Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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Rate hike fears have re-emerged as the driving force behind market sentiment going into today’s session, following higher-than-expected US inflation and hawkish commentary from a number of Fed officials. The stage was set when Fed Governor Christopher Waller made it clear that he would back a 25-bps rate hike in December and would even push for a half percent adjustment should inflation remain hot. Hours later, the October CPI print confirmed the worst, as both the headline and core figures rose more than expected month-over-month, coming in at 0.4% and 0.3% respectively. The figures were later acknowledged by Dallas Fed President Lorie Logan, who spoke of the need to implement at least two more rate hikes before pausing. All hopes of a rate pause in December were quickly abandoned following yesterday’s report, the only point of contention among interest rate traders now revolving around the size of the hike in question.
The change in expectations pushed US bond yields steadily higher yesterday, while the dollar currency index nudged back over the 102-point threshold. Higher rates are bad news for precious metals, causing gold to drop over $100 on Tuesday to $4,030 per ounce. Bitcoin looked similarly dishevelled on Tuesday after falling below $74k per coin; the original cryptocurrency is well on its way to closing its sixth consecutive week in the red. Stocks proved to be somewhat more resilient, with the Dow and S&P 500 incurring only 0.3% losses, while the Nasdaq-100 had fallen 0.6% by the end of the day.
The question of sticky inflation within the US economy should not be taken in isolation. Crude oil, which is no small contributor to the increase in prices observed around the world, has fallen nearly 20% since the start of the month. The Brent Crude benchmark is currently sitting around $92 per barrel, while WTI has dipped down to the mid-$80 range. If oil markets continue to sink, the effect will eventually reach consumer and producer price baskets, immediately changing the picture with regard to inflation and consequently the predicted response from central banks.
The tech sector is being put under pressure by the ongoing selloff in Nvidia (NVDA), which lost another 5.5% yesterday amid the extramarital affair scandal involving CEO Jensen Huang and a top executive at Singapore-based firm Megaspeed, a company under investigation for allegedly circumventing US export controls. According to Bloomberg, Nvidia’s Chief Legal Officer contacted the US Department of Commerce last summer to discuss an investigation into a semiconductor smuggling probe involving the company. The FBI is currently investigating whether the matter extends to a national security breach, while Nvidia shareholders have filed a proposed class-action lawsuit against the chipmaker and its CEO, accusing the company of defrauding investors. The House Foreign Affairs Committee has scheduled a briefing with Jensen Huang on the 18th of November, one day after the company is set to deliver its third quarter earnings report. NVDA shares are now down 30% from their October peak.
About the Author
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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