The USD is the strongest and the GBP is the weakest as traders send stocks lower and yields higher. The day after the BOE raised rates by 50 basis points, the new UK government is announcing stimulus measures that will cut taxes and provide energy subsidies. The GBP is moving sharply lower (down to a low to near 1.1000 at 1.1019), while UK yields soared with the 10 year yield up 29 basis points to 3.786% as investors wonder how the UK government will square the books without much larger borrowing needs.
US yields are also higher after the Fed hiked by an additional 75 basis points on Wednesday and now see end of year rates at 4.4% (so 4.25% to 4.5%). The current target is 3.0% to 3.25%. There are two more meetings in 2022 which makes 75 and 50 basis points the path seen by Fed officials. The good news is that they don't see much more in 2023. The 2 year yield is at 4.214%. Does it go to target 4.4% area? The 10 year yield moved above 3.8% earlier today. A week ago the yield was at 3.45%.
German 10 year yields are above 2% for the first time since 2011.
US stocks are sharply lower in premarket trading. The Nasdaq is falling away from its 200 week MA after closing below that key MA yesterday. The 200 week moving average comes in today at 11095.94. The index close yesterday at 11066.81 and is trading down -146 points in premarket trading today. Bearish.
The S&P index closed at 3757 yesterday. Its 200 week MA is at 3585. That is 72 points away from that key MA. The premarket price is down about 50 points this morning. The price is getting closer to that key long-term moving average level.
The Dow industrial average is trading below its closing low from June at 29888.79. The low price from June reached 29653.29.
Feds Brainard and Powell are scheduled to speak at 2 PM ET. SNB's Jordan and ECB's Nagel speak at 11:30 AM ET. The flash PMI services and manufacturing data in the US will be released at 9:45 AM ET
Crude oil sharply lower.
A look at the other markets is showing:
- spot gold is trading down $23 or -1.35% at $1648.55
- spot silver is trading down $0.51 or -2.59% at $19.10
- WTI crude oil for November delivery is trading down sharply at $80.82. That's down -$2.60 and trading at the lowest level since January 12, 2022. The end of year level is $75.35
- The price bitcoin is trading at $18,914. The low on Wednesday reached $18,157.
In the premarket for US stocks:
- Dow industrial average is down -330 points after falling -107.10 points yesterday
- S&P index is down -44 points after falling -31.94 points yesterday
- NASDAQ index is down -146 points after falling -153.39 points yesterday
In the European equity markets, the major indices are down sharply. The German DAX is trading at a new and the lowest level since November 2020:
- German DAX, -2.22%
- France's CAC, -1.96%
- UK's FTSE 100 -1.9%
- Spain's Ibex -2.51%
- Italy's FTSE MIB -3.1%
In the US debt market, the yields are higher across the yield curve. The 10 year yield traded to the highest level since April 2010 earlier today.
In the European debt market, the benchmark 10 year yields are also higher with the UK 10 year soaring by 30 basis points.. The German 10 year is above 2% and at the highest level since December 2011. The UK 10 year is also at 2011 levels him
