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The US market crash has started
26 Feb 2021 (768 views)

The US stock market fell sharply on 25 Feb 2021. S&P fell by 2.5% and Nasdaq fell by 3.%. The growth stocks that I invested previously fell by 7% for the day and about 30% over the past month.

The main catalyst for the market correction is the rise in Treasury yield. The 10 year yield has increased to 1.6%.

Why did the Treasury yield increase?

Investors are selling Treasuries. They probably see inflation increasing in America and they do not like to hold the Treasury bonds.

If more people sell the Treasury, the yield is likely to increase further.

Where will the excess liquidity go? Gold and silver fell. Even bitcoin fell moderately. It seems that the investors are now holding cash. But cash is not a good strategy for the long term.

I wonder if the money will go into the emerging market, e.g. China stocks. We will see how the Hong Kong and China market perform today.

I expect the drop in the US market to be temporary due to the following reason:

* The $1.9 bllion stimulus plan will flood the economy with more liquidity. A large part of it will go back into the market.

I expect to see a temporary recovery in the market over the next few days but a bigger fall in the months ahead.

Caution. This is my personal view. I am usually not good at reading the market. Nevertheless, I need to take a view to guide my personal investments over the next few days.

 

 



The US market crash has started
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The US stock market fell sharply on 25 Feb 2021. S&P fell by 2.5% and Nasdaq fell by 3.%. The growth stocks that I invested previously fell by 7% for the day and about 30% over the past month.

The main catalyst for the market correction is the rise in Treasury yield. The 10 year yield has increased to 1.6%.

Why did the Treasury yield increase?

Investors are selling Treasuries. They probably see inflation increasing in America and they do not like to hold the Treasury bonds.

If more people sell the Treasury, the yield is likely to increase further.

Where will the excess liquidity go? Gold and silver fell. Even bitcoin fell moderately. It seems that the investors are now holding cash. But cash is not a good strategy for the long term.

I wonder if the money will go into the emerging market, e.g. China stocks. We will see how the Hong Kong and China market perform today.

I expect the drop in the US market to be temporary due to the following reason:

* The $1.9 bllion stimulus plan will flood the economy with more liquidity. A large part of it will go back into the market.

I expect to see a temporary recovery in the market over the next few days but a bigger fall in the months ahead.

Caution. This is my personal view. I am usually not good at reading the market. Nevertheless, I need to take a view to guide my personal investments over the next few days.