NYSE is expected to continue its unstable trend this week (March 1 to 5) paying keen attention to the U.S. government bond rate trend.
Investors are paying keen attention to whether rising U.S. government bond rates will turn the financial market into a new phase. If interest rates rise trendively, changes in the asset composition of investors are inevitable.
In particular, a steep rise in interest rates as last week could add to anxiety. The fate of the stock market will also change depending on how much longer it will rise. With the 10-year U.S. government bond interest rate rising to 1.5%,.
NYSE unstable, Powell the Key
Whether the Fed, including Fed Chairman Powell, will control the rise in interest rates is paramount.
In his testimony to Congress last week, Powell reiterated his willingness to maintain the easing policy. He said it could take more than three years to meet the inflation target. Interest rates seemed to calm down a bit by Powell’s comments, but soon resumed their surge.
Some Fed officials also said the rise in interest rates was due to the improved economic outlook. Adding that it was no problem.
As some in the market expect, there are no signs yet that interest rates will continue to be held by measures. Such as expanding long-term bond purchases.
Later in the week, the U.S. employment index for February will be released. The prevailing view is that employment may have improved due to the calming of COVID-19 crisis.
According to the Wall Street Journal tally, experts expect employment to have improved from 49,000 in January to 218,000 in February. The unemployment rate is to remain the same at 6.3 percent.
The problem is that if employment is good, inflation concerns may increase in the future. And interest rate hikes may also accelerate. As interest rates have become a key variable in moving stock prices, the stock market may become unstable due to strong indicators.
In addition to employment, the Supply Management Association (ISM)’s February Purchasing Managers’ Index (PMI) in the manufacturing and service industries is also a major indicator that can affect the market.
Optimism over the Covid-19 control might also continue due to the approval of the vaccine developed by Johnson & Johnson (J&J).
Meanwhile, New York stocks fell sharply last week, led by tech stocks, due to rising interest rates.
The Dow Jones 30 industrial average fell about 1.8 percent. The Standard & Poor’s 500 index fell 2.5 percent, while the Nasdaq plunged 4.9 percent.