Good Morning Everyone!
Prices as of 4 pm EST, 9/21/22; % YTD
MARKET UPDATE Fed lifted interest rates by expected 75bps
- Third consecutive 75bps hike
- Powell signaled more to come
- Comments more hawkish than expected
- “The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive, or restrictive for longer”
- Current: 3.00-3.25%
-
Median forecast has rates hitting 4.4% by end of 2022, 4.6% in 2023
- 75bps in November followed by 50bps in December?
- New Dot Plot:
Bond Market reaction
- Yields on US Treasury bonds jumped on the Fed’s decision
-
Highest yields since
- US2Y - October 2007 (>4%)
- US10Y - February 2011
- US30Y - April 2013
- Yields reaction:
US Q2 Current Account - deficit narrows
- -$251.1 billion vs. -$260.6 billion expected (prev. -$282.5 billion)
- Consensus -$260.6 billion
Initial jobless claims - labor market still strong
- 213k vs 218k expected (prev. 208k)
10 am EST - Conference Board Leading Economic Index (LEI)
- Current data point to already elevated recession risks:
Crude $83
- Prices dropped on Putin’s mobilization announcement
- US inventory levels - gasoline and distillate stocks remain below their 5-year ranges:
- The streak of declining US gasoline prices has ended after 98 days:
Earnings
- Accenture (NYSE: NYSE:ACN)
- Darden Restaurants (NYSE: DRI)
- FactSet (NYSE: FDS)
- Manchester United (NYSE: MANU)
CRYPTO UPDATE Stablecoin regulations: US vs. EU
-
In the US, new bill would criminalize creation/issuance of algorithmic stablecoins (think Terra (CRYPTO: LUNC))
- Panel could vote as early as this week
- Some existing stablecoins concerned, uncertain if they fall in this category
-
In the EU, new draft of the markets in crypto-assets (MiCA) regulation removes limitations on stablecoins
- Major win for stablecoin advocates
- Leaves door open for regulations on DeFi and NFTs
Lockstep: Bitcoin and S&P 500
- 60-day correlation between BTC (CRYPTO: BTC) and S&P 500 futures hit 0.72 this week
- Just shy of May record
MEME OF THE DAY
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