North American News
Major US stock indices close higher for the day
- S&P and NASDAQ snap two day slides
The major US stock indices are closing higher on the day. Both the S&P and NASDAQ index averted closing below a key 200 day moving average. The NASDAQ index already closed below the 200 day moving average yesterday. However the rise higher today push the index back above that bullish/bearish barometer.
A look at the final numbers are showing:
- Dow Industrial Average of 341.73 points or 1.05% at 33003.56
- S&P index of 29.94 points or 0.76% at 3981.34
- NASDAQ index of 83.51 points or 0.73% at 11462.99
- Russell 2000 up 4.22 points or 0.22% at 1902.65
US Q4 unit labor costs +3.2% vs +1.6% expected
- Revisions to the Q4 productivity report
- Prelim was +1.1%
- Prior was +2.0%
- Productivity +1.7% vs +2.6% expected
- Prelim was +3.0%
US initial jobless claims 190K versus 195K estimate
- Weekly US initial claims and continuing claims
The weekly US initial jobless claims in continuing claims for the current week shows:
- initial jobless claims 190K versus 195K estimate. Prior week 192K. Seventh week below 200,000
- 4-week moving average of initial jobless claims 193K versus 191.25K previously
- continuing claims 1.655M versus 1.665 million estimate. Prior week revised to 1.660M versus 1.654M previously reported
- 4 week moving average of continuing claims 1671.5M vs 1670.25M previously.
US 10-year yields hit 4.08% as the 2-year approaches 5%
The bond market is starting to take charge again as we see 10-year Treasury yields move above 4% in trading today. There was already a warning after the ISM data yesterday and we are now seeing a bit more of a follow through ahead of European trading later.
It looks like market players are starting to come around to the idea that the Fed may very well hike more aggressively in the months ahead as inflation pressures remain stickier than anticipated.
The front end could also be ready to make headlines with US 2-year yields up 4.2 bps to 4.93%. A touch of 5% could bring retail investors out of the woodwork and would be a powerful alternative to risk assets in an uncertain world.
With the further rise in yields, the dollar found some bids.
Waller turns more hawkish
“Recent data indicate we haven’t made as much progress as thought,” he said and that the Fed may need to hike above the ‘central tendency’ of 5.1-5.4% in the dot plot.
Fed’s Collins: Number of additional hikes will be determined by incoming data
- Comments from Collins
- How many more hikes will be determined by incoming data
Fed’s Bostic: Fed may have to do more given high inflation
- Comments from the Atlanta Fed President
- Won’t decide until meeting on the proper path of policy
- Have seen ‘some attenuation’ on inflation but Fed needs to remain ‘resolute’ in fighting high prices
- Says he’s firmly in the 25 bps camp for rate hike pace and says policy should begin to bite in the spring
- Considers risks now roughly balanced
- Business contacts demand is strong and that concerns are more macro than on their business
- Fed does not “do more than we need to”
- Businesses say they are expecting to ratchet down the pace of wage hikes, but still plan to add workers
- Will need to have ‘some kind’ of slowdown in labor market but not ‘catastrophic’
Commodities
Gold is an attractive asset for 2023 – SocGen
2023 will be the beginning of the end for USD strength. Thus, strategists at Société Générale believe that Gold exposure is set to provide great returns.
Fixed income to do better than equities
“Gold can offer protection against systemic risk.”
“Continue rebalancing away from the USD. Gold will be a powerful protection against a falling USD.”
“2023 will be the year of several pivots, and overall, we expect higher returns than in 2022.”
“We see fixed income (both sovereign and credit) doing better than equities.”
Silver bears await sustained break below 61.8% Fibo. level
- Silver comes under some renewed selling pressure and snaps a two-day winning streak.
- The technical setup favours bearish traders and supports prospects for additional losses.
- Slightly oversold oscillators on the daily chart warrant caution before placing fresh bets.
Silver struggles to capitalize on this week’s modest recovery gains recorded over the past two days and meets with a fresh supply on Thursday. The white metal remains depressed through the mid-European session and is currently placed near the lower end of its daily trading range, around the $20.80 region.
From a technical perspective, the XAG/USD, so far, has managed to hold its neck above the 61.8% Fibonacci retracement level of the recent rally from the October 2022 low. The said support is pegged near the $20.60 area, which is followed by the YTD low, around the $20.40 region touched earlier this week. A convincing break below the latter will be seen as a fresh trigger for bears and set the stage for an extension of the recent slide from the $24.65 zone, or a multi-month top set in February.
Crude oil is back to unchanged on the day
- The price settles at $77.69 yesterday
Crude oil futures have moved back to unchanged on the day. The price settled yesterday at $77.69. The current price is trading right at that lev.el
Looking at the daily chart, the high-priced day stalled against a downward sloping trendline. That line cuts across near $78.59. The low price earlier today was reached at $77.23 before rotating to the upside.
US EIA weekly natural gas inventories -81bcf vs -75bcf expected
- A bigger of a natural gas draw
Natural gas has been trying to get off the floor after flirting with a one-handle. Forecasts have been trending colder for March but it’s too late to save the heating season. It’s looking to me like there’s too much natural gas in North America and a mess in the pipeline system. In the second half of the decade, it could balance out with more LNG online but given how rapidly gas names upped production, I don’t think we’re going to be back above $5 sustainably for awhile.
EU News
European equity close: France leads the way
- Closing changes
- Stoxx 600 +0.5%
- German DAX +0.1%
- UK FTSE 100 +0.4%
- French CAC +0.6%
- Italy MIB +0.3%
- Spain IBEX flat
Eurozone February preliminary CPI +8.5% vs +8.2% y/y expected
- Latest data released by Eurostat – 2 March 2023
- Prior +8.6%
- Core CPI +5.6% vs +5.3% y/y expected
- Prior +5.3%
Other News
Blinken: Were China to provide ‘material’ lethal support for Russia, it would be a problem
- Comment from the US Secretary of State
US Secretary of State Blinken says that if China were to provide ‘material’ lethal suport for Russian agression, then it will be a ‘serious’ problem for ‘our’ countries.
It’s not clear if he’s talking about the G20 or G7.
Cryptocurrency News
Reasons why Ethereum could resist selling pressure even after ETH token unlock in Shanghai upgrade
- Ethereum tokens staked in the Beacon Chain contract would be unlocked after the upcoming Shanghai Upgrade.
- Nearly 60% of staked Ethereum, representing 10.3 million ETH tokens are currently at a loss, selling pressure arises when participants are profitable.
- The largest staking pool Lido holds almost 30% of all staked ETH, at an average unrealized loss of nearly $1,000.
While Ethereum’s token unlock with the Shanghai upgrade is being perceived as a bearish event, new insights that have emerged reveal this may not be the case. Since Ethereum being staked in pools like Lido is at unrealized losses, it is likely that despite token unlock ETH holders may resist the sale of their holdings.
Ethereum staked in staking pools is at unrealized losses, ETH could resist selling pressure
The Ethereum Shanghai upgrade is one of the most highly anticipated ones in the community as it would allow validators to unlock their staked ETH tokens for the first time since the launch of the staking contract.
Based on data from CryptoQuant, 60% of staked ETH is at a loss. This represents 10.3 million ETH tokens sitting on unrealized losses. Typically, the selling pressure on an asset increases when holders of the token are sitting on unrealized profits.
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