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The morning after
THURSDAY MARKET UPDATE
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Good Morning Everyone!
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”
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
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:
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:
Stablecoin regulations: US vs. EU
In the US, new bill would criminalize creation/issuance of algorithmic stablecoins (think Terra)
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 and S&P 500 futures hit 0.72 this week
Just shy of May record
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