GB Market Commentary 12/07/2022
by William Morris
Bitcoin finished the day in the green yesterday but has dropped around 2% today - as markets hasten losses following the much higher than anticipated CPI reading yesterday. The FTSE 100 is currently trading 1% down on the day, along with the NASQAD and S&P almost 1% down on futures markets.
Yesterday the US reported the worst inflation in 41 years, soaring to 9.1%, 30bps above consensus. The market is now predicting a 30% chance of a 100bps increase in interest rates in the US at the next FOMC meeting on July 27th. This is spooking fear across global financial markets due to a rapidly appreciating USD, coupled with major liquidity contraction and debt burdens rising rapidly. The US dollar has already achieved parity with the Euro – which is even leading some to question the ability of many southern European countries to meet their debt obligations. The Federal Reserve looks intent on keeping the pressure on, to attempt to turn around runaway inflation. While this is the case it would appear likely that there will be greater pain experienced across financial markets – adding greater strength still to the USD. For countries paying debt obligations denominated in dollars, things could get very painful over the coming months, particularly while inflation remains rampant. A global debt crisis seems increasingly plausible, arguably is even looming.
Celsius Network has filed for Chapter 11 Bankruptcy protection. In the United States this allows a business to continue operations while having no capacity to pay debts. Before halting withdrawals Celsius had accumulated more than $20bn in assets, giving depositors interest rates as high as 18%.