Powell: "Inflation pressures exist... Will be patient"‥US stock market plunges (Comprehensive)

Sharp Rise in Government Bond Yields Amid Inflation Concerns in Yongin
Stock Market and Gold Prices Plummet

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), has recently focused on the rise in Treasury yields and acknowledged inflationary pressures.

Although Chairman Powell emphasized patience and ruled out the possibility of an interest rate hike, U.S. Treasury yields surged sharply and the New York stock market reversed to a decline. Powell's remarks caused market turmoil, with gold prices plummeting and the dollar strengthening.

On the 3rd (local time) at 12:05 p.m., Powell answered questions about rising Treasury yields, inflation, and monetary policy at the Wall Street Journal-hosted 'Job Summit' event.

Powell emphasized, "There are inflationary pressures, but they are temporary. We will be patient." This statement was perceived as the Fed's intention to tolerate recent inflation.

Regarding Treasury yields that surged to the 1.6% range last week, Powell said, "It was notable," and stressed, "Asset purchases will continue at the current level until we make considerable progress toward our goals."

He repeatedly emphasized that actual progress, not forecasts, is necessary and predicted that it would take a considerable amount of time. He also said that day, "We are ready to use all tools to achieve our goals." However, Powell did not mention the 'Operation Twist' that the market expected the Fed to introduce to curb the rise or fall of Treasury yields.

Immediately after Powell's remarks, the yield on the 10-year U.S. Treasury note rose vertically from 1.48% to the 1.54% range. At the same time, the New York stock market collectively reversed to a decline.

As of 1:15 p.m., the Dow Jones Industrial Average was down 1.2%, the S&P 500 index fell 1.4%, and the Nasdaq index plunged 2.37%.

Due to the rise in Treasury yields, international gold prices dropped to the $1,600 per ounce level. Meanwhile, the dollar index, which shows the value of the dollar against major currencies, rose 0.6% to 91.53.