Recently, financial market volatility has increased, making investors anxious.
Recently, technology stocks dragged down U.S. stocks, U.S. bond prices fell while the yield rate rose, while the dollar rose strongly, oil prices also moved higher. At first glance, this market situation appears to be crazy.
But Barron’s points out that from a certain point of view, it all makes sense. As the new pneumonia (Chinese communist virus) Epidemic eases and economic growth accelerates, U.S. bond yields climb; and higher yields will boost the dollar, because that means U.S. assets offer more yield than foreign assets, which will fuel demand for the dollar.
Oil prices usually do not rise with the dollar, but in the dollar rose, oil prices also rose above $ 65 per barrel in early trading on the 5th. Why this? This is because the economy is improving faster than the pace of output recovery, indicating that oil prices may continue to climb higher.
If prices are rising because the economy has turned stronger, this is a good thing. However, if the good thing to burst, resulting in “reflation” into “Inflation re-inflation”, it may in turn kill the recovery. However, it is not yet to that point.
As for the recent plunge in technology stocks, part of the factor is that investors do not want to change. However, things always have to change, and no one wants to spend the rest of their careers in Zoom video conferencing. So money rotated from growth stocks during the epidemic to stocks that are sensitive to the boom cycle.
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