- One stumble from Powell tomorrow and it's curtains for this market
- There are only two possible explanations for the oil market
- Tomorrow's FOMC likely to trigger another leg of USD rally - BofA
- Bitcoin leads another improvement in the risk tone
- Bond yields reverse higher in a cautionary sign
- US sells 5-year notes at 1.533% vs WI 1.547%
- Macron: If there is an attack on Ukraine, we will reply. The price will be high.
- US Commerce Dept looks at what is behind the chip shortage
- Richmond Fed manufacturing index for January 8 vs 14 estimate
- US January consumer confidence 113.8 vs 111.8 expected
- US in discussions with major natural gas producers on surging deliveries to Europe
- IMF cuts US growth in 2022 by 1.2%
- US S&P/Case Shiller home price index for November 18.3% versus 17.9% estimate
- How have markets fared in the aftermath of huge reversals like yesterday?
- Philly Fed January non-manufacturing index -16.2 vs +27.3 prior
- The USD is the strongest and the CHF is the weakest as the NA session begins
- ForexLive European FX news wrap: Dollar nudges higher, US futures pointing lower
- Do you believe in miracles?
It's one more sleep until the Fed decision tomorrow.
The expectations are for no change in rates with the first hike in March now. The Fed is likely to keep the taper on target.with the end finally in March as well. The balance sheet reduction is for later on. However, there is a lot of wiggle room. Can the Fed speed the taper? They did one time already. Can they speak to 4 or more tightenings from 3 at the last meeting? The chair has said they have the tools to slow inflation. The other tool not part of the conversation after the decision in December, showed up in the minutes to that meeting. That was the balance sheet reduction. The chair has said it worthy of talk but 3 or so meetings from implementation. I am sure the market will be anxious to hear more from the Fed chair with regard to what the policy board is truly thinking.
Needless to say as well, the markets are very skittish with the sentiment more negative. The Microsoft earnings after the close were indicative of the mood. They tech giant did beat on the top and bottom lines, but the stock still moved down some 5% after closing down -17% from the November high and -13.8% from the end of year. It's tough out there and whereas even in the uncertain times in the recent past, the glass was always 1/2 full. The new normal seems to be the glass is 1/2 empty.
The US stocks today saw the Dow erase a 816 point decline and move up 226 points at the high, but then rotate lower into the close and close down -66.77 points. The S&P index was down -123.02 points at the low and returned to up 0.88 of a point at the high before closing down -53.68 points. The Nasdaq index, never saw the light from a positive day. The closest it got was down -73.50 points or -0.53%, but that was still better than the -441 point decline (or -3.18% decline) at the lows. It closed down -315. 82 points or -2.28%. Ouch.
In other markets:
- Spot gold is trading up 5.27% $1847.60
- Spot silver is down $0.15 -0.65% at $23.81
- Crude oil is trading up $1.82 at $85.12. Continued concerns from Russia and supply demand imbalances continue to keep the price elevated. See Adam's post here.
- Bitcoin traded up to $37,552 before rotating back down to $36,537 currently
The US treasury market, the 10 year yield is trading at 1.783%. That's up about one basis point on the day. The two year yield is at 1.03%, up about five point basis points. The US auction of five year notes was another good one led by strong international demand for the second day in a row. Foreigners are more than willing to accept the higher yields afforded in the US debt market. Domestic demand was so-so. That was the pattern seen in yesterday's two year auction as well. The U.S. Treasury will take tomorrow off and auction off seven year notes on Thursday after the Fed decision tomorrow.
In the forex market, the AUD is ending the day is the strongest of the major currencies while the CHF is the weakest. The CHF has been a safe haven with the EURCHF reaching the lowest level since 2015 yesterday, but found some sellers today. The USD is ending mixed with gains vs the CHF, EUR, and NZD, and declines or near unchanged vs the GBP, JPY, CAD and AUD. Apart from the rise vs the CHF (+0.50%) and EUR (+0.19%), the changes were quite modest as traders are distracted by the stocks and yields more.
In after hours trading the QQQ index is taking a beating at -1.6%. The drubbing continues - even with the markets closed.
Earnings tomorrow include:
All those companies will report before the opening. Companies reporting after the close include:
- Lam research
On Thursday morning:
- The Blackstone Group
After the close on Thursday:
- Western Digital
- US Steel
Finally on Friday:
- Phillips 66