© By Geoffrey Smith Investing.com — Bond yields continue to rise after Fed Chair Jerome Powell brought bigger, faster rate hikes into play. The European Central Bank tries to downplay stagflation risks as eurozone governments prepare for a round of fuel subsidies. Nike (NYSE:) earnings impressed late Monday, while Carnival (NYSE:) and Adobe (NASDAQ:) will report later. Tesla’s (NASDAQ:) new German factory opens. China Evergrande has a shocking new revelation, and a more expensive dollar is pushing oil prices below API’s weekly inventory data. Here’s what you need to know in the financial markets on Tuesday, March 22. 1. Powell Puts the Slip on Bonds US bond yields continued to rise overnight after one of their biggest one-day gains in a decade in response to Federal Reserve Chairman Jerome Powell’s warning that in the next months. Powell had rocked the markets on Monday by warning that the job market is “extremely tight” and inflation “way too high”. He said the Fed “may conclude that we need to act faster” than currently expected. The benchmark was up 17 basis points in response, gaining another 3 basis points to trade at 6 AM ET (1000 GMT) at 2.35%, its highest point since May 2019. The , which is more sensitive to short-term interest rates. , is now above 10 years at 2.38%, while it stands at 2.19%. Watch for more commentary on the NY Fed Chief’s outlook, Cleveland’s and San Francisco’s later. 2. ECB allays fears of stagflation as eurozone prepares fuel subsidies The vice-president of the European Central Bank downplayed suggestions that the eurozone is heading for stagflation this year, saying the bank still expects growth of more than 2%, even if the inflation is now expected to persist longer higher. Comments stabilized the USD, which had fallen again below $1.10 in the wake of Powell’s comments, which in turn came after data showed it was up nearly 26% year-on-year in February. De Guindos also gave the green light to a series of energy subsidies being rolled out by eurozone countries in response to the rise in fuel prices. EU leaders will meet on Thursday to discuss such measures, along with a tightening of sanctions against Russia. The Wall Street Journal reported Monday that the EU is increasingly following the US in banning Russian oil imports, although Germany and Hungary still oppose it. 3. Shares will open higher; Nike up after win; Adobe’s US stocks were later set to open slightly higher after closing in negative territory Monday in response to Powell’s comments. By 6:15 a.m. ET, they were up 114 points, or 0.4%, while they were both up 0.2%. There will be economic data from and the , while cruise operator and – after the bell – software giant will report. Other stocks likely to come into the picture later on include Nike, whose earnings beat expectations late on Monday despite falling sales in China, and Tesla, whose new factory in Germany begins production on Tuesday. 4. Evergrande’s Unpleasant Discovery; Alibaba’s pleasant buyback surprise Real estate developer Evergrande sent shockwaves through China’s markets after it discovered that more than $2 billion in cash from a subsidiary had been pledged as loan collateral and could therefore be seized by creditor banks. The announcement declared the abrupt break in Hong Kong on Monday and raises new questions about corporate disclosure standards in China, a worrying development both for the local market and one that bodes ill for the ongoing battle with US regulators over transparency. of Chinese accounts. There was better news, though, from Alibaba (NYSE:), which has slashed another $9 billion to $25 billion, days after Deputy Prime Minister Liu He signaled easing of regulatory crackdown on the country’s largest internet companies. 5. Oil slides on higher dollar; API stocks due to the price of crude fell slightly but remained good bid amid fears that the EU, by extending its sanctions package, will eventually tighten the global market as it competes for more non-Russian stocks. At 6:25 AM ET, prices were down 0.6% to $109.34 a barrel, while futures fell 0.3% to $115.31. Prices were hit by the appreciation of the dollar, making oil more expensive for non-dollar importers, especially in emerging markets. and were forced to raise interest rates sharply on Monday, when they are expected to hike again at today’s meeting. More importantly for the physical market, Indian oil refineries increased their benchmark prices, raising the prospect of demand destruction. That may also be apparent closer to home, when the American Petroleum Institute releases her at 4:30 p.m. ET.
