Good Morning Everyone!
Prices as of 4 pm EST, 9/21/22; % YTD
MARKET UPDATE
Fed lifted interest rates by expected 75bps
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Third consecutive 75bps hike
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Powell signaled more to come
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Comments more hawkish than expected
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"The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive, or restrictive for longer"
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Current: 3.00-3.25%
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Median forecast has rates hitting 4.4% by end of 2022, 4.6% in 2023
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75bps in November followed by 50bps in December?
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New Dot Plot:
Bond Market reaction
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Yields on US Treasury bonds jumped on the Fed's decision
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Highest yields since
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US2Y - October 2007 (>4%)
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US10Y - February 2011
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US30Y - April 2013
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Yields reaction:
US Q2 Current Account - deficit narrows
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-$251.1 billion vs. -$260.6 billion expected (prev. -$282.5 billion)
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Consensus -$260.6 billion
Initial jobless claims - labor market still strong
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213k vs 218k expected (prev. 208k)
10 am EST - Conference Board Leading Economic Index (LEI)
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Current data point to already elevated recession risks:
Crude $83
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Prices dropped on Putin's mobilization announcement
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US inventory levels - gasoline and distillate stocks remain below their 5-year ranges:
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The streak of declining US gasoline prices has ended after 98 days:
Earnings
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Accenture (NYSE:ACN)
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Darden Restaurants (NYSE:DRI)
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FactSet (NYSE:FDS)
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Manchester United (NYSE:MANU)
CRYPTO UPDATE
Stablecoin regulations: US vs. EU
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In the US, new bill would criminalize creation/issuance of algorithmic stablecoins (think Terra (CRYPTO: LUNC))
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Panel could vote as early as this week
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Some existing stablecoins concerned, uncertain if they fall in this category
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In the EU, new draft of the markets in crypto-assets (MiCA) regulation removes limitations on stablecoins
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Major win for stablecoin advocates
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Leaves door open for regulations on DeFi and NFTs
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Lockstep: Bitcoin and S&P 500
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60-day correlation between BTC (CRYPTO: BTC) and S&P 500 futures hit 0.72 this week
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Just shy of May record