2023-08-23 02:32:13
Wall Street falls at the end of the session after opening higher. Worsening sentiment is due to S&P Global’s downgrade to regional banks and hawkish comments from Fed member Thomas Barkin.
Barkin’s remarks, coupled with the strength of the US dollar, put pressure on risky assets. EUR/USD is down around 0.5%, strengthening the US dollar, which is one of the strongest currencies today.
S&P Global downgraded several regional banks in the US due to liquidity concerns, following a similar move by Moody’s. They highlighted the risk of recession and expect a decline in the commercial real estate (CRE) market that will test the strength of regional banks.
Barkin made it clear that if high inflation persists and demand does not show significant signs of cooling, the Federal Reserve will need to adjust policy. Strong consumer spending and economic strength allow the US economy to pick up speed before inflation subsides.
US government bond yields hit their highest level in 16 years, with markets forecasting the Federal Reserve will hold interest rates until at least the first quarter of 2024.
The Richmond Fed regional index registered -7 points, compared to -10 previously and -9 expected. US home sales declined 2.2% year-on-year, compared with a previous drop of 3.3% and a forecast of 0.24% (4.07 million vs. forecasts of 4.15 million and 4 .16 million previously).
Charles Schwab (SCHW.US) continues to decline despite Morningstar upgrading its recommendation. Documents filed with the SEC indicate the company plans to save costs through job cuts and office sales. This move is linked to the integration of operations with the acquisition of TD Ameritrade, which raises concerns about the company’s debt.
Macy’s stock (M.US) are in decline despite beating second-quarter revenue and profit forecasts. The weaker projections for the third quarter reflect an increase in US consumer credit card debt beyond expectations, highlighting macroeconomic uncertainty and consumer weakness risks.
The Euro is weakening against most currencies, taking EUR/USD near key support levels, with EUR/USD trading around 1.0851, down about 0.50%.
Precious metals gain slightly but are hampered by declines in major Wall Street indices. Gold is up 0.15%, trading around $1897.
Energy products show mixed sentiment. WTI and Brent oil are down around 0.5%, while natural gas is down more than 2%.
Sentiment in the cryptocurrency market remains weak, with Bitcoin struggling to stay above $26,000. The federal court reportedly needs an additional 240 days to consider Grayscale’s new application for a Bitcoin ETF.
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