US stocks were all over the place as investors assess a wall of worry that include a weakening consumer, persistent supply chain issues, and growth concerns, while some investors think the selling of stocks is nearing the end. Billionaire hedge fund manager David Tepper noted that he covered his Nasdaq short and anticipates that 12,000 holds for the Nasdaq.
The bond market selloff is clearly repositioning itself ahead of tomorrow’s inflation data as the 10-year Treasury yield is well below yesterday’s high of 3.20%. Everyone is expecting the April inflation report to show a sharp deceleration that confirms the peak was set in March.
Fears tentatively returned of much more aggressive Fed tightening after Cleveland Fed Chief Mester said, “We don’t rule out 75 forever.” The dollar and Treasury yields at the short-end of the curve rallied following Mester’s hawkish comments, but a sustained breakout did not occur.
Oil prices are in freefall as crude demand concerns intensify as more companies become pessimistic to the short-term outlook and concerned over the negative impact of higher energy costs. The latest EIA forecasts suggest slower production growth which implies economic growth concerns are worsening.
Everything in the past 48 hours seems to have turned bearish for oil prices as EU sanctions on Russian energy have completely stalled and as the US dollar rallies over economic growth concerns. WTI crude tentatively fell below the $100 level, but energy traders won’t forget how tight the oil market is and also how prices will react when the EU is able to get sanctions on Russian oil pushed through.
Gold edged lower prices as the dollar continues to rally and as the stock market shows signs of stabilizing. It looks like investors are ready to buy stocks but not gold if rates are steady. Gold remains in the danger zone if the $1830 level breaks as that could trigger another wave of technical selling.
If Treasury yields end up lower following tomorrow’s inflation report and gold does not muster up a rally, some bullion investors could throw in the towel.
Bitcoin’s plunge below $30,000 level did not last a long time, but the world’s largest crypto is still in danger. Too much institutional money will have a tight leash with their Bitcoin trades and they most likely won’t tolerate a move below the $30,000 level. The rebound in the Nasdaq was welcome news for Bitcoin investors, but Wall Street won’t feel fully confident in piling back into equities until the Fed and ECB can signal they have inflation under control. Aggressive central bank tightening has been mostly priced in for the Fed, but the major European central banks still can signal significantly tighter conditions are coming.
Bitcoin faces short-term resistance at the $32,500 level, followed by the $35,000 region. To the downside, Bitcoin will try to hold the $30,000 level, with $28,500 providing major support.
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