© Reuters
By Geoffrey Smith
Investing.com — Federal Reserve Vice Chairman Lael Brainard believes the Fed may start easing rate hikes “soon.” U.S. producer price data for October and Walmart revenue could shed some light on when that might be. Chinese industry and retail sales weakened markedly in October, sending a fresh headwind to crude oil prices. Amazon is considering mass layoffs to restore profitability, and FTX’s first substantial bankruptcy filing indicates the collapsed crypto exchange could have up to 1 million creditors. Here’s what you need to know in financial markets on Tuesday, November 15.
1. Brainard sees a slowdown in rate hikes “soon”; PPI data due
Federal Reserve Vice Chair Lael Brainard said the Fed may be able to hike in the future. The comments, coming from the central bank’s most senior economist, are the clearest indication yet that the Fed is entering its long-awaited “dovish pivot” as it begins to fall.
“It will probably be appropriate soon to move to a slower rate of increase,” Brainard said. Bloombergalthough she added “I think it’s really important to underline: we have done a lot, but we still have work to do.”
Yields on benchmark Treasuries, sensitive to Fed rate expectations, fell another 8 basis points on comment to trade at 4.35% at 0600 ET (1100 GMT).
The comments preceded October data, which is expected to confirm a downtrend already in place for six months.
2. Chinese production, retail sales weaken; COVID spread casts doubt on loosening rules
There was fresh evidence of steam coming out of the global economy overnight as Chinese data for , and all were below estimates under pressure from the ongoing housing crisis and recurring localized COVID lockdowns. -19. The production and investment data illustrate why the government on Monday extended the deadline for banks to reduce their exposure to property developers, a policy that further tightened financial conditions in the sector.
Industrial production growth slowed to 5.0% while retail sales turned negative year-on-year.
The lockdowns are expected to persist for the near future, despite signs that the government is easing its quarantine requirements slightly. National case incidence has reached its highest level since April in recent days, and although the omicron strain of the virus appears to be less virulent than previous dominant strains, it still poses a significant public health threat, given the lower effectiveness of Chinese vaccines.
3. Stocks should open higher; Layoffs at Amazon, Walmart, Home deposit focus on revenue
US stock markets are expected to open slightly higher, supported by Brainard’s comments. Investors will have one eye on how the PPI reacts to the latest strength in energy prices and the other on retail indicator earnings Walmart (NYSE:) and Home Depot (NYSE:), the latter being the first out with a modest beat on the top and bottom lines.
As of 6:15 a.m. ET, they were up 120 points or 0.4%, while they were up 0.7% and up 0.2%.
The technology was backed by new evidence of cost-cutting to restore profitability, as the Wall Street Journal reported that Amazon (NASDAQ:) is considering up to (not to be confused with the temporary uptick in hiring around the holiday season).
4. FTX’s bankruptcy is not getting better
Collapsed cryptocurrency exchange FTX has released the first real details of its execution to the responsible Delaware court, claiming it may have up to 1 million creditors.
The details surrounding FTX’s collapse are getting uglier by the day, with new indications that the heist reported over the weekend, which drained some $400 million from its remaining liquid assets, may have been an “inside job”, rather than an exploit by experienced hackers. .
Arkham Intelligence research suggested that the hackers panicked after withdrawing the amount from FTX wallets, losing significant amounts of their token holdings as they moved assets across different chains.
Reuters reported over the weekend that FTX founder Sam Bankman-Fried had personally inserted a “backdoor” into the company’s software, allowing it to transfer client funds to its hedge fund subsidiary Alameda Research without be detected.
5. Oil Slides on China Data; IEA raises demand forecast for 2022, cuts 2023
Crude oil prices fell further on weak economic data from China, ignoring the , which had to revise upwards its low demand growth estimates in the fourth quarter of this year.
It also cut its forecast for average demand growth next year from 40,000 bpd to 1.6m bpd next year from 2.1m bpd in 2022, a revision entirely due prospects in China. The market is expected to remain tight, however, due to continued pressure on Russian production from sanctions, he said.
As of 6:30 a.m. ET, futures were down 0.5% at $85.44 a barrel, while futures were down 0.3% at $92.83 a barrel.
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