Growth concerns were somewhat alleviated after the PBOC followed through and cut the RRR rate as speculated. Much of this week’s weakness in stocks stemmed from rising coronavirus cases in various countries, so yesterday’s news that Pfizer is planning to begin testing of a Delta-specific booster shot provided optimism for winning the war against COVID. Pfizer is seeking to have the vaccine booster shot to get EUA in August.
Both the S&P 500 index and Dow Jones Industrial Average got their respective grooves back as investors still have to favor the US growth story against what is happening in both Asia and Europe.
The 10-year Treasury yield is now almost 10 basis points higher from yesterday’s low, settling just below the 1.35% level.
Anticompetitive
President Biden will sign an executive order that will tackle anticompetitive practices in Big-Tech, pharma, and a number of various sectors. Business lobbies are standing up against this potential crackdown as it could really disrupt mergers and acquisitions.
China Cuts
In less than 48 hours, China has quickly delivered on a pledge to cut the reserve requirement ratio used by banks. This is not a broad-based rate cut but it does provide some support to banks. Slightly softer than expected inflation data paved the way for the RRR cut of 50 basis points. This was the first cut since early in the COVID-19 pandemic and it helped weaken the dollar against its major trading partners.