North American News
US major indices close at lows for the day
- NASDAQ index falls -1.78%
The major US stock indices closed near low levels for the day. The declines were led by the NASDAQ index which fell -1.78%. Things got more negative after feds Bullard said a 50 basis point rise could not be ruled out at the next meeting.
Bullard is not a voting member is one of the more hawkish of the Fed officials. He sees a terminal rate of 5.25% – 5.50% as appropriate which is higher than the current projection of 5.10% from the December meeting.
Looking at the major indices:
- Dow Industrial Average fell -431.20 points or -1.26% at 33696.86
- S&P fell -57.19 points or -1.38% at 4090.42
- NASDAQ index fell -214.75 points or -1.78% at 11855.84
- Russell 2000 fell -18.75 points or -0.96% at 1942.21
US January PPI 6.0% y/y vs 5.4% expected
- US January 2023 producer price data
- Prior PPI 6.2% y/y
- m/m PPI +0.7% vs +0.4% expected (-0.4% prior)
- PPI ex food and energy +5.4% y/y vs 4.9% expected (5.5% prior)
- PPI ex food and energy +0.5% m/m vs +0.3% expected (+0.1% prior)
Atlanta Fed GDPNow estimate for 1Q growth ticks up to 2.5% from 2.4% yesterday
- Solid growth from the 1Q model
The Atlanta Fed GDPNow estimate for 1Q growth has moved up to 2.5% from 2.4% previously. The gain came on the back of the housing starts when increased first-quarter real residential investment to -8.1% from -10.4% previous.
In their own words:
“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2023 is 2.5 percent on February 16, up from February 15. After this morning’s housing starts report from the US Census Bureau, the nowcast of first-quarter real residential investment growth increased from -10.4 percent to -8.1 percent.”
US initial jobless claims 194K versus 200K estimate
- US initial jobless claims and continuing claims for the current week
- Initial jobless claims 194K versus 200 K estimate. Prior month revised to 195K vs 196K last week
- 4 week moving average of initial dollars claims 189.5K versus 189.00K last month
- Continuing claims 1.696M versus 1.695M estimate. Prior week was revised to 1.680M from 1.688M previously reported
- 4 week MA of continuing claims 1.673M vs 1.663M last week
- The largest increases in initial claims for the week ending February 4 were in California (+6,820), Ohio (+3,528), Illinois (+1,533), Kansas (+611), and Florida (+568),
- The largest decreases were in Georgia (-1,463), New Jersey (-1,291), Texas (-859), Oregon (-692), and Arkansas (-632).
Fed’s Mester: Fed will need to go above 5% and stay there for awhile
- Mester: How far Fed goes above 5% depends on the data
- Jan CPI report underscores there is still more to do on cooling inflation
- Expects to make good process on lowering inflation
- Says she saw compelling case for 50 bps at the last FOMC meeting
- Fed has more work to do to control inflation
- Inflation levels remain too high
- Bigger risk is to undershoot in effort to control inflation
- Can accelerate the pace of hikes if conditions warrant it
Commodities
Silver trims its losses but remains exposed to sellers below the 200-DMA
- Silver price stopped its fall but remains shy of reclaiming the 200-EMA.
- A third daily close below the 200-day EMA will cement Sllver’s price downward bias.
- Silver Price Analysis: Break below $21.40 would expose the $21.00 mark.
Silver price attempts to recover the 200-day Exponential Moving Average (EMA) but stays shy of reclaiming the $21.94 price level, which would underpin the XAG/USD towards the psychological $22.00 mark. Nevertheless, the Silver price registers gains, and the XAG/USD is trading at $21.71 after hitting a daily low of $21.44.
Once the XAG/USD extended its losses beyond the 200-day EMA, sellers faced difficulties dragging prices below the weekly low of $21.43. The Relative Strength Index (RSI) is in bearish territory but turned flat, meaning bears are getting a respite before re-attempting to drive prices toward the November 28 low at $20.87.
In the short term, the XAG/USD 1-hour chart suggests the pair is sideways. Even though the white metal dived towards the S1 daily pivot at $21.40, it encountered bids and climbed back above the daily pivot at $21.64. However, failure to crack the R1 daily pivot at $21.84 would keep the daily chart bias intact.
That said, the XAG/USD first support would be the daily pivot at $21.64, followed by the S1 pivot point at 21.40. A breach of the latter and the following line of defense for Silver bulls would be the S2 daily pivot at $21.19, followed by the S2 area at $20.96.
Gold comes within a gold flake of the $1,825 target
- Gold price bears came close but there was no cigar.
- The US data of late has been in contrary to the belief that the Fed is about to pivot.
- Investors could now be looking to diversify in uncertain times.
Gold price bears have been on a quest for the $1,825 target since the start of the month in anticipation of a long squeeze into higher time-frame breakout traders getting long at the break of $1,800 towards the end of 2022. In Thursday’s Gold price action, fuelled by a resurgence in the US Dollar pertaining to a slew of inflationary US economic data, the bears moved in again and came in close to the $1,825 target, but there was no cigar.
At the time of writing, Gold price is trading higher by some 0.3% and close to the highs of the day ($1,844.80) near $1,842 and has rallied from the session low of $1,827.62 in a typical volatile fashion. The US Dollar is trying to claim higher grounds on the back of a fickle narrative surrounding the Federal Reserve and what the latest key data points are revealing to be sticky inflation for longer.
WTI crude futures settles at $78.49
- Down -$0.10 or -0.13%
WTI crude oil closed at $78.49. That’s down $0.10 or -0.13%.
The low price reached $78.18. The high prices at $79.76.
Saudi energy min: Current OPEC+ deal will continue until year end
- Says can’t increase output only based on initial signals about demand
- Oil demand level is unpredictable, I will believe in demand growth when I see it
The better signs from the global economy are bullish for oil but there are some indications that Chinese demand isn’t coming on as quickly as some thought. OPEC always talks its book but there is no clarity on either the demand or supply side on oil.
EU News
European equity close: The broken record continues in another day of gains
On the day:
- Stoxx 600 +0.3%
- German DAX +0.2%
- Francis CAC +1.0%
- UK’s FTSE 100 +0.2%
- Spain’s Ibex +0.4%
- Italy’s FTSE MIB +1.2%
ECB’s Lane: Much of the ultimate inflation impact of our measures is still in the pipeline
- Comments from the ECB chief economist
- Has open mind about the precise scale of the monetary policy tightening that will be needed.
- Calibration of the monetary policy stance needs to be regularly reviewed in line with the incoming information
- Says ECB will have data-dependent, meeting-by-meeting approach to setting interest rates
- monetary policy poses two-sided risks to the delivery of our medium-term inflation target
- It is fully priced (in line with our expressed policy intentions) that the main policy rate (the DFR) will reach 300 basis points in March, and it is priced to rise even higher subsequently
- If the increasing role of intangible assets for firm revenues turns out to be a persistent trend, it could support higher interest rate sensitivity, since an increasing role of intangible assets means equity valuations may turn out more sensitive to interest rate changes than in the past
Other News
Bank of Mexico’s Heath: Sees terminal interest rate between 11.25% and 11.75%
- Banxico raised rates by 50 bps to 11% last week
Bank of Mexico’s deputy governor Jonathan Heath is on the wires saying:
- sees a terminal interest rate reaching between 11.25% and 11.75%, but says a lot can change
- rate hiking cycle is nearing its terminal rate
- monetary posture clearly restrictive
- once terminal rate is reached, we will leave rates at that level for a good amount of time to allow monetary policy to take effect
- forward guidance in the last policy statement of the smaller rate hike in March is not a commitment. Ultimate decision is data dependent
- sees inflationary pressures starting to move to more local, domestic factors from global pressures
- stickiness of inflation in scenario of preponderance of domestic pressures merits a coherent monetary posture
Cryptocurrency News
Bitcoin runs up toward swing area top and stalls
- The swing area between $25258 to $25401
Bitcoin has continued the run up today. Remember yesterday, the price moved up $2121 or 9.55%. Today the gain is more contained with the price currently up $554 or 2.28%.
The high today took the price up $938 at the high. That high reached $25270 which got within $131 of the high of a swing area on the daily chart at $25401.05. The area between $24258 and $25401.05 is home to a number of swing highs, and a swing low going back to May 2022. The current price is trading at $24,799.
A move above the aforementioned swing area, would open the door for further upside momentum with the 38.2% retracement up to $28,074 as the next major target on the daily chart.
Market demand pushes trading volumes on DEX level finance to over $1b
Trading volumes on BNB Chain-based decentralized finance exchange Level Finance have crossed over $1 billion in a little over two months since its December launch – suggesting high interest from users for such products.
The platform has earned fees of over $1.2 million since inception, with a portion of these distributed to Level’s users as an incentivize for using the service. As such, Level holds over $16 million in locked tokens on its platform as of Thursday. Nearly 50% of this is held in binance USD (BUSD), a dollar-pegged stablecoin, and BNB.
Level allows users to trade financial derivatives, such as futures on bitcoin (BTC) and ether (ETH), with low slippage and cheap fees. It also offers high leverage of up to 30 times the initial collateral.
Bitcoin futures on Level crossed $12 million in trading volumes in the past 24 hours, data from the platform show. Futures of BNB Chain’s native BNB tokens saw $11 million in volumes while ether futures recorded $7 million in volumes.
That activity came as crypto market capitalization rose 8.8% as bitcoin reached six-month highs of $24,700.
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