Rates as of 0500 GMT

Market Recap

The main action yesterday was in stocks, which evidently didnt like the idea of higher interest rates. Speaking at an event, US Treasury Secretary Yellen said, It may be that interest rates will have to rise somewhat to make sure that our economy doesnt overheat, even though the additional spending is relatively small relative to the size of the economy. So, it could cause some very modest increases in interest rates to get that reallocation. But these are investments our economy needs to be competitive and to be productive.

Her comments made waves because a shes a former Fed Chair herself, b its unusual in normal administrations for Cabinet members to comment on interest rates the previous regime was an aberration, and c she had seemed to subscribe to the FedWhite House view that any inflationary pressures would be transitory. Stocks had opened lower anyway and this was just another kick in the pants. Tech stocks were particularly badly hit. The NASDAQ composite was down 2.9 at the low, while the broader SP 500 was off as much as 1.5. The NASDAQ subsequently recovered somewhat to end down 1.9, while the broader SP 500 was off only 0.7.

European stocks also had a rough day. The German DAX fell 2.5, its largest oneday fall this year, while the Europewide STOXX 600 also fell 1.4.

Shortly after the market closed Yellen realized her gaffe and clarified her statements. Its not something Im predicting or recommending, she said at a…