US stocks, Nasdaq reversal FOMC additional interest rate hike, expectations for rate cut within the year recede | 23rd Financial Tankan


3/23 (Thursday) morning market trends (compared to the previous day)

traditional finance

    • NY Dow: $32,030 -1.6%
    • Nasdaq: $11,669 -1.6%
    • Nikkei Stock Average: ¥27,466 +1.9%
    • USD/JPY: 131.3 +0.01%
    • USD Index: 102.5 -0.69%
    • 10 year US Treasury yield: 3.45 -4.3% annual yield
    • Gold Futures: $1,973 +1.6%

crypto assets

  • Bitcoin: $27,588 -2.1%
  • Ethereum: $1,748 -2.9%

Today’s NY Dow and Nasdaq fell back. NY Dow tumbled on Chairman Powell’s FOMC meeting, ending him at -$530.

At the Federal Open Market Committee (FOMC) meeting on the 23rd, the FRB decided to raise the policy interest rate by 0.25%, almost as expected by the market, and raised the target to 4.75-5.00%. This will be the 9th consecutive meeting of interest rate hikes, but monetary easing continues from the 0.25% interest rate hike on February 2nd.

According to the FOMC participants’ interest rate outlook (dot plot) released at the same time, the policy rate will be 5.125% at the end of 2023, unchanged from the median forecast in December last year. (The dot chart is a distribution map of policy interest rate levels that FOMC participants consider appropriate.)

However, the suspension of interest rate hikes (suspension), which some major financial institutions expected due to recent bank credit risk, did not materialize. The FOMC said in a statement that inflation was still high and Powell was considering a halt to rate hikes at the FOMC meeting, but stressed that “if necessary, we will raise rates further than expected.”

The chairman mentioned that disinflation (early stages) was progressing at the last FOMC meeting, but since economic indicators such as the CPI since then have suggested strong economic conditions, additional measures have been taken to return the inflation rate to 2%. I think the policy decision may be appropriate. Meanwhile, the prospect of a recession has resurfaced as prolonged rate hikes exacerbate the bank liquidity crisis.

On banking, the chairman stressed the health and strength of the U.S. banking system, adding that “the monetary authorities are ready to use whatever tools they can to maintain financial stability.”

connectionFormer Coinbase CTO warns of US dollar hyperinflation, bets on Bitcoin reaching $1 million

Economic indicators from this week onwards (Japan time)

  • March 30, 21:30 (Thursday): U.S. October-December Quarterly Real Gross Domestic Product (GDP, Final Value) (Quarterly Change Annual Rate)
  • March 31, 21:30 (Friday): U.S. February Personal Consumption Expenditure (PCE Core Deflator) (MoM/YoY)

connection: What is the US monetary policy meeting “FOMC” that attracts the attention of global investors | Easy-to-understand explanation

US stocks

US bank stocks slumped after Treasury Secretary Janet Yellen testified to Congress. The Treasury secretary said he was not considering offering “full-scale” deposit insurance. Bank stocks surged across the board at the time, as he said on Wednesday that “if small banks run out of deposits, deposit protection could be justified.” But today’s remarks caused bank stocks to plummet, weighing on stock indices. JPMorgan Chase -2.5%, Citigroup -3%, First Republic -15.4%, Bank of America -3.3%, Wells Fargo -3.3% (vs. previous day).

Some IT/tech stocks also dropped in response to Chairman Powell’s remarks. Compared to the previous day for individual stocks, NVIDIA +1%, -2.3%, Big -1.6%, Tesla -3.2%, Microsoft -0.5%, Alphabet -1.4%, Amazon -1.9%, Apple -0.9% , Meta-1.1%, Coinbase-8.1%, Microstrategy-9.7%.

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SEC investigation into coinbase

Coinbase shares are down another -12% after hours. On the same day, the US SEC announced that it was investigating the company’s staking, wallet and exchange services. According to Coinbase’s statement, “SEC staff have identified a possible securities law violation, but have provided little further explanation.”

Coinbase filed an opinion with the SEC on the 20th regarding the securities law treatment of the staking service.

connection: “Why should staking services be excluded from securities certification?” US Coinbase filed a petition with the SEC

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