China Fund News reporter Guo Minjun
Good morning, everyone! Last night and this morning, there were many major events.
The three major U.S. stock indexes closed down across the board.
There has been another wave of layoffs around the world.
The Fed's "Beige Book": the economy grew slightly, prices rose moderately.
Fed official Mester said the Fed could keep interest rates at current levels for longer if inflation does not fall to 2% on a sustained basis.
U.S. Treasury yields closed lower across the board.
The three major U.S. stock indexes closed down across the board
On April 17, Eastern time, the three major U.S. stock indexes closed down across the board. At the close, the Dow fell 0.12% to 37,753.31. The S&P 500 fell 0.58% to 5,022.21. The Nasdaq fell 1.15% to 15,683.37.
Chip stocks were weak. ASML fell 7.09%, Chaowei Semiconductor fell 5.78%, Applied Materials fell 4.58%, Micron Technology fell 4.47%, Nvidia fell 3.87%, Broadcom fell 3.49%, Qualcomm fell 2.53%, Intel fell 1.6%, and TSMC fell 0.52%.
There has been another wave of layoffs around the world
A number of large companies have announced layoffs.
According to local media reports, Toshiba Corp. is seeking to lay off 5,000 employees in Japan, or about 10% of its workforce. The move could kick off Japan's biggest round of layoffs this year. The Tokyo-based company is reportedly scaling back non-core operations and will account for a one-time cost of about 100 billion yen ($650 million).
Google will lay off employees and move some jobs to other countries. A Google spokesperson confirmed the layoffs but declined to disclose the number of affected employees.
In addition, Morgan Stanley plans to start cutting about 50 investment banking jobs in the Asia-Pacific region this week. HSBC will also cut another 20 investment banking positions in Asia.
The Fed's "Beige Book":
The economy grew slightly, and prices rose moderately
On April 17, Eastern time, the Federal Reserve issued a "Beige Book" stating that the economy expanded slightly, the difficulty of enterprises passing on costs increased significantly, and prices in the United States rose moderately.
According to the national economic situation survey report released by the Federal Reserve Board of the United States on the 17th, the U.S. economy has grown slightly since the end of February, and prices have maintained a moderate upward trend.
The report, also known as the Beige Book, is based on the latest findings of the 12 regional reserve banks. The report shows that overall economic activity has expanded slightly since the last Beige Book, but there are two jurisdictions where economic activity has not changed. At the same time, consumer spending as a whole barely grew. Manufacturing activity declined slightly, with only three jurisdictions seeing growth. There was a slight increase in residential construction and an increase in home sales in most jurisdictions.
The Beige Book shows that employment levels have risen slightly in most jurisdictions, but at very modest or modest paces. While the supply of labour and the quality of job seekers have increased in most jurisdictions, there is a persistent shortage of qualified labour for some positions, including mechanics, trade workers, etc.
In terms of prices, prices in all jurisdictions remained modest, with the same rate of increase as at the beginning of the year, with energy prices rising moderately in six jurisdictions. However, the ability of companies to pass on cost increases to consumers has been greatly reduced, resulting in lower corporate profit margins.
Looking ahead, jurisdictions are cautiously optimistic about the overall economic outlook going forward, with inflation expected to remain slow and stable. At the same time, employment opportunities are expected to grow further modestly as labor demand and supply remain relatively stable, and employee wage growth is expected to continue to slow to pre-pandemic levels.
Another Fed official "hawkish"
On April 17, local time, Federal Reserve official Mester said that more information is needed to ensure that inflation is "sustainably" falling back to 2%.
He pointed out that inflation this year is slightly higher than expected, and hopes to have enough confidence in the pullback, although he still expects inflation to fall. He believes that the U.S. labor market is strong, economic growth is solid, and if inflation does not continue to fall to 2%, the Fed may keep interest rates at current levels for longer, and at some point it will start easing, but there is no need to rush to ease policy. He said that the Fed may cut interest rates if the labor market deteriorates, and is watching the risks of the Fed's dual mission to protect jobs and stabilize prices.
According to CME Fed Watch, there is a 96% chance that the Fed will keep interest rates unchanged in May, and a 4% chance of a 25 basis point rate cut. There is an 83.1% probability that the Fed will keep interest rates unchanged until June, and a 16.3% probability of a cumulative 25 basis point rate cut.
U.S. Treasury yields closed lower across the board
On April 17, Eastern time, U.S. Treasury yields closed down across the board: the 2-year Treasury yield fell 5.3 basis points to 4.943%, the 3-year Treasury yield fell 7.8 basis points to 4.773%, the 5-year Treasury yield fell 8.4 basis points to 4.624%, the 10-year Treasury yield fell 7.9 basis points to 4.594%, and the 30-year Treasury yield fell 6.1 basis points to 4.705%.
Editor: Huang Mei
Review: Muyu