Janet Yellen, Chair of U.S. Federal Reserve (Photographer: Andrew Harrer/Bloomberg)

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Fed officials talk equities, Draghi lights a fire under the euro and yields, and U.S. tech stocks tumble. Here are some of the things people in markets are talking about.

Fed Valuation Warning

A trio of Fed officials delivered remarks on Tuesday, and the state of financial markets were front and center. In a television interview in Australia, San Francisco Fed President John Williams said the U.S. stock market "seems to be running very much on fumes" and that he was "somewhat concerned about the complacency in the market." In a speech in Washington, Fed Vice-Chair Stan Fischer suggested that there had been a "notable uptick" in risk appetite that propelled valuation ratios to very elevated levels. Fed Chair Janet Yellen took a more measured view, opining that asset valuations look "somewhat rich" but that traditional metrics depend on long term interest rates, which are expected to stay below historical norms. 

Reflationary Forces

A turn of phrase from European Central Bank President Mario Draghi at a forum in Portugal Tuesday spurred traders to believe policy normalization is coming sooner rather than later. Draghi's reference to the emergence of "reflationary forces" contributed to the worst loss for German bonds since 2015, while the euro was the second best G10 currency on the day. Separately, Bank of England Governor Mark Carney warned that the central bank plans to increase capital requirements for the nation's lenders in a bid to safeguard the financial system following a pick-up in credit growth. On Wednesday, a star-studded central banking panel including Carney and Draghi (as well as Bank of Canada Governor Stephen Poloz and Bank of Japan Governor Haruhiko Kuroda) will take place on the third day of the ECB's forum.

Technical Difficulties

The Nasdaq 100 Index fell 1.8 percent Tuesday, with weakness in tech shares also contributing to a retreat in the S&P 500 Index. The CBOE Volatility Index jumped to above 11 amid signs that institutions are buying protection to hedge against a major stock selloff. Meanwhile, West Texas Intermediate futures managed to post their fourth consecutive gain, breaking above $44 per barrel.

Global Cyberattack

Another major ransomware attack is afflicting a host of companies around the world, including Rosneft PJSC and the shuttered Chernobyl nuclear facility. Victims are being instructed to pay $300 in cryptocurrency to restore access to their devices. Bitcoin bull Michael Novogratz suggested that cryptocurrencies could be worth more than $5 trillion in five years, unfazed by any association the asset class could have with the cyberattacks. 

Futures Mixed

Nikkei 225 futures are flat ahead of the open, while S&P/ASX 200 futures are in the red as of 6 a.m. Tokyo time. The MSCI Asia Pacific Index was mixed Tuesday ahead of a heavy calendar of Fedspeak, while a sharp selloff in Hong Kong small caps was attributed to links between some of the firms and a brokerage facing a regulatory probe.

What we’ve been reading

This is what caught our eye over the last 24 hours.

To contact the author of this story: Luke Kawa in New York at lkawa@bloomberg.net.