Financial markets are moving into a new era in 2021

Financial markets are moving into a new era:

A version of Financial markets first appeared in the CNN Business Before the Bell newsletter. Not a subscriber? You can register directly here.

London (CNN Business) What Federal Reserve Chairman Jerome Powell softly said Wednesday may not sound harsh. To wash.

What’s Happening: The US Federal Reserve now plans to raise interest rates in 2023 as the economy recovers from the pandemic and inflation rises. This was ahead of what was announced in March when the Fed’s projected interest rates would remain close to zero for the next two years.

And officials are debating whether to pay off the Fed’s massive asset purchase program, which generates $ 120 billion in bonds every month, to keep borrowing costs low.

You can think of this meeting as a ‘discussion meeting’ if you like, noting that at least one policy change is on the central bank’s radar.

The change was felt immediately in all markets, thanks to the stimulus of the crisis period over a year ago.

After the announcement, the Dow was down more than 380 points, or 1.1%, and the S&P 500 and Nasdaq Composite were down 1% and 1.2%, respectively. The bond market also sold about 0.1% of US tax returns in opposite directions. Real yields, which refer to what borrowers pay when inflation is included, show an even greater increase.

For the last time in more than two months, the US dollar is reaching its highest level against a basket of major currencies. In Europe, the STOXX 600 index fell for the first time in ten trading sessions on Thursday, due to rising government bond yields.

Oliver Blackbourn, Janus Henderson’s multi-asset portfolio manager, told me he thinks the Fed’s big surprise could play on the markets for a while, especially if real yields stay high and the dollar holds. This could affect emerging markets and commodities such as oil.

At the same time, we spend a lot of time on very useful fiscal policy and easy monetary policy. One of the axes of the market is moving and is now slowly retreating.

He believes the Fed’s pivot could pave the way for a stock market boom, although strong corporate earnings still provide support.

The most important statistic: the conversation is mostly about inflation. The Fed raised its inflation forecast for 2021 to 3.4%, one percentage point above the previous estimate.

Powell said Wednesday that the Fed still believes price pressures will be short-lived, and if not, it has the tools to fix the problem.

The Fed is currently supporting inflation, Blackbourn said. We are grappling with a long period of inflationary forces.

However, there is a lot of uncertainty as the Fed pays attention at the beginning of the end, this is what investors should pay attention to. If inflation continues, the central bank could be forced to raise interest rates drastically.

We’re not ruling out the possibility that inflation will last longer than expected, Powell said.

Airlines and Banks Can’t Have Another Internet Crash

On Thursday morning, airlines, banks, currency exchange, and trading platforms briefly shut down the site after much of the internet infrastructure went down, causing the second major outage in the past ten days.

Virgin Australia said Thursday it had resolved an IT crisis caused by a crash at Akamai Technologies, a global content distribution network.

Virgin Australia was one of many organizations currently experiencing an outage in Akamai’s content delivery system, and we are working with them to ensure steps are taken to prevent these outages from happening again, the airline said. an advertisement.

Power outages on Thursday arrested companies such as Southwest Airlines (LUV), United Airlines (UAL), Commonwealth Bank of Australia, Westpac Bank, and Australia and New Zealand Banking Group. The Hong Kong Stock Exchange website was also offline for a while.

Remember, the outages come a little over a week after countless websites and programs around the world were blocked for about an hour when Fastly, another major content distribution network, was completely shut down.

Content delivery systems improve website loading by storing content and other aspects of websites and applications on servers that are physically closer to users.

Investor Information: According to Downdetector Monitor, the disruption also affected the Vanguard and E*TRADE sites, a key reminder that global markets remain vulnerable to technology turmoil.

Teenagers who want to work are very popular.

Teen workers are very popular this summer, especially in essence, reports my CNN colleague Jeanne Sahadi.

Working teens have been hit hard by pandemic-related layoffs. In May 2020, the national unemployment rate was just under 30%, according to federal employment data.

But in May, according to the Bureau of Labor Statistics and St.

One reason:

Teens are now taking advantage of the difficult time many small businesses face in finding suitable workers for their operations as restrictions on the pandemic are lifted. Many adults are still unable to work due to childcare or health problems. Some may have decided to leave their industry or simply chose to work in a larger network that pays better. Others can expect federal unemployment benefits of $300 a week to lapse.

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