U.S. stocks were boosted by gains in growth stocks and banking stocks, with major indexes opening higher on Wednesday (15th) as investors awaited the Federal Reserve’s (Fed) decision-making meeting and are expected to take active measures to curb hot inflation.
Before the deadline,Dow Jones Industrial Averageup nearly 340 points or nearly 1.12%,Nasdaq Composite Indexup nearly 180 points or nearly 1.7%,S&P 500 Indexrose nearly 1.4%,Philadelphia SemiconductorThe index rose more than 1 percent.
The U.S. Federal Open Market Committee (FOMC) will announce its decision at 2:00 a.m. on Thursday (16th) in Taiwan, shattering the peak of U.S. inflation as the May consumer price index (CPI) released last week posted the largest increase in 40 years The hope is that the big Wall Street banks including Goldman Sachs, JPMorgan Chase and Barclays have predicted that the Fed will rise 3 yards (75 basis points) in one go this week, raising the target range of the federal funds rate to 1.50-1.75%.
“New Debt King” and DoubleLine Capital executive Jeffrey Gundlach tweeted that the Fed should raise rates by 225 basis points, bringing the federal funds rate to 3%; Billionaire hedge fund manager and founder of Pershing Square Capital Bill Ackman said if the Fed hiked rates by 100 basis points, then another 100 basis points in July, and then continued, “the world would be better off.”
The bond market also sent a warning signal of recession to the United States on Monday: the U.S. two-year bond yield rose 16 basis points to 3.214%, the highest level since 2007; the 30-year bond yield hit 3.31%, a record high Highest level in November 2018. 2 years and 10-year Treasury yieldIt hung upside down for the first time since early April.
Investor worries about stagnant inflation have pushed stocks into a bear market, sparking a sharp sell-off in bonds in recent days, with parts of the U.S. Treasury yield curve still inverting, signaling concerns that restrictive monetary policy could lead to a downturn, by press time The U.S. 10-month Treasury note yield was at 3.368%.
In European news, the European Central Bank (ECB) held an Interim Governing Council meeting before announcing plans to create new tools to addressEURDebt crisis and secession risk in the region.
The ECB has clearly planned to raise interest rates at the July meeting. However, since last week, the bond market of European bonds, especially the surrounding countries, has been “blooded”. Germany and the more indebted southern countries (especially Italy) have The yield gap between the two countries rose to its highest level in more than two years.EURThe risk of regional fragmentation is also increasing.
With the status quo on the brink of crisis, ECB officials need to develop plans to protectEURThe region’s weaker members are shielded from soaring borrowing costs.
Marija Veitmane, senior strategist at State Street Global Markets, believes that the European Central Bank is in the same dilemma as most central banks, with very high inflation and little cooling trend, while the economy is increasingly fragile, especially in the Russian-Ukrainian conflict and rising energy costs. in the case of climbing. Therefore, any measures that the ECB can announce to reduce systemic risk are very welcome by the market.
As of 21:00 on Wednesday (15th) Taipei time:
Stocks in focus:
Baidu (START US) rose 1.77% to $143.29 a share in early trade
Foreign media reported that Chinese search engine giant Baidu is in talks to sell a controlling stake in iQiyi, a deal that could value iQiyi at $7 billion.IQ-US) tumbled more than 9 percent in premarket trading, before opening losses converged to 1 percent. In this regard, iQIYI’s official response is only pure rumors, and did not explain much.
Modena (MRNA-US) fell 2.32% to $124.38 a share in early trade
New crown vaccine maker Moderna has been recommended by the U.S. Food and Drug Administration (FDA) to give its new crown vaccine to children between the ages of 6 and 17, and the authorities will vote in the next few days. In addition, the U.S. Centers for Disease Control and Prevention (CDC) recently cited recent data showing that compared with Pfizer’s BNT new crown vaccine, Modena’s vaccine may have a higher risk of heart inflammation in a certain age group.
Starring (STLA-US) rose 2.43% to $13.29 a share in early trade
Stellantis, the world’s fourth-largest auto group, said it will lay off indefinitely next week at its stamping plant in Michigan. It is reported that the plant is the world’s largest stamping plant, with 2,184 employees, of which more than 2,000 are hourly workers. The UAW did not respond to a request for comment on the number affected by the layoffs.
Today’s key economic data:
- U.S. retail sales grew at an annual rate of 8.09% in May, down from 7.82% previously
- The monthly growth rate of US retail sales in May was 0.0%, expected 0.5%, the previous value was 0.5%
- U.S. core retail sales rose 0.5% in May, compared with 0.8% expected and 0.4% previously
- The monthly growth rate of the US import price index in May was 0.6%, expected 1.1%, and the previous value was 0.4%
- The annual growth rate of the U.S. import price index in May was 11.7%, expected to be 11.9%, and the previous value of 12.3%
- US June NAHB housing market index is expected to be 68, the previous value of 69
Wall Street Analysis:
Nema Ramkhelawan-Bhana, an economist at Rand Merchant Bank, said the market is ready for the Fed to raise interest rates sharply, although the economy may not yet enter recession territory, but the landing will not be as mild as the Fed expects, as long as the Fed raises rates below 3 yards, or At least a strong will to make a bigger correction could turn the stock market upside down.
Markets are now pricing in a 95% chance of a rate 3 rate hike, FedWatch data showed. “My view is that the Fed won’t raise rates by 100 basis points because that would further undermine the credibility of their forward guidance, which is already bad,” said OANDA analyst Jeffrey Halley. The forward guidance stance was adjusted to a more hawkish level. I suspect prices are now priced in at 75 bps. If guidance is more dovish, I believe investors will come in aggressively on dips in the rest of the week.”