Today the financial markets are experiencing a generalized decline that affects almost all assets: stocks, bonds, cryptocurrencies and commodities.
Everything Is Crashing: Stocks, Bonds, Crypto, Commodities All Tumble https://t.co/W0hQAHiWaj
— zerohedge (@zerohedge) May 19, 2021
Even gold is now down by 0.20% compared to yesterday.
The most significant drop is that of cryptocurrencies, with bitcoin at -15%, and several altcoins doing even worse, such as ETH (-24%), BNB (-25%), XRP (-24%), ADA (- 26%) and DOGE (-27%).
The Tesla stock on Nasdaq in the pre-market loses 3%, while that of Coinbase loses almost 6%.
Only the US dollar index rises , slightly, indicating that today traders and investors are probably looking for dollars, so much so that they are willing to sell everything else at low prices.
Something like this happened last year, in mid-March, when there was a real crash of the financial markets. Although the current situation should be completely different, given that the pandemic is in the process of being resolved, today panic prevails in the financial markets.
The reasons for the decline in the financial markets
Indeed, some pessimism is spreading after the ECB warned the euro area that it will need to face high financial stability risks , due to high debt burdens, and emerging concerns about inflation.
The 10-year US Treasury yield hit a week’s high of 1.67%, triggering a general sell-off in Apple, Microsoft and Facebook, which lost 1% in pre-market.
In reality, the financial markets seem to be in distress since yesterday.
According to Daiwa Securities chief global strategist Hirokazu Kabeya, concerns about inflation are making investors reluctant to make important decisions until they see a clearer picture. He has declared:
“Inflation concerns will keep markets uncertain for now, although I don’t expect stock prices to plummet given economic reopening.”
In March of last year, the crash lasted about a week, with the recovery of pre-crash levels already in the following week, and a return to the highs in less than two months. But massive intervention by the Fed was necessary , also made possible by very low inflation at the time. It is not certain that the Fed will intervene in the same way this time too.