Central banks continue hawkish stance
Wall Street was quick to fade yesterday’s post-FOMC rally as the other major central banks are turning very hawkish with their respective inflation battles. Traders paid special attention to a surprise rate hike by the SNB, which paved the way for more increases in the foreseeable future. The BOE also took rates to the highest levels since 2009 and will likely not be easing up anytime soon with their tightening cycle.
US economic data is showing a deceleration in activity, which is making Wall Street bring forward its recession calls. Jobless claims remained steady, but everyone is focusing on a steady stream of layoff announcements from companies across housing and crypto markets. The housing market is cooling quickly after both housing starts and building permits plunged, while mortgage costs surge. Mortgage rates rose to 5.87%, the biggest one-week increase since 1987.
Traders went from expecting a soft landing to fearing an imminent recession. Some consumers are already behaving as if we are already in a recession and that is a troubling sign for many of the S&P 500 companies.
Bitcoin
The news flow has been terrible for cryptos. The Texas Securities Board is investigating the Celsius network‘s decision to suspend withdrawals and everyone is expecting restrictive guidelines to quickly make life difficult for crypto-lending firms.
Bitcoin declined as risk appetite left Wall Street as investors became worried about a much quicker deterioration for the US economy. Surging recession fears are crippling appetite for risky assets and that has crypto traders remaining cautious about buying bitcoin at these lows.
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