After Powell's speech, the 10-year U.S. Treasury yield plummeted, and U.S. stocks surged rapidly

On Friday, Federal Reserve Chairman Jerome Powell stated that a shift in risk balance may require policy adjustments, and the downside risks to employment are rising, suggesting a possible adjustment to interest rates.

After Powell's speech, traders increased their bets on a rate cut by the Federal Reserve in September, U.S. Treasury yields and the dollar plummeted, U.S. stocks and cryptocurrencies surged rapidly, and gold turned to rise:

• Traders increased their bets on a rate cut by the Federal Reserve in September, now fully betting on two rate cuts by the FOMC by the end of the year.
• The S&P rose 1.3%, the Dow Jones surged 688 points, expanding its gain to over 1.5%, and the Nasdaq rose 265 points, up over 1.1%. Subsequently, the gains in U.S. stocks expanded, with the Nasdaq's intraday gain reaching 2%, closing at 21,528.67 points; the S&P 500's intraday gain reached 1.5%, closing at 6,473.62 points.
• The index of the seven major U.S. tech stocks expanded its intraday gain to 2%. Tesla rose 5.1%, while Amazon, Google A, Meta, Apple, and Nvidia rose over 1%, and Microsoft rose 0.8%.
• The yield on the U.S. 10-year Treasury bond briefly dropped about 5 basis points to below 4.26%, with an overall intraday decline of 7.4 basis points. The yield on the 2-year Treasury bond plummeted from 3.78% to nearly 3.68%, with the overall intraday decline momentarily exceeding 9 basis points. Subsequently, the decline in U.S. Treasury yields further expanded, with the yield on 2-3 year Treasury bonds dropping by at least 10 basis points.
• The Bloomberg Dollar Index fell sharply from a flat 1211 points, plunging 0.55% and approaching 1204 points. The dollar against the yen fell 1%, marking the largest intraday drop since August 1, hitting a new daily low of 146.83.
• Before Powell's speech, spot gold slightly dipped, trading around $3,335. After the speech, gold turned to rise by 0.3%, hitting a new daily high, approaching $3,350. Subsequently, the gains in spot gold continued to expand, reaching nearly 0.7%, with a new daily high above $3,360. COMEX silver futures saw an intraday gain of 2.0%, priced at $39.36 per ounce.
• Cryptocurrencies surged rapidly, with Bitcoin quickly rising over $3,000, and the intraday gain further expanded.

Regarding Chinese-related assets, the offshore yuan against the dollar saw an expanded gain, and the domestic futures night market almost all closed higher:

• The offshore yuan against the dollar expanded its gain to nearly 0.2%, hitting a new daily high above 7.17 yuan, trading below 7.1850 yuan before Powell's speech, which released dovish signals.
• Coking coal rose 6.18%, coke rose 4.75%, fuel oil rose 4.01%, glass rose 3%, synthetic rubber rose 2.78%, iron ore rose 2.14%, soda ash rose 1.83%, low-sulfur fuel oil rose 1.67%, and hot-rolled coil and rebar rose over 1.2%.

In terms of European market trends, European stocks rose, German bond prices continued to rise but underperformed compared to U.S. bonds:

• The European STOXX 600 index broke through the historical closing high set in March.
• The money market maintained expectations for European Central Bank easing, with a near 10 basis point rate cut expected by the end of the year. German bonds continued to rise, with mid-curve bonds leading the gains, but underperformed compared to U.S. Treasury bonds. The yield on the German 10-year Treasury bond fell 3 basis points to 2.73%; Italian bonds outperformed other Eurozone bonds, with the Italy-Germany bond spread tightening by 2 basis points to 81 basis points
• Traders continue to bet that the Bank of England will further cut interest rates, with swap trading indicating an additional 8 basis points cut this year. UK government bond prices rose, and the yield on 10-year UK government bonds fell by 1 basis point to 4.72%