Extreme hawkishness, risky assets broadly head lower, Housing cools, UAE plans on more output, gold slides, cryptos crushed

This week is not just about the Fed, but about a wrath of central banks that are mostly considering super-sized rate hikes. It is difficult to be buying up stocks with this lousy macro backdrop, persistent inflation pressures, global growth weakness, and slashed earnings outlooks. Pessimism for equities remains elevated as the US economy appears to have a one-way ticket towards a recession as the Fed is poised to remain aggressive. ​ The risks for a retest of the summer lows could easily happen if the Fed remains fully committed to its inflation fight. ​

Data

US homebuilder sentiment continues its record downward trajectory. ​ The National Association of Home Builders/Wells Fargo Housing Market Index fell three points to 46, a ninth straight monthly decline. Almost a quarter of builders noted that they are lowering prices as rates have jumped. ​ Despite rising costs for land, labor, and materials builders are lowering prices. ​ The housing market is cooling but it still has a long way to go.

Cryptos pummelled as yields soar

Cryptos are getting crushed as yields skyrocket and as pessimism grows for a sharper global slowdown. ​ The entire cryptoverse is vulnerable to surging borrowing costs and that risk remains front and center. ​ This week could be the catalyst that sends the market to pricing in peak Fed tightening. This could be the ripping the band-aid off moment for bitcoin as selling pressure could get ugly here but that might be what is needed to form a bottom. ​ ​

Ethereum’s post Merge hangover also continues after SEC’s Gensler suggests Ethereum could now mean the crypto becomes regulated as a security. ​ Ethereum was close to forming a bottom but Gensler’s warning unleashed another wave of selling. ​

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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