- The Nasdaq has the best day going back to 2020
- US crude oil settles at $86.47
- Brazil's Bolsonaro calls emergency meeting with armed forces generals
- Mexican central bank hikes rates 75 bps to 10%, as expected
- BOC's Macklem: We are particularly focused on measures of core inflation
- Fed's George: Early indications suggest labor market cooling
- BOE lays out demand-led approach to unwinding recent gilt purchases
- US sells 30-year bonds 4.080% vs 4.113% WI
- Fed's Mester: Upside inflation risks remain. Fed needs to press forward on rate rises.
- More from Fed's Daly: Inflation is one of the most lagging variables
- Bank of Canada's Mackem: To hit 2% inflation target we need to rebalance labor market
- Fed's Daly: The time is now to step down on the pace of rate hikes
- Alameda owes FTX about $10 billion - report
- Tether freezes USDT belonging to FTX at the request of law enforcement - report
- Fed's Logan: CPI data a welcome relief but still a long way to go
- Fed's Harker says he favors a pause at 4.50%
- Sam Bankman-Fried tweets says he's in talks with a number of investors. Priority is users
- ECB's Vasle says not yet at peak inflation, pipeline pressures significant
- Fed's Harker: Expects the FOMC can slow the pace of hikes in the coming months
- CPI report leaves Fed on track to hike by 50 bps - Timiraos
- US October CPI +7.7% y/y vs +8.0% expected
- US initial jobless claims 225K vs 220K estimate
- Sam Bankman-Fried says "will be conducting a [capital] raise" next week in memo to staff
- The GBP is the strongest and the EUR is the weakest as the North American session begins
The various markets went into the CPI data with a binary "one way or the other" mindset. If the data was higher than expectations, the dollar would rise, rates would go higher, stocks would go lower, and gold would go lower. Conversely, if the data was weaker than expectations, the dollar would tumble, rates would go lower, stocks would go higher and gold would go higher.
The number came out weaker. Headline CPI came in up 0.4% for the month and up 7.7% year on year. There was less than 0.6% and 8.0% expected. The core measure came in at 0.3% vs. 0.5% expected. The YoY was at 6.3% vs. 6.5%. Yes better but still work to do.
Fed officials are mixed:
- Fed's Harker said that he expects the FOMC can slow the pace of hikes and that he favors a 4.5% pause
- Fed's Daly said that now is the time to step down on the pace of rate hikes and that inflation is one of the most lagging variables
- Fed's George said in early indications suggest labor market is cooling
- Fed's Mester said that inflation risks remain in the Fed needs to press forward on rate rises
Looking at the forex, ranking the strongest to the weakest of the major currencies, the USD is ending as the runaway weakest of the major currencies. The JPY and the GBP are the strongest.
The greenback was particularly weak vs the JPY which had seen a 27% increase in 2022 coming into today's trading. Today, the USDJPY fell -3.52% or over 500 pips. My data goes back to 2008 and the pip decline is the largest one day move lower since that time. It is also the largest % decline since that time.
The GBPUSD moved up 352 pips or 3.13%. Back in January of 2017, the price moved up 3.05%. Today is the largest % gain going back to at least 2008.
The AUDUSD is also a big mover with a move of 2.78% or 180 pips.
Overall the dollar index (DXY) fell -2.17% and is closing below its 100 day MA for the first time since June 15, 2021. The pip and % change lower in the DXY is the largest declines since at least 2012.
Looking at the US stocks, the major indices enjoyed their best day since the pandemic volatility when the major indices were moving up and down in 5-12% range.
- Dow industrial average rose 1168 points or 3.6% at 33685
- S&P index rose 205 points or 4.46% at 3953
- NASDAQ index were 754 points or 7.29% at 11108.02
- Russell 2000 rose 100 627 points or 6.04% at 1866.597
Looking at the US debt market,
- 2 year yield is trading at 4.33%, -29.4 basis points
- 5 year yield is trading at 3.944%, -33.9 basis points
- 10 year yield is trading at 3.823%, -3120 basis points
- 30 year 4.058%, -26.0 basis points
It is only one day, but in what has been a one-way ticket for the USD, rates, stocks in 2022, today could be the start of a corrective move in the opposite direction. There is a long way to go and would not expect rainbows and unicorns in the opposite direction but there is room to roam.