On Tuesday, the statements of Fed member Lael Brainard about the recent rise in government bond yields were considered as the main event of the day. According to her, the speed of the situation development is attracting attention, and she will be concerned if there is a constant tightening of financial conditions, which might slow down the economic growth.
The sharp rise in 10-year Treasury bonds yield has led to rumors that the central bank may retaliate, including replacing bond purchases with long-maturity securities. Lael Brainard is the first member of the Fed who admitted that the rise of the bonds yield has no compelling reason, which contradicts Jerome Powell’s opinion. Against this background, some market participants conclude that the rapid tightening of financial conditions may provoke a response from the Fed. The stock market reacted negatively to the statements. The S&P 500 lost 0.92%, the Dow Jones decreased by 0.46%. With the opening of trading in Asia, stock futures are gradually recovering.
Today, Finance Minister Rishi Sunak will publish an annual budget plan according to which it is expected to support the fired British workers until the end of September. As the country is still in quarantine, the government will continue to pay 80% of the salaries to the program participants until the end of June, the Finance Ministry mentioned in a statement. But this benefit may decrease over the next three months.
There will be the publication of ISM data on the services sector in the United States. According to economists’ forecast, a slowdown is not expected. In this regard, as well as with the strong growth of the Australian economy, futures for stock indices are growing. The V-shaped recovery, which suddenly appeared in Australia, gives investors hope for a quick global recovery. As a result, stocks in Australia, China and Hong Kong were the leaders in growth in the Asian session, setting the pace for European and American futures.
Main market quotes:
- S&P 500 (F) 3,890.62 +23.12 (+0.60%)
- Dow Jones 31,391.52 -143.99 (-0.46%)
- DAX 14,119.45 +79.65 (+0.57%)
- FTSE 100 6,661.76 +48.01 (+0.73%)
- USD Index 90.752 -0.038 (-0.04%)
Important events:
- Australia’s GDP (q4) at 2:30 (GMT+2);
- Eurozone Services PMI (Feb) at 11:00 (GMT+2);
- UK Services PMI (Feb) at 11:00 (GMT+2);
- ADP United States Nonfarm Employment Change (Feb) at 15:15 (GMT+2);
- US ISM Non-Manufacturing PMI (Feb) at 17:00 (GMT+2);
- US crude oil reserves at 17:30 (GMT+2).
