U.S. 10-year Treasury yield touched 1.754% on Thursday, the first Time since January last year rose above 1.7%, coupled with the tense atmosphere in the U.S.-China talks, France announced a new round of blockade measures, the Polish Epidemic out of control, so that the European economic recovery added to the gloom, global stock markets again under pressure. First of all, technology stocks and energy stocks led by the decline, the U.S. Dow on Thursday turned up for down, closing down 153 points, the technology-based Nasdaq fell 409 points or 3%, affecting the performance of Asian stocks and European stocks on Friday. Due to the U.S. debt interest rate “hard net”, U.S. stocks Friday (19) early section did not stop falling.
Asian stocks generally fell on Friday, the Nikkei average index fell 424 points or 1.41% to close at 29,792 points, Taiwan, South Korea and Australia stocks closed 1.34%, 0.86% and 0.56%, respectively, with South Korean stocks for the first time in 3 weeks recorded a full week decline. European stocks also opened significantly lower immediately after the market opened, with British, French and German stocks falling 1.69%, 1.3% and 1.43%.
Criticized by market participants to ignore the rising Inflation, the Federal Reserve added fuel to the fire, said the Supplemental Leverage Ratio (SLR) relief measures expire on March 31 will not be renewed, meaning that the U.S. banking industry needs to make up about 1.6 trillion U.S. dollars as reserves, do not rule out the need to sell U.S. debt to fill, indicating that the 10-year U.S. bond interest rates have the opportunity to rise.
The bond interest rate fell on Friday and then rebounded to a high of 1.746%, dragging the Dow down 357 points to 32,862 points in the morning; the S&P down 29 points to 3,886 points; the Nasdaq repeatedly, having fallen 77 points to 13,039 points.
Miller Tabak + Co market strategist Matt Maley said, although the technology stocks again by the sell-off is unpleasant, but not yet worrying, and that technology stocks since March last year after a significant rise in valuation is quite high, so the sell-off can reduce the bubble, creating long-term upside.
However, technology stocks have been quite volatile recently, with Thursday’s market close, the Nasdaq 100 index rose again in the year to gray, for the second time in just two weeks, reflecting the impact of the U.S. debt interest rates fell. The Federal Reserve’s attitude has triggered market doubts about the acceleration of inflation and pushed up debt rates, when debt rates rise, will weaken the demand for highly valued technology stocks.
The current market hot talk can not be separated from inflation, dominating the stock market to go! Nobel laureate in economics Krugman believes that inflation will not appear like the runaway situation in the 1970s, that is, debt interest rates will not soar sharply. He pointed out that it took more than a decade to make the problem unmanageable, is the accumulation of year after year, this time will not be, if necessary, the Federal Reserve has “easy” tools to cope with price pressures, unlikely to take “extremely serious and irresponsible high interest rate monetary policy as in the 1970s “. He believes that the worst case scenario for the U.S. $1.9 trillion fiscal stimulus package is a brief surge in prices, as in the early years of the Korean War. In addition, he criticized Europe for falling into a vaccine disaster, with vaccination progress lagging significantly behind the United Kingdom and the United States, especially France, and the institutional deficiencies are the same as the scourge of the European debt crisis a decade ago.
However, the “King of Crocodile” Dalio warned that rising inflation may force the Federal Reserve to raise interest rates early, describing the economy as a person’s pulse is falling, when falling, the doctor will inject stimulants, and now the economy is rebounding, inflationary pressure is also heating up, the economy and inflation is expected to adjust faster than the market or the Federal Reserve expected. He has long said outright that it is foolish to invest in bonds or dollar-denominated assets.
In fact, the market is biased to support the “king of the crocodile”! Primary dealers have been selling U.S. bonds, according to Federal Reserve data, as of last Wednesday, the relevant U.S. bond positions by $16.1 billion, together with the previous week’s record-breaking $64.7 billion, a total of two weeks to sell more than $80 billion, positions fell to the lowest since October 2018.