Stocks fall on growth and COVID concerns, euro rallies, cryptos crumble

The buy-the-dip strategy that has worked so well during the pandemic will soon be tested.  Investors initially hit the sell button as growth forecasts for the remainder of the year got slashed as several parts of the world continue to struggle with the fight against COVID-19.  A month ago, everyone was thinking the US economy could grow between 8-10%, now that has come down closer to 6%.  Growth concerns were dragged down after both news that the Olympics in Tokyo will occur without fans and that the US isn’t any closer to lifting restrictions on international travel.

Treasury yields continue to fall and that might not change unless inflation expectations grow.  The 10-year Treasury yield fell below 1.25% in early trade and is settling closer to 1.29%.

Wall Street also has a little bit of nervousness that this earnings season will show peak growth and that is as good as it will get.  Elevated stock valuations and a ton of froth in the market have some investors very anxious to head for the sidelines if the banks don’t provide enough reasons to be optimistic about the US consumer.  The stock market will see a ton of support from central banks, but certain pockets of froth might be ripe for a major pullback.  Energy stocks and anything tied to China could be vulnerable over these next couple of weeks.

Earnings season officially kicks off on Tuesday with JPMorgan, Pepsico, Fastenal, and Goldman Sachs reporting before the opening bell.


The euro is rallying as bond yields slide as concerns grow over the global economic growth outlook for the rest of the year.  The ECB strategy review confirmed the adoption of a symmetric 2% target over the medium term.  What the ECB didn’t clarify is how much they will allow inflation to overshoot.  The new strategy will take effect with the July 22nd ECB monetary policy decision.

The ECB also released a roadmap of climate change-related actions.  This will draw some controversy as the central bank will outline key proposals in tackling climate risks.


Cryptocurrencies across the board are tumbling hard on both concerns that China’s central bank is worried about stablecoins’ risk to financial systems and on broad risk aversion that has risky assets tumbling.  Bitcoin appears to be sliding back towards the lower end of the USD30,000 to USD40,000 trading range.  The news that cryptocurrency operator Circle, who has a stablecoin, will go public in a blank-check merger deal valued at USD4.5 billion is positive for the cryptoverse but didn’t excite traders.

Bitcoin can’t shake off any negative news from Beijing until the majority of the mining has found a new home, that is hopefully using clean energy. Scrutiny over the progress on using renewable energy is growing and that might take time to prove otherwise.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.