Choppy waters for stocks ahead of US inflation report, small businesses are hurting, euro falls to parity against dollar, bitcoin below USD 20k

Stocks might be struggling for direction ahead of a pivotal inflation report, but global growth concerns continue to make rates comes in as the Treasury curve inversion gets deeper. The June inflation report will be a scorcher and help cement market expectations that the Fed will deliver another massive rate hike at the Fed policy meeting at the end of the month. The bond market is clearly sending a strong message that risk aversion is not leaving anytime soon as the lists of risks to the outlook grows: new Omicron variant in Shanghai, currency headwinds for multinationals, stagflation risks abroad, and rising recession risks. ​

US Data

The NFIB small business optimism index saw expectations for future conditions plunge to a record low. ​ The report shows that companies are tightening up their budgets as capital spending fell 23%. ​ Expectations for better business conditions have steadily declined each month this year. ​ The 7-point drop in the plans to increase employment erased the six-point increase saw in May. Every key component in the NFIB report posted a decline, which suggests small businesses are feeling the pain everywhere. ​

Bitcoin

Bitcoin is once again below the USD 20,000 level, but it could be far worse considering the FX pain seen with the euro. ​ Bitcoin will keep its correlation with stocks and that should mean the next 24 hours will be choppy for it until tomorrow’s CPI report. ​ ​

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya