Yellen’s Curveball Comment Hammers Tech-Stocks. Is There More of That to Come?

Nigel Frith

This week was always going to be a busy one in terms of planned announcements but unscheduled comments from Janet Yellen have just turned volatility up a notch. Speaking on Tuesday, the US Treasury Secretary suggested interest rates may have to rise and, in doing so, took 2.69% off the value of the Nasdaq 100 index.

Source: IG

The somewhat throwaway comments were made at the Atlantic economic forum when Yellen said:

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat … Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates.”

Later in the day, there was some backtracking, especially as Yellen had overstepped the mark and commented on monetary policy issues managed by the US Federal Reserve. Yellen’s mandate is US fiscal policy and her suggestion that the economy is overheating will be brushed off by the officers of the Fed. It does, however, give rise to fears that the $5.3trn Covid relief package, which Congress has approved, could be the last act of support from the White House.

Source: IG

Despite Yellen later saying that an interest rate rise was “not something I’m predicting or recommending”, the damage had already been done for equity prices, and the shaky start to May was confirmed. Since mid-April, the Nasdaq 100 index had been trading in the range of 13780 – 14060, but Yellen’s comments were enough to cause a break to the downside. The 13780 level now forms a significant resistance to any tech stock share price recovery, and the hourly 20 SMA is also providing resistance to upward movement.

Thursday the 6th of May – Bank of England Statement

The events in the US have led to more attention being placed on the interest rate announcement due from the Bank of England on Thursday. The UK focused equity bulls are currently more optimistic and took the Yellen price plunge as an opportunity to buy the dips at the bottom of that market’s price range.

Source: IG

The recovery in UK equity futures prices, which started after the closing bell in London, carried on through the Asian session and found more momentum after European markets opened on Wednesday. For the FTSE 100, the bounce off the support level marks 6920 – 6930 as an increasingly significant price range. Resistance in the region of 7040 remains, and Wednesday’s price move could love momentum as the countdown to the Bank of England’s announcement begins.

National Holidays are Clouding the Picture

Those looking to navigate the markets this week do need to keep an eye on the economic calendar. Monday’s UK national holiday was followed by ones in China, Japan and Thailand on Tuesday. With the markets being closed on those days, there is gapping between prices of the underlying equities and equity futures. Early session price volatility as the two markets recalibrate looks set to be a theme of the week.


If you want to know more about this topic, or have been scammed by a fraudulent broker, please contact us at [email protected]

Nigel Frith

Latest news

Scammer Alert – Trader Feedback on The Scams Currently Doing the Rounds
The Forex Fraud team has received more messages from scammed traders pointing out how recent crypto price rallies are bringing an old scam, the double-dip, back to the table. Read more
State of the Nation – Up to Date Reports on Which of the Brokers Can be Trusted – Tickmill
Given the amount of technical and fundamental analysis that goes into running a successful investment strategy, it’s often surprising how many traders skip analysing the health of their broker. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2011 Global CFD & FX Broker
Number One Broker
#2 ForexTB logoYour capital is at risk Founded: 2015 Global Forex & CFD Broker
Number One Broker
LOWEST FEES Visit broker
#3 Tickmill forex broker logoYour capital is at risk Founded: 2014 Global Forex & CFD Broker
Number One Broker
Best Trading Conditions Visit broker
#4 BlackBull MarketsYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
#5 Forex Broker Pepperstone LogoCFDs and FX are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker

    Forex Fraud Certified Brokers

    skilling logo
    Vantage FX logo
    LegacyFX Small Logo
    Plus500 Small Logo
    City Index Logo Logo
    FXTM Logo
    OctaFX Logo
    HYCM Logo
    AvaTrade logo
    ATFX Logo
    IQ Option Logo
    XM Logo
    BlackBull Markets Logo
    Exness Small Logo