By Geoffrey Smith

Investing.com — Bond yields continue to climb after Federal Reserve Chairman Jerome Powell staked bigger and faster interest rate hikes. The European Central Bank is trying to play down the risks of stagflation as eurozone governments prepare a series of fuel subsidies. Nike (NYSE:) earnings impressed late Monday, while Carnival (NYSE:) and Adobe (NASDAQ:) are due to report later. Tesla’s new German factory opens. China Evergrande has a shocking new revelation and a more expensive dollar is taking over oil prices ahead of weekly API inventory data. Here’s what you need to know in financial markets on Tuesday, March 22.

1. Powell bails the skates

U.S. bond yields continued their overnight upward move after one of their biggest one-day gains in a decade on Monday in response to Federal Reserve Chairman Jerome Powell’s warning in months future.

Powell had upset markets on Monday by warning that the labor market is “extremely tight” and inflation “far too high”. He said the Fed “may well come to the conclusion that we need to act faster” than currently expected.

The benchmark had jumped 17 basis points in response and gained another 3 basis points to trade at 2.35% at 6 a.m. ET (1000 GMT), its highest level since May 2019. The , more sensitive to short-term interest rates, is now above the 10-year at 2.38%, while the is at 2.19%.

Look for more comments on the outlook from New York Fed Chief Mary Daly of Cleveland and San Francisco later.

2. ECB plays down stagflation fears as Eurozone prepares fuel subsidies

The vice president of the European Central Bank has played down suggestions that the eurozone will be heading for stagflation this year, saying the bank still expects growth of more than 2%, even though inflation is now expected stay higher longer.

The comments stabilized the , which had once again fallen below $1.10 following comments from Powell, which in turn came after data showed it was up almost 26% on the year. in February.

De Guindos also gave the green light to a series of energy subsidies rolled out by eurozone states in response to soaring fuel prices. EU leaders are due to meet on Thursday to discuss those measures as well as tougher sanctions against Russia. The Wall Street Journal reported on Monday that the EU is moving closer to the United States in banning imports of Russian oil, although Germany and Hungary still oppose it.

3. Stocks should open higher; Nike up after earnings; In Adobe’s eyes

US stocks are expected to open slightly higher later, after ending in negative territory on Monday in response to Powell’s comments.

As of 6:15 a.m. ET, were up 114 points, or 0.4%, while and were both up 0.2%.

There will be economic data from and , while the cruise line and – after the bell – the software giant are due to report. Other stocks likely to be targeted later include Nike, whose earnings on Monday evening beat expectations despite falling sales in China, and Tesla (NASDAQ:), whose new factory in Germany starts production on Tuesday.

4. Evergrande’s unpleasant discovery; Ali Baba the pleasant surprise of the takeover

Property developer Evergrande has once again sent shockwaves through Chinese markets after it discovered that more than $2 billion in cash from a subsidiary had been pledged as collateral for loans and could therefore be seized by creditor banks.

The announcement explained the abruptness in Hong Kong on Monday and raises new questions about corporate disclosure standards in China, a worrying development both for the local market and one that bodes ill for its ongoing fight with US regulators over the transparency of Chinese accounts.

There was brighter news, however, from Alibaba (NYSE:), which, from an additional $9 billion to $25 billion, days after Vice Premier Liu He signaled an easing of regulatory crackdowns on the country’s biggest internet companies.

5. Oil slips on a more expensive dollar; API inventories due

Crude oil prices fell slightly but remained well in check amid fears that the EU, by expanding its sanctions package, could end up tightening the global market as it competes for more supplies not Russians.

As of 6:25 a.m. ET, prices were down 0.6% at $109.34 a barrel, while futures were down 0.3% at $115.31.

Prices have been hit by the rising dollar, which makes oil more expensive for non-dollar importers, especially in emerging markets. and were forced to raise interest rates sharply on Monday when they are expected to raise them again at their meeting today.

More importantly for the physical market, Indian oil refiners have raised their benchmark prices, raising the prospect of demand destruction. It might also be evident closer to home, when the American Petroleum Institute releases it at 4:30 p.m. ET.