“Temporary rise in prices…to be patient”
US 10-year Treasury yields surge to 1.555% during intraday
Photo = Getty Image Bank
The New York Stock Market plunged last night. This is due to increased market uncertainty, as Jerome Powell, chairman of the US Central Bank (Fed), spoke on the intent to endure rising inflation pressures.
On the 4th (local time) on the New York Stock Exchange, the Dow Jones 30 Industrial Average closed at 30,924.14, down 345.95 points (1.11%) from the previous day. The Standard & Poor’s 500 index fell 51.25 points (1.34%) to 3,768.47, while the technology stocks Nasdaq index plunged 274.28 points (2.11%) to 12,723.47.
It is interpreted that the mayor’s disappointment was expressed by Chairman Powell’s comments. “If the economy reopens (as the pandemic eases), the base effect could create some inflation pressure,” said Powell at the Wall Street Journal (WSJ)’s Jobs Summit video conference. “This will be temporary.” .
“I keep in mind the past cases of inflation in the 1960s or 1970s,” he said. “The situation is different now.” He said, “Inflation is expected to rise within the next year, but inflation is unlikely to exceed 2% (the Fed monetary policy target).”
It re-emphasized its intention to maintain the current monetary policy. “As inflation is temporary, the Fed will be patient,” said Powell. “To raise the policy rate, we need to achieve full employment and sustained inflation of more than 2%.”
Regarding the recent surge in government bond yields, he said, “I am not looking at a single interest rate, but the financial market as a whole.” It is interpreted to mean that no action will be taken to ease the soaring government bond interest rates.
As Chairman Powell said that inflation could occur, the 10-year Treasury bond rate soared to 1.555% during the week. The 30-year Treasury bond rate also rose to 2.321%.
Economic indicators also had a negative impact on investment sentiment. The U.S. Department of Labor announced that the number of new unemployment benefits claims last week was 745,000, an increase of 9,000 from 736,000 the previous week. It was less than the market estimate of 750,000, but increased again in two weeks.
The Chicago Options Exchange (CBOE) volatility index, called the fear index, recorded 28.45, up 6.67% from the previous day.
Eunbit Go, reporter Hankyung.com [email protected]
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