Nasdaq and other U.S. stocks fall across the board Disgusted by chairman Powell’s congressional testimony, dollar yen to 137 yen level | 8th financial tankan

1 year ago 110

March 8 (Wednesday) morning market trends (compared to the previous day)

traditional finance

NY Dow: $32,856 -1.7%
Nasdaq: $11,530 -1.2%
Nikkei Stock Average: ¥28,309 +0.2%
USD/JPY: 137.1 +0.9%
US dollar index: 105.5 +1.2%
10 year US Treasury yield: 3.96 -0.4% annual yield
Gold Futures: $1,819 -1.8%

crypto assets

Bitcoin: $22,033 -1.4%
Ethereum: $1,549 -1.1%

The New York Dow fell sharply today – closing at $574. The S&P 500 and Nasdaq also fell. Fed Chairman Powell’s hawkish testimony in Congress is disgusting.

Chairman Jerome Powell showed his willingness to tighten monetary policy at a hearing before the Senate Banking Committee on the 7th. At the FOMC meeting in February, the pace of interest rate hikes was suggested to be slowed down, but this time, regarding the policy interest rate, he said, “If necessary, we are ready to accelerate the pace of interest rate hikes.” “It’s likely to be higher than expected,” he said. These remarks intensified the selling pressure in the market.

In addition, Powell pointed out that “the latest economic data, including January’s employment report and February’s consumer price index, were stronger than expected” behind the continued rate hikes. At the next FOMC meeting in March, a 0.25 percentage point rate hike was priced into the market as in the previous meeting, but economic indicators to be released show that the rate hike efforts so far have been insufficient to slow the economy. If so, the odds of a 0.50 percentage point rate hike would increase.

As a result of the chairman’s remarks, in the CME interest rate futures market, expectations for an interest rate hike of 0.50 points surged to 70.5% at the next FOMC meeting on March 22nd. The peak interest rate expected by the market has risen from around 5.5% on the previous day to slightly less than 5.6%.

connection: Expectations of US Fed interest rate hikes after May

This week, attention is increasing to the change in the US non-farm payrolls for February, which is scheduled to be announced on the 10th. In January, the unexpected increase of 517,000 people caused turmoil in the market, but some pointed out that it was an abnormal value. The consensus for February is an increase of 200,000. “Despite slowing growth, the labor market is still very tight,” Powell said in his testimony.

March Economic Indicators (3/8-3/15)

March 8, 22:15 (Wednesday): U.S. February ADP employment statistics (month-on-month change)
March 10, 22:30 (Friday): U.S. February average hourly wage (vs. previous month), change in February non-agricultural sector employment (vs. previous month)
March 14, 21:30 (Tuesday): US February Consumer Price Index Core Index (CPI)
Wednesday, March 15, 21:30: U.S. February Retail Sales
Wednesday, March 15, 21:30: U.S. February Wholesale Price Index (PPI)

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US stocks

Today IT and tech stocks are all down. Compared to the previous day for individual stocks, NVIDIA -1.1%, c3.ai -4.4%, Big Bear.ai -4.8%, Tesla -3.1%, Microsoft -1%, Alphabet -1.3%, Amazon -0.2%, Apple -1.4% , Meta-0.2%, Coinbase-1.4%, Silvergate Capital-3.5%.

Meta Platforms is reportedly planning to make thousands of new job cuts this week. As of November last year, the company announced its first large-scale job cuts, cutting more than 11,000 people, equivalent to 13% of all employees. Meta, which is pivoting to a virtual space platform called Metaverse, is asking its directors and vice presidents to create a list of employees who can be laid off amid slowing advertising revenue, Bloomberg reports.

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Cryptocurrency/Blockchain-related Stocks (Year-on-Year Change/Year-to-Week Change)

Coinbase | $61.8 (-1.4%/-4.1%)
MicroStrategy | $231 (-2.5%/-6.3%)
Silvergate Capital | $5.2 (-3.7%/-9.7%)

For Silvergate Capital shares, data from S3 Partners shows that approximately 87% of the shares ($50 million short outstanding) have been shorted in the past 30 days. Last week saw a -60% drop in just a few days after the revelation of serious financial troubles.

And here are the highest US SI % Float for stocks with over $50 million of short interest: pic.twitter.com/Hsj0kKzdQC

—Ihor Dusaniwsky (@ihors3) March 6, 2023

It was also reported that Silvergate Capital consulted the FDIC (Federal Deposit Insurance Corporation) for business continuity. One option is to augment liquidity with cryptocurrency firms, according to Bloomberg sources. Last week, it was also reported that major investors Citadel and BlackRock had bailed out.

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cryptocurrency market

Bitcoin (BTC) fell as the US stock market fell. There was a lot of ups and downs between Mr. Powell’s remarks.

Source: Binance

Dollar Yen 137 yen level

US dollar = 137.1 yen, up 0.9% from the previous day. The dollar-yen surged after Powell’s hawkish remarks.

In the US bond market, the yield on two-year US government bonds, which easily reflects changes in policy interest rates, has risen to the 5% level for the first time in 15 years since 2007 (price has fallen). Meanwhile, 10-year U.S. Treasury yields fell.