The early morning stock market rally that stemmed from optimism that China was poised to deliver more stimulus and nearing a loosening of COVID restrictions did not last. Investors remain fixated on anything that involves inflation and most of those headlines are leading many to believe the Fed hawks might be proven right next quarter. One major inflation catalyst could be a rail strike that seems poised to get delayed until after the holiday. Congress appears positioned to block the strike that could deliver a devastating blow to the economy.
With Fed Chair Powell’s discussion on the outlook and labor market happening tomorrow, Wall Street might not do much of anything the rest of the day as traders enjoy a pivotal World Cup match between USA and Iran.
Cyber Monday/Treasury yields
Treasury yields rallied as the US consumer didn’t hesitate to take advantage of Cyber Monday deals. The consumer was expected to refrain a little as inflation runs wild but it looks like they will set a record $11.6 billion. Adobe Analytics sees a jump of 8.5% from a year ago, which is somewhat surprising. This could very well mean that Americans were motivated to take advantage of deals and that they might be done with shopping early.
The Conference Board’s consumer confidence reading showed the economy is weakening but not as sharply as many were expecting. The key index fell from 102.5 to 100.2, a couple of ticks higher than the consensus estimate of 100.0. Real consumption growth is still likely to drive for a strong fourth quarter as consumers remain more optimistic than they were this summer and well above the pandemic lows.
Bitcoin is bouncing around the $16,000 level as crypto traders await the next domino to fall in the FTX saga. BlockFi’s bankruptcy was expected given the loan exposure to FTX, but now traders are trying to find out which parts of the cryptoverse are about to break. This is not a friendly environment to buy the crypto dip as the risks to the downside are elevated given pricing disparities for other crypto derivatives, fears of a potential run on some exchanges, and concerns that risk appetite is in for a rough period as the economy appears headed for a recession.
Bitcoin could continue to stabilize here if Wall Street rebounds, but that seems unlikely as this bear market for stocks has yet to bottom out. Bitcoin has support ahead of the $15,500 level but if that does not hold, technical selling could send prices toward the $13,500 region.
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