Q2 starts with negative news, US bond yields surge, probability of rate cut in June decreases, Bitcoin falls to 64K

On April 2nd, the Dow Jones Industrial Average experienced another decline as Wall Street entered a slump in the new quarter. CNBC reported that the main reason was the rise in U.S. Treasury bond yields, with the 10-year bond yield jumping to its highest level since November 28th of last year, and oil prices hitting a five-month high, exacerbating inflation pressures. Additionally, hopes of a rate cut by the Federal Reserve in June have diminished, leading to the Dow Jones Industrial Average falling for two consecutive days.

On the other hand, the cryptocurrency market was also severely affected, with Bitcoin dropping over 7% in 7 days and Ethereum falling by more than 9%.

The recovery of the U.S. manufacturing sector affecting rate cut expectations caused Bitcoin to temporarily drop to 68K.

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Rising Yields and Inflation Concerns Hit the Market

The second quarter started off with turbulence, attributed to ongoing high inflation data and some unexpectedly strong economic figures, which have collectively driven up yields and reduced the possibility of future rate cuts by the Federal Reserve.

Tech Stocks Struggle as Tesla's Q1 Delivery Rate Drops 8.5% Year Over Year

Tech companies are feeling significant selling pressure. Tesla's first-quarter delivery numbers fell short of expectations, leading to a 5.5% drop in its stock. Other tech giants like Nvidia, Alphabet, and Microsoft also recorded around a 1% decline.

Staying Optimistic?

Despite recent setbacks in the market, some analysts remain optimistic. They view the selling pressure as a "natural digestion" period after rapid price increases. They see good performance in the market, especially in areas outside of tech like energy.

As Q2 progresses, the focus remains on whether the Federal Reserve decides to maintain its current rate stance and if the momentum from early 2024 can be sustained. Investors and traders are readjusting their strategies to adapt to the evolving economic landscape, with particular attention to inflation, oil prices, and the next steps by central banks.