North American News
Nasdaq index leads the declines. Selling into the close
- Nasdaq closed below its 200 week MA
The major stock indices are all closing lower for the 3rd day in a row. There is no day-after relief rally for the stocks today.
The Nasdaq led the declines with the pair closing below the 200 week MA at 11096. The index is closing at 11066.82. Admittedly, it is the end of the week that matters (so tomorrow), but the failure to stay above the level into the close today is not looking good.
Yields are sharply higher today as the Fed decision and projection of 4.4% at the end of the year weighs on projections for earnings and growth prospects. The 10 year yield is at 3.7%. That is up from 3.45% at the close on Friday (+25 basis points). The 2 year yield is at 4.12%. The close on Friday was at 3.875% (also up 25 basis points).
The final numbers are showing:
- The Dow fell -107.12 points or -0.39% at 30076.67
- The S&P fell -31.94 points or -0.84% at 3758.00
- The Nasdaq fell -153.38 points or -1.37% at 11066.82
- Russell 2000 fell -39.84 points or -2.26% at 1722.11
US treasury auctions off $15 billion of 10 year TIPS at a high yield of 1.248%
- WI level at 1.281%
- High yield of 1.248%
- Tail -3.3 bps
- Bid to cover 2.54x vs six-month average of 2.43x
- Dealers 7.89% vs six-month average of 12.9%
- Directs 21.32 vs six-month average of 15.5%
- Indirects70.79% vs six-month average of 71.6%
Commodities
Gold unable to consolidate above $1680 as yields keep rising
- Gold looks vulnerable as government bond yields continue to rise.
- Yellow metal peaked at 1684$ and retreated back to the 1670$ area.
- Price continues to move in a wide range, bearish bias.
Gold rose after the beginning of the American session to 1685$, hitting a fresh daily high but it failed to hold above 1680$ and retreated to 1667$. It is hovering around 1670$, as it continues to move sideways in a wide range between 1655$ and 1685$.
Volatility remains elevated but XAUUSD holds within the range. The consolidation takes place within a bearish trend that remains in place. A firm recovery above 1680$ could open the doors for a larger bullish correction. On the flip side, under 1650$ could trigger an acceleration targeting initially 1640$.
Following the 75 bps rate hike from the Federal Reserve, US yield continues to rise on Thursday. The US 10-year yield are at 3.70%, the highest level since February 2011 while the 2-year reach 4.15%, the highest since 2007. Higher yields are usually not good news for gold bulls. In the current context, bad news could be positive for gold.
Earlier on Thursday, the Japanese government’s intervention in the currency market weakened the dollar and favored the rebound in XAU/USD. However, the recovery was short-lived.
EU News
European equity close: Stoxx 600 takes out the June low
- Ugly day, ugly finish
Closing changes in Europe:
- Stoxx 600 -1.8% — lowest since Feb 2021
- German DAX -1.8%
- French CAC -1.8%
- Spain IBEX -1.3%
- FTSE 100 -1.2%
ECBs Schnabel: Reasons to believe that inflation will still rise
- ECBs Schnabel speaking
The ECBs Schnabel is on the wires saying similar things as yesterday:
- reasons to believe that inflation will still rise
- labor market is proving quite resilient
- the risk of recession has gone up
- inflation may be more persistent than we originally thought
- wage data gives us some comfort that 2nd round inflation impact hasn’t materialized yet
Other News
US Treasury acknowledges intervention by BOJ, says it intended to reduce volatility
- The Treasury didn’t say whether it was involved
The ECB, SNB and BOC have all come out and said they didn’t intervene in the yen. The Japanese MOF also said they didn’t do it alone.
The Treasury here is ‘acknowledging’ Japan forex intervention which sort-of implies it was just Japan but unlike those other central banks they’re not distancing themselves from it.
Cryptocurrency News
The crypto market has chosen the downward path
Attempts at intraday gains have been shattered by the adverse market reaction following the Fed’s forecasts and comments. BTCUSD has been declining for eight of the last nine days.
Total crypto market capitalization is down 2% to $900bn for the day. Ethereum remains worse than the market, losing 5.5% in the last 24 hours, while the top altcoins are changing in a range of -2.2% (DogeCoin) to +3.5% (XRP).
News background
A US court has ordered Tether, the issuer of USDT, to provide USD reserves data, including account statements from banks and other institutions.
Meanwhile, a new bill has been introduced in the US Congress that proposes to ban the creation of algorithmic stablecoins like TerraUSD for two years.