© Reuters
By Geoffrey Smith
Investing.com — Dollar Weakens and Bonds Soar as Markets Bet on a Federal Reserve Pivot by Year’s End. JPMorgan, Citigroup and Bank of America kick off fourth-quarter earnings season. Tesla cuts the price again and the SEC accuses Gemini and Genesis of illegally offering securities. And oil hit a 10-day high on improving prospects for the global economy. Here’s what you need to know about the financial markets this Friday January 13th.
1. Dollar collapses on hopes of a Fed pivot
The dollar dropped to a seven-month low as bond yields stabilized after Thursday’s sharp decline as a further drop in US headline inflation bolstered hopes of an end to rapid interest rate hikes by the by the Federal Reserve, or even a first cut in the second half of the year.
By 1:45pm, the index was down just under 0.1% at 102.20, with the biggest losses against a revitalized one, reflecting that the Bank of Japan has only recently begun to consider the index. tightening of its monetary policy.
The decline in the consumer price index was less impressive than it initially seemed, being almost entirely due to a 9% drop in petrol prices that can easily be reversed. However, analysts were almost unanimous in seeing these figures as evidence that inflation has peaked. This should be reflected in the ‘inflation expectations’ component of the survey due at 4pm.
2. The bank’s results kick off earnings season
The improvement in bond market sentiment probably came too late for the best of Wall Street to salvage anything from the 2022 wreck, but the year-to-date sentiment turnaround could give the outlook more weight. and his colleagues when they publish their results before the bell.
JP Morgan, citigroup (New York Stock Exchange:), Well Fargo (NYSE:) and Bank of America (NYSE:) are all releasing their results early, with a high degree of uncertainty about how they handled choppy markets in the final quarter of last year. It will also be interesting to know how much their loan loss provisions will increase in the context of an economic slowdown.
Those looking for positive results can turn to Blackrock (NYSE:), which has already posted better-than-expected results despite layoffs announced earlier this week.
3. Stocks are poised for a weekly gain; Tesla hurts mood with further price cuts
US stock markets will open slightly lower later, after rising on Thursday in reaction to inflation data followed by fresh suggestions from Federal Reserve officials that the central bank may only go higher. February meeting.
As of 1:45 pm, they were down 42 points, or 0.1%, while down 0.2% and 0.4%. The major currency indices gained as much as 0.6% on Thursday and are expected to end the week with gains of between 2% and 3.8%.
A fly in the ointment could be Tesla (NASDAQ:) and the rest of the auto industry, after the EV maker cut prices in the US and Europe. The move will allow its Model 3 sedans and Model Y crossovers to qualify for US federal tax credits and help it run out of inventory after missing delivery targets late last year, but as of the end of last year, at the expense of its profit margins. Shares of Tesla fell 5.2% in pre-market, as the news also dragged down European rivals Mercedes (ETR:), Volkswagen (ETR:) and Stellantis (EPA:) (NYSE:).
4. The SEC accuses Gemini and Genesis
The Securities and Exchanges Commission has accused Genesis and Gemini of illegally offering securities to US clients, in another blow to the cryptocurrency industry, still reeling from the collapse of FTX.
The SEC’s decision was expected, but it further complicates efforts to unfreeze accounts at Genesis, which suspended customer withdrawals after losing money in the crash of FTX and Terra/Luna earlier in 2022.
Tyler Winklevoss, co-owner of Gemini, called the decision a “super gross.” Along with his twin brother Cameron, he has one of the largest remaining cryptocurrency holdings. It may be necessary to at least partially liquidate these holdings if the SEC gets a heavy deal from Gemini.
Additionally, Bulgarian cryptocurrency platform Nexo has also struggled, being raided by local authorities who suspect it aids in money laundering.
5. Oil hits a 10-day high on the weaker dollar
Crude oil prices hit a 10-day high as the dollar weakened on hopes of US monetary policy easing that will allow other central banks around the world to further support their economies.
The effect of US inflation data outweighed that of weak December data, which showed that both imports and exports continued to decline year-over-year.
As of 1:50 p.m., futures were up 0.7% to $78.97 and 0.7% to $84.60. The Baker Hughes platform report and CFTC positioning data will close the following week.