U.S. Treasury Secretary Yellen is again warming up the interest rate debate


Asian stock markets opened the week unevenly. Japan’s Nikkei rose by 0.4 per cent in early Finnish time, while Hong Kong and mainland China’s main stock exchange indices fell by 0.6–0.8 per cent.

Statistics released on Monday showed weaker-than-expected export figures. Chinese exports were disrupted by, for example, the corona cases in Guangdong Province. Imports into the country, on the other hand, grew the fastest in 10 years, as raw materials now have to pay an even higher price.

In the West, at the beginning of the week, the agreement reached by the G7 countries on the lower limit of the corporate tax rate will speak in particular. The G7 countries support a global corporate tax rate of 15% and work to ensure that taxes are paid in the countries where companies operate. The minimum was proposed by the President of the United States Joe Biden administration.

At the end of the G7 meeting, the US Treasury Secretary Janet Yellen commented on the long-speculated interest rate issue in the market.

According to Yellen, a slightly higher interest rate environment “would actually be good for society”. According to the minister, that would also be a good thing from the point of view of the central bank Fed.

The interest rate on the 10-year U.S. government bond was only slightly up 1.7 percentage points on Monday at 1.570 percent.

No major changes were noted in the foreign exchange market at the beginning of the week. The US dollar weakened slightly to 109.41 yen and 0.8217 euros.

In recent months, even small hints of interest rate hikes have triggered waves of sales in highly valued growth stocks.

Figures for the United States and Europe released this spring appear to be hot year-on-year inflation. Some economists stress that the background is a rather exceptional reference period, and currently commodity prices and international supply chains in particular are tight as economies open up and recover.

Skeptics, for their part, say a generous state-led stimulus will inevitably lead to more permanent inflation.

In the United States, the government is planning permanent annual spending increases of $ 400 billion on top of the thousands of billions of stimulus packages already decided.

According to Yellen, the “spurt” seen in price increases will melt next year.

“We have been fighting low inflation and low interest rates for a decade. We want them up, ”Yellen summed up.


Source: Arvopaperi by www.arvopaperi.fi.

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