Summary of this article
Yesterday, the US stock market fluctuated downward before the Federal Reserve announced its monetary policy resolution. After the announcement, the decline expanded, and the yields of US dollar and US bonds jumped. But in fact, judging from the resolutions announced by the Federal Reserve meeting, the so-called rate hike or not is still a distant concept. The greater manifestation of the US stock market is emotional catharsis. For investors, they are bullish in the long term, pay attention to bands in the medium and short term, and are still optimistic about the investments that we have firmly insisted on choosing ETFs or sector leaders. Still stick to attention: economic recovery (cyclical stocks) + technology growth sector (chips/federal stimulus plan + new energy/photovoltaic wind power), pay attention to the negative effects of anti-monopoly reform on the science and network giants from time to time.
After-hours analysis of the US stock market
Yesterday US stock fluctuated downward before the Federal Reserve announced its monetary policy resolution. After the announcement, the decline expanded, and the yields of US dollar and US bonds jumped. But in fact, judging from the resolutions announced by the Federal Reserve meeting, the so-called interest rate hike is still a long-lasting concept. The greater manifestation of the US stock market is emotional catharsis.
ended the closing, Dow fell for three consecutive days, closing down 265.66 points, a drop of 0.77%, to 34,033.67 points, closing for the first time since May 18, exceeding 200 points, hitting a new closing low since May 19. S&P closed down 0.54% to 4223.70 points, the biggest closing decline since May 18 and a new low since last Wednesday, June 9. The Nasdaq closed down 0.24% at 14,039.68 points, the lowest closing level in the past four days. Leading technology stocks rose and fell. Among the six major technology stocks s, Amazon, which closed up 0.95%, performed the best. Apple rose nearly 1% in the early trading, but turned down in the afternoon, closing up nearly 0.4%. Netflix, which turned up , turned up 0.1% in the late trading, opened low and closed down nearly 1.7%, and , which turned down more than once during the trading session, closed down more than 0.5%, and , which turned down in the afternoon, closed down nearly 0.4%. As gold fell below the $1,830 mark, gold stocks fell collectively, and gold mining stock ETFs fell by more than 2%. Banking ETFs rose more than 1%, leading the rise among all U.S. stock ETFs. With the decline of US bond , utility ETFs led the decline, down 1.4%.
Judging from the results of the meeting announcement, most of the substantive content is still in line with expectations. The only increase is the number of officials who agree to raise interest rates by the end of 2023, which is one of the key points that triggered the market's emotional changes yesterday. After two days of meeting, the latest interest rate resolutions released by the Federal Reserve are in line with market expectations: the excess reserve rate (IOER) will be adjusted from 0.1% to 0.15%, and the overnight reverse repurchase interest rate will be adjusted from 0% to 0.05%, which will take effect from June 17. In addition, the plan to reduce bond purchases has not been officially launched after this meeting as the market imagined: it will continue to increase its holdings of at least $80 billion in Treasury bonds and at least $40 billion in Housing Mortgage-backed securities every month until substantial progress has been made in the Commission's full employment and price stability targets (Since June last year, the Federal Reserve has been purchasing at least $120 billion in bonds and mortgage bonds every month to lower long-term borrowing costs and provide further support for economic recovery).
The latest adjustment of economic expectations by the Federal Reserve
(the latest adjustment of economic expectations by the Federal Reserve)
In terms of inflation expectations, the Federal Reserve slightly raised its economic expectations for 2021, and on the other hand, it significantly raised its inflation expectations for this year. At the 3 meeting in March, the Federal Reserve expects the U.S. GDP growth rate this year to be 6.5%, and this time it is 7.0%. Inflation expectations are significantly higher than 3.4% of the previous 2.4%. Regarding the unemployment rate, the Federal Reserve is optimistic about the US economic recovery, and is expected to drop to 4.5% by the end of this year and to 3.8% and 3.5% next year and the following year. In terms of consumption expectations, the Federal Reserve expects the inflation rate of core personal consumption expenditure to reach 3.0% in 2021, higher than the forecast of 2.2% in March. Core personal consumption expenditure in 2022 is currently expected to be 2.1%.
Some market analysis is very vigilant about the Fed's sharp increase in inflation expectations for the year. First, the Fed itself stated in a statement that it is concerned that if the inflation rate exceeds 2% too much or too long, it may cause businesses and consumers to expect more inflation in the future . If inflation expectations rise, it may need to tighten policies earlier or more radically than originally planned, re-set inflation expectations at around 2%. Therefore, analysts such as Michael Arone, an adviser to State Street Global, believe that there is a disconnect between the Fed's summary of economic forecasts and the content of the statement, which confuses the market. Kathy Jones, head of fixed income department at Schwab Financial , believes that if the Fed said it is necessary to complete at least two interest rate hikes by 2023, the bond purchase plan must be launched as soon as possible. Through economic analysis and deduction, we believe that this process will take at least 10 months to 1 year to reduce at a moderate rate, so it is highly likely that the Federal Reserve will start to close the water at the end of this year and reduce the balance sheet. What really "touched" market sentiment is that the number of Federal Reserve officials who agreed to raise interest rates increased, that is, the market believes that the Federal Reserve is gradually turning from a "dove" to a "hawk". ’s forecast on Wednesday showed that 13 members believed the Fed would raise interest rates in 2023, with most of them saying the Fed would raise interest rates at least twice in 2023. Only five committee members believe that the Fed will remain silent in 2023. In fact, seven out of 18 committee members believe that the Fed may raise interest rates as early as 2022. In the March forecast, four of the 18 members of the FAP (FOMC) are expected to raise interest rates sometime in 2022. Meanwhile, seven committee members saw interest rates rise in 2023.
The latest dot map released by the Federal Reserve on Wednesday
(the latest dot map released by the Federal Reserve on Wednesday)
The Fed’s forecast in March 2021
( The Fed’s forecast in March 2021 )
Through the comparison of the two dot map , the market believes that the Fed’s position is more hawkish than expected, and it can be seen that the Fed is surprised and positive about the speed of vaccination and the cancellation of social isolation measures. Richard Bernstein Advisors Fixed Income and Asset Portfolio Manager Michael Contopoulos believes that the Fed's position is more hawkish than expected, and also provides support for topics such as inflation and interest rate hikes. It also adds new fuel to the subsequent Jackson Hall annual meeting and the September FOMC meeting. Bank of America's global fund manager survey in June showed that inflation could be temporary, and long-term transactions built around inflation are currently the most excessive in the market: 73% of respondents believe inflation is "temporary" and only 23% believe inflation is permanent. Recent price pressures will ease over time and eventually fall back to normal levels. But most respondents still believe that the Fed will soon adopt the first step of austerity policy: 63% expect the signal to send a $120 billion bond reduction plan in August or September, 38% expect the signal to be sent at the Jackson Hall annual summit in August, and 25% expect the signal to be sent at the FAP meeting in September.
investors are bullish in the long term, pay attention to the band in the medium and short term, and are still optimistic about the investments we have firmly insisted on choosing ETFs or sector leaders. The current US stock market is already at a historical high, and from a long-term perspective, since it started to sing a big pullback in 2018 to the present, it has shown an upward trend curve. Therefore, for the long-term trend of US stocks, it is nothing more than whether there is more incremental funds entering the US market. As long as the US dollar system remains strong and the US market is still attractive to the whole world, then the long-term trend of US stocks is still bullish. In terms of medium- and short-term waves, investors should pay attention to various emotional declines, rises and huge fluctuations in the US stock market triggered by news. However, the end of this Fed meeting, and the US stock market will be more rational until at least next time (August this year). From the perspective of sectors, we still insist on paying attention to: economic recovery (cyclical stocks/Federal latest position/financial + consumption) + technology growth sector (chips/federal stimulus plan + new energy/photovoltaic wind power), and pay attention to the negative effects of anti-monopoly reform on the science and network giants from time to time.
Important market comments and market news reprints
The Federal Reserve advances the forecast for the first rate hike to 2023 and begins to discuss reducing bond purchase plans.
The Fed on Wednesday advanced its first rate hike since the pandemic to 2023 and debated when and how to start scaling down its massive bond buying plans. Chairman Powell said members began “mentioned discussions” to reduce the Fed’s monthly $120 billion asset purchase plan, which the committee members said will continue until “further substantial progress” is made in achieving the Fed’s full employment and 2% inflation target. In its latest policy statement, the Federal Reserve pointed out that improved public health conditions and vaccination have limited the spread of the virus and removed the long-term wording of the crisis dragging the economy. US stock market fell after the release of the Federal Reserve's statement and the latest economic forecast, the US dollar rose, and US Treasury yields rose sharply. Federal funds rate futures market trends show that the likelihood of interest rate hikes by January 2023 is about 90%. Before the Fed issued a statement, the market completely digested expectations of a rate hike in April 2023.
Bayp's first summit achieved little results, and both sides said the talks were pragmatic but not friendly.
U.S. President Biden and Russian President Putin 's first summit results are very small. Although they agreed to negotiate arms control and cybersecurity, there are still major differences. Both sides said that the summit was pragmatic but not friendly. Talks at Villa La Grange on Lake Geneva lasted only three hours, well below Biden's advisers' expectations. But Biden said we had compact and detailed talks, "we don't need to spend more time on consultations." Putin called Biden, 78, a constructive and experienced partner and said they had “the same idea,” but added that there was no friendship and there was a pragmatic dialogue on the interests of the two countries.
US Treasury Secretary Ye Lun said that he would not give China any special treatment in setting the world's lowest corporate tax rate.
U.S. Treasury Secretary Yellen said the United States will not agree to give China or other countries any form of special treatment, which will weaken the world's lowest tax rate system. Yellen said the United States and other countries are continuing to work to convince China to support the consensus reached by the G7 on Sunday. She said she hoped that Beijing would decide to support the plans, thinking it was in its interest, but she made it clear that Washington would not support a flawed deal. Yellen expects the United States to decouple from China in certain areas to protect U.S. national security, but she is worried about completely cutting ties in the technology field.
The growth rate of housing starts in the United States in May was lower than expected, and import prices hit the largest year-on-year increase since September 2011.
The rebound in housing starts in the United States in May was lower than expected, as the price of timber and the shortage of other materials continued to limit the ability of builders to seize the opportunity of severe housing shortages in the market. House starts in the United States rose 3.6% in May, with a seasonally adjusted annual rate of 1.572 million households. The April data was revised from 1.569 million households previously announced to 1.517 million households. Import prices rose 1.1% in May, up from 10.8% in April to 11.3%, the biggest increase since September 2011.
WuXi AppTec : The company's shareholders have been investigated by China Securities Regulatory Commission for suspected illegal and irregular information disclosure.
Chinese pharmaceutical giant - WuXi AppTec announced that the company's shareholder Shanghai Yingyi Investment Center (Limited Partnership) has been investigated by the China Securities Regulatory Commission for suspected illegal and irregular information disclosure. This means that the incident in which Shanghai Yingyi Investment Center previously illegally reduced its holdings of more than 17 million shares of WuXi AppTec, with a total amount of nearly 2.9 billion yuan, has further escalated.
Blackstone Group 23.6 billion Hong Kong dollars to acquire SOHO China.
SOHO China issued an announcement on Hong Kong Stock Exchange stating that the US private direct investment company Blackstone Group plans to acquire SOHO China's issued shares for as high as HK$23.66 billion and will maintain its listing status. The price of the acquisition offer of Blackstone is HK$5 per share, a 31.6% premium to the recent closing price of HK$3.8 before SOHO China suspended .
10-year U.S. Treasury yield hits the biggest increase in three months, and 2-year yield hits a year-on-year high.
The yield on the US 10-year benchmark Treasury bond fell below 1.49% in the early trading session, and once approached 1.48% in the middle of the session and hit a new daily low, which is still far from the intraday low since the beginning of March when it fell below 1.43% last Friday. It fell by about 1 basis point in the day. The US stock market had returned to 1.49% in the early trading session. Before the Fed's resolution was announced, it was basically close to 1.49% in the afternoon but below the 1.49% level. After the Fed's resolution was announced, the 10-year U.S. Treasury yield jumped at around 1.49%, and once measured 1.59%, hitting a new intraday high since June 4, with an intraday increase of more than 9 basis points. By the close of US stocks, it was nearly 1.58%, up more than 8 basis points in the day, setting the largest increase since March 12.
U.S. 10-year Treasury bond trend and events contact chart
2-year U.S. Treasury yield rose above 0.2% for the first time since June last year. The 30-year and 5-year U.S. bond interest rate spread once expanded to more than 129.5 basis points during the session, and the yield curve of the 5-year and 30-year U.S. bonds fell to the lowest point this year. Most European government bond prices rebounded on Wednesday, ending two consecutive declines, and Greek government bond yields rose for two consecutive days. The yield on the 10-year benchmark UK Treasury bond fell 1.9 basis points to 0.739% during the same period; the yield on the German Treasury bond fell 1.8 basis points to -0.25%.
London copper came out of the trough for more than seven weeks and failed to recover $10,000 in three days. gold futures closed out of a one-month low. After the market, plunged fell 3% at one point.
London base metal futures rose and fell differently on Wednesday. London copper ended its two-day consecutive decline, breaking out of the seven-week low hit on Tuesday, closing up 1% to $9,667/ton, partially smearing the biggest eight-month decline created by Tuesday's 4% decline, but the increase was limited, closing below $10,000 for three consecutive days. On Tuesday, London nickel, which both fell 4%, continued to fall, hitting another three-week low. Lun aluminum, Lun zinc and Lun lead rebounded, and Lun zinc and Lun lead approached a three-month high. Lunsin fell for two consecutive days, reaching US$31,215/ton, and still defending the US$31,000 mark. Before the Fed's resolution was announced, New York gold futures had fallen for three consecutive days as of the close. COMEX August gold futures closed up 0.3% at $1,861.40 per ounce, breaking out of the closing low of the main contract since May 14, which was set on Tuesday. However, after the close, gold futures plunged after the Federal Reserve's resolution was announced, quickly stopped rising and falling, and once fell below $1,810, with an after-hours decline of 3%.
New York silver futures reversed two consecutive declines when it closed. COMEX July silver futures closed up 0.4% to $27.81 per ounce, breaking from the low since June 3 set on Tuesday. But silver also turned to decline in the later stage, approaching the $27 mark at one point, and the after-hours decline was nearly 3%.
US oil hit a new high for more than two and a half years in two consecutive days, Bergaso hit a new high for two consecutive years in five consecutive days, and turned a decline after the market.
International crude oil Futures continued to close higher, but turned down after the market. US WTI July crude oil futures closed up $0.03, up 0.04%, at $72.15 per barrel, hitting a new high in the closing of the main contract since October 10, 2018 for two consecutive days. As of last Friday, US oil hit a new high since October 16, 2018 for two consecutive days. Brent 8 crude oil futures closed up $0.40, or 0.54%, to $74.39 per barrel, setting a new high for the main contracts since April 24, 2019, and hit a new high since April 25, 2019 on Tuesday. It reached a new high since April 30, 2019 for two consecutive days until Monday, and both hit a new high since May 16, 2019 last Thursday. After the session, U.S. oil fell below $72, a drop of 0.7%, Bergamoto fell below $74, and after the session, a drop of nearly 0.7%.
GM increases investment in the electric vehicle field to US$35 billion by 2025.
On Wednesday, Eastern Time, General Motors issued an announcement to increase investment in the electric vehicle sector to US$35 billion by 2025, accelerate the construction progress of US battery factories and give stronger-than-expected profit expectations. The investment of $35 billion rose sharply by 75% from the company's initial investment plan set by the 2025.In November last year, General Motors raised the plan to US$27 billion, and increased its investment by US$8 billion in just half a year later. Affected by this news, General Motors closed up 1.56% on Wednesday.
Citi CFO warning of the second quarter results triggered a plunge in stock prices.
was affected by Citi CFO Mark Mason's announcement at an investor video conference that the company's second-quarter spending may increase by $1 billion year-on-year, and that both trading and consumer business revenue will decline by double-digit percentages. After opened on Wednesday, , Citigroup's stock price fell by more than 5% at one point, and finally closed down 3.20%.
Google's first retail store will open in New York on Thursday.
Google announced on Wednesday that its first retail store in New York will be officially opened to the public on Thursday. The store is located in the Chelsea neighborhood of , Manhattan, and is also the first floor lobby of Google's New York office. It is worth mentioning that this physical store is only one block away from the retail store in the 14th block of Apple West.
Biogen controversial Alzheimer's disease drug is officially put into use.
According to local media reports in the United States, a 70-year-old real estate agent, Mark Archambault, received a new Alzheimer's drug Aduhelm in the hospital on Wednesday, becoming the first patient to use the drug outside the clinical trial stage. At present, there is still a lot of controversy in the medical community about whether this drug is effective, and medical insurance suppliers have not made it clear whether they will pay for this expensive drug.
Facebook announced the start of testing advertising on VR devices.
Facebook announced on Wednesday that it will test advertising on Oculus head-mounted VR devices, a move that will provide software developers with new revenue channels. In the next few weeks, Facebook will be available for advertising on a shooting game called "Blaston", and users can also block some ads or advertisers by setting them up.
Intel CEO predicts that the semiconductor industry will usher in a "good day in ten years".
When attending the event on Wednesday, Intel CEO Pat Kissinger predicted that the semiconductor industry is in a state of rapid expansion, and such good days may last for ten years. The world is becoming more digital, and digital itself requires semiconductors. Kissinger also said that Intel plans to announce the construction of more "superfactories" in the United States and Europe by the end of the year.
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The content of this article is only for personal market views and does not constitute any direct investment advice.
hereby declare: The market is risky, so be cautious when investing!
