stocks fell to expand the Dow had fallen nearly 500]
U.S. 10-year bond interest rate on Friday had fallen back to 1.474%, lower than the 1.5% alert line, once driven by the European stock market Friday after the opening of the decline was eased, but after the decline expanded again, the British, French and German stock markets fell 1.88%, 1.18% and 0.44%, respectively.
After a major plunge on Thursday, the U.S. stock market did not stop falling in the early part of Friday, with the Dow repeatedly dropping 491 points to 30,911; the S&P fell 28 points to 3,800; the technology-based Nasdaq rose 197 points before falling 95 points to 13,024.
Data, U.S. personal spending in January rose 2.4% month-on-month, during the period because the government handed out check assistance, stimulating personal income rose 10%, the largest increase after April last year, higher than expected, the Federal Reserve Board importance of Inflation indicators – personal consumption expenditures (PCE) core index rose 1.5% year-on-year, slightly higher than expected. U.S. consumer sentiment index of the University of Michigan in February from 79 points in the previous month, down to 76.8 points, higher than expected.
Recall that at the beginning of this year, the 10-year U.S. bond yield is still only 0.9%, but just a few weeks will rise above the 1.6% level, mainly because the market envisioned vaccine distribution and government stimulus measures will push up the economy and inflation, as well as the U.S. government continues to issue debt to increase supply, depressing the price of debt, so that the opposite trend of yields rise.
Because the United States can print money “debt out of debt” to avoid default, U.S. debt is considered a zero-risk investment, the yield has also been identified as a zero-risk interest rate, when debt interest rates rise, the attractiveness of the stock will fall, especially the current high valuation of the stock market, a slight increase in debt interest rates may prompt investors to sell technology stocks to stop earning. Research institutions FactSet projection, the current S&P dividend rate of about 1.43%, meaning that the 10-year U.S. bond yields have risen above this level, the funds have enough incentives to change goods.
For the current rise in debt interest rates, the market interpreted as a sign of economic recovery, but the better the economy, the Federal Reserve “water” the greater the incentive, in recent years by “water” to promote the valley of the bull market in the stock market is disguised endangered, can be described as “double-edged sword “.
TD Securities strategist pointed out that the market is betting that the Federal Reserve Board will resume interest rate hikes in early 2023; former U.S. Treasury Secretary Summers earlier estimated that the fastest next year. Bank of America is expected that the authorities will discuss later this year to scale back the $120 billion monthly bond-buying operation and implement it later next year.
Japanese stocks inserted nearly 4% Korea, Taiwan and India under pressure]
Affected by the performance of U.S. stocks overnight, the MSCI Asia Pacific Index had fallen 3.2% on Friday, the most wounded in 11 months. The Nikkei average closed 1,202 points or 3.9% lower at 28,966 points; Taiwan, South Korea, India and Australia stocks also fell 3.03%, 2.8%, 3.8% and 2.35% respectively.
The reaction of global stock markets to rising debt rates is reminiscent of the painful experience of May-June 2013, when the Federal Reserve hinted that it would start buying less debt, triggering a “tapering panic” that hit global stock markets, with Asia particularly hard hit, falling 13% from its high in May of that year; in contrast, the S&P fell from its high to its low by only In contrast, the S&P index fell from the high to the low of only 6%.
Given the signs, the market is now worried that a number of emerging market currencies will fall into a wave of devaluation. Royal Bank of Canada points out that this Time the Indonesian rupiah, South African rand, Turkish lira and Brazilian real are the most vulnerable currencies. In fact, the Korean won became the biggest loser of Asian currencies on Friday, depreciating 1.2%; the Indonesian rupiah also fell 1%. The Mexican peso fell 2.3% on Thursday, the worst in five months; the lira fell for five days in a row.
Hong Kong stocks dipped more than 1,000 points and the science network sector was hit hard]
U.S. debt interest rates rose sharply triggered market panic, Hong Kong stocks also followed the global stock market on Friday fell sharply, the Hang Seng Index in the last trading day of February fell more than 1,000 points to a full-day low of 28,980 points to close the market, the whole week fell 1,664 points, the largest single-week decline since March last year.
The HSI opened lower on Friday, the early part of the decline had narrowed to 494 points to a high of 29,579 points, but then repeatedly downward, and finally closed down 1,093 points, the most wounded after May 22 last year. To sum up February, the HSI rose from the most 2,899 points to 696 points; SOE index closed at 11,247 points, down 470 points; technology index 31 constituent stocks fell across the board, dragging down the science index fell 542 points to close at 8,954 points.
Leading science and technology network stocks became the locomotive of the market decline, American Group (03690) dipped 8.2% to a full-day low of $ 340 to close the market, worse than the blue chips, “ATMX” other members of Alibaba (09988), Tencent Holdings (00700) and Xiaomi Group (01810) fell between 4.19 to 5.77%, 4 The market value of the company evaporated more than 656.2 billion yuan.
Recently sought after popular sectors are also generally put, resource stocks fell more, Minmetals Resources (01208) and Luoyang Molybdenum (03993) closed down 12.83% and 12.28%, respectively, Zijin Mining (02899) also fell 11.26%.
MSCI Ming Sheng’s quarterly index adjustment took effect after the market closed on Friday, with total turnover of Hong Kong stocks increasing to $321.3 billion and short-selling ratio of 11.46%. The “North Water” through the Hong Kong Stock Exchange sold more than 7.59 billion yuan, the Hong Kong Stock Exchange (00388) and the United States Mission were net sold 2.704 billion yuan and 1.214 billion yuan; as for the 99.9 cents (09922) was a net buy of about 423 million yuan against the market.
For the Hong Kong government intends to increase the stamp duty on stocks, the Hong Kong Securities Association Chairman Tsui Luen On said in a radio program, the industry generally opposed, investors in buying and selling, will consider the transaction costs, now the authorities intend to increase the stamp duty, the industry are concerned about the impact on the competitiveness of the Hong Kong market, and even have the opportunity to lead to capital outflow. He said that the Association will continue to discuss with the Government, hoping that the authorities to suspend the relevant measures.
“Fund Godfather” Lei Xianda pointed out that the rise in debt interest rates on the high valuation of the new economy stocks have a greater impact on investors to re-examine the investment value of technology stocks, I believe that the trend of capital transfer from the new economy stocks to the old economy stocks will continue, technology stocks this year is difficult to win the old economy stocks that can benefit from future economic recovery. He continued that Hong Kong stocks will be adjusted to what level is still too early to say, and maintain the HSI this year, the annual high and low volatility of about 6,000 points forecast, I believe the volatility will be smaller than last year’s 8,000 points.
Hong Kong stocks American Depositary Receipts (ADR) Friday morning section individual development, HSBC Holdings (00005) reported 46.01 yuan, 1.29 yuan lower than the Hong Kong closing price; Tencent reported 668.41 yuan, 5.91 yuan higher than Hong Kong. If proportional, equivalent to the HSI fell 19 points.
[If the rise through 2 percent light friend warning burst bubble]
Inside media analysis, because the U.S. economic fundamentals have entered a strong recovery phase, coupled with local monetary policy will not soon tighten, short interest rates do not move under the assumption that long rates will continue to rise, the 10-year U.S. bond yield target is expected to be about 2.6 percent, up more than one percent from the current level. CITIC Securities expects the 10-year U.S. bond interest rate before the end of the year to 1.7%, if the real interest rate (i.e., after deducting inflation) rose 0.5% from the low, or lead to U.S. stocks fell 5 to 12%.
Societe Generale famous big light friend Edwards (Albert Edwards) warned that global stock markets face a “tipping point”, once the 10-year U.S. bond interest rates break through two percent, there will be a big turmoil, especially technology stocks will fluctuate significantly, global central banks may need to launch a new round of stimulus policies to appease the market. From Japan’s lessons learned, investors will be “addicted” to fiscal and monetary policy, once the requirements are not met, the market will “riot”, the largest asset bubble in history will usher in the inevitable end of the burst pot.
A number of Federal Reserve officials are of the view that the sharp rise in debt rates mainly reflects the market’s optimism about the prospects for economic recovery, and stressed that the authorities do not plan to tighten monetary policy prematurely. New York Federal Reserve Bank President Williams said that the government increased spending on the economy has a lot of help, the Federal Reserve Board will also fully support the economy, and is expected to local economic growth this year will be the strongest in decades.