Geoffrey Smith 

Investing.com — Federal Reserve speakers are set to speak out in support of markets. This comes a day after the bank raised concerns about the state of liquidity in the key markets. Stablecoin is a sign of stress, and it ‘breaks buck’. The stock market is expected to rebound after Monday’s loss, however there are challenges ahead as more “profitless” tech companies report higher ‘earnings. Tesla (NASDAQ) will have to slow down production in Shanghai once again due to concerns about the global demand outlook. These are the top financial market news stories for Tuesday, May 10th.

1. Incoming! Fed speakers are due all day

You can expect a lot of Fedspeak. Get your hard hats on. At least five of the U.S. central bank’s top policymakers will make public appearances on Tuesday and their comments may show whether they are still exclusively focused on taming inflation, or whether the prospect of a global slowdown is starting to force a rethink.

First up at 7:40 AM ET (1140 GMT) is New York Fed President , whose status as the Fed’s point man for Wall Street will give his comments particular weight, a day after the Fed warned of worsening liquidity in key financial markets in its latest Financial Stability Report.

He’s followed by Atlanta’s Raphael Bostic at 8:30 AM ET. A lull then follows until 1 PM ET when Governor Christopher Waller and Minneapolis’ Neel Kashkari are both due to speak. Cleveland’s Loretta Mester rounds off the festivities at 3 PM.

The data calendar has very little else, except for the NFIB small-business survey. In May, the main index was stable at 93.0. This is slightly less than we had expected.

2. Terra Infirma

The signs of financial market stress talked about by the Fed aren’t hard to spot. There have been significant spikes in nickel and energy markets in the last few months, in addition to continuing default risks from Chinese property developers as well as almost all Russian entities below sovereign level.

On Monday, it was the turn of crypto, as the ‘stablecoin’ UST – notionally tied to the dollar –  fell to as low as 69 cents, triggering a wave of redemptions for fiat money.

Terra, an algorithmic stablecoin, relies more on arbitraging against digital assets than asset backing to determine its value. While the system designed to keep it stable was partially successful in bringing Terra’s price back up, it was stuck at just over 90c by 6:25 AM ET.

Stablecoins have some similarities to the Great Financial Crisis’s role in money market funds. Both asset classes promise risk-free returns. It was the realization that 2008’s assets supporting MMFs were not solid that led to the most horrific 2008 events.

3. Stocks are set to bounce. Tech reports cast shadow 

U.S. stock markets nonetheless think they’ve priced in quite enough bad news, thank you very much, after another rocky start to the week on Monday.

At 6:25 AM ET they were up 250 points or 0.8% while up 0.9% (or 1.5%) That represents a recovery of between one-third and 40% of Monday’s losses.

The first test of sentiment this morning will likely come from Peloton (NASDAQ:) and Workhorse, given the particularly negative sentiment toward ‘profitless tech’. Sysco, Warner Music, Li Auto, Fox Corp. and Electronic Arts are expected to all report before the deadline, with Occidental Petroleum and Electronic Arts leading late reports.

4. Tesla forces Shanghai’s production to be slowed again

Reuters claimed that Tesla was forced to stop its Shanghai production, citing an internal memo. According to an internal memo, Tesla blamed the sudden stoppage on a shortage of parts resulting from lockdowns across the region that now enter their eighth week. These locks were instituted after several false dawns in relation to reopening.

Data released earlier the China Passenger Car Association (CPCA) showed that Tesla’s sales in China had fallen 98% in April. 

Shanghai’s lockdowns were also at the heart of two warnings for the German manufacturing sector on Tuesday, with both the ZEW think tank and the VDMA engineering industry group sounding the alarm.

5. On demand worries, oil drops to a one-week low; API concerned

The fear of global growth continues to drive crude oil prices lower. Prices are still stuck in an equilibrium between Russian and Chinese supply restrictions.

Futures fell 1.5% to $101.50 per barrel at 6:35 AM ET. By 10.04 am ET futures had fallen 1.8% to $104.04 per barrel. Both blends have previously reached their lowest level in more than a week.

In the face of record-breaking diesel prices, The American Petroleum Institute will report its weekly inventory data on Wednesday at 4:30 pm ET. Europe is urging Hungary to abandon opposition to the embargo it has on Russian oil. The move comes as President Ursula von der Leyen of EU Commission left Budapest empty-handed Monday.