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Market Review: Inflation Continues to Rise, Stocks and Cryptos Slide
New inflation reports show that inflation continues to rise at the highest rate in 40 years The rise appears to have brought fear back into the market as investors begin to expect more aggressive monetary tightening from the Fed !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll(“iframe”);for(var a in e.data[“datawrapper-height”])for(var r=0;r
Market Review: Inflation Continues to Rise, Stocks and Cryptos Slide
- Neue Inflationsberichte zeigen, dass die Inflation mit der höchsten Steigerungsrate seit 40 Jahren weiter ansteigt
- Der Anstieg scheint die Angst wieder in den Markt gebracht zu haben, da die Anleger beginnen, eine aggressivere Straffung der Geldpolitik von der Fed zu erwarten
!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r In January the consumer price index increase rose another 0.6%, bringing the year-on-year figure to 7.5%. The rate of increase in inflation is now higher than it has been since 1982. Last week the fear seemed to have dissipated in the market, but the new inflation report brought it back. Higher inflation will likely lead to more aggressive rate hikes by the Fed, a move that has historically been correlated with falling markets and even recessions. As shown in the chart below, slow increases in the federal funds rate, which directly controls liquidity in the economy, were correlated with sharp declines in the S&P 500 in 2000, 2007, and most recently in 2019. In contrast, reductions in the federal funds rate were correlated with intense bull markets. Markets fell on the news, with the S&P 500 falling as much as 2.18% on the day. The Nasdaq fell as much as 2.72% and the Dow fell as much as 1.11% on the day, likely due to investor fears of an aggressive stance from the Fed to combat inflation. Crypto's volatile reactions to the inflation report, with Bitcoin rising 2% then losing 2.53% at midday. Bitcoin then reversed again, rising over 3%. It began to fall as the day progressed, falling half a percent as the stock market ended its day. Ethereum moved similarly throughout the day, starting down 1.11%, then falling almost 4.6%, then rising again by over half a percent. At the end of the stock market day, Ether was down 3.9%. Crypto investors seemed unsure how to react to the inflation numbers. Some may have seen inflation as a good sign for crypto, as Bitcoin's touted use case is as an inflation hedge. Many major Bitcoin influencers tried to push the stance of Bitcoin as investors' saving grace against inflation on social media. Inflation just reached 7.5%. The highest since 1982. Obtain #Bitcoin to protect yourself. – Dan Held (@danheld) February 10, 2022 Bitcoin was built as a response to undisciplined monetary and fiscal policies. -Pomp As Bitcoin ends the day in the red, most investors appear concerned that higher inflation just means a more aggressive approach from the Fed to combat the dollar's declining purchasing power. Story: Sources: UBS Asset Management is reviewing crypto hedge fund managers Story: Analysts assess likelihood of rate hikes in March as CPI disappoints again Story: Decentraland, launching FTX ETPs in Switzerland Story: YouTube ramps up NFT integration, says exec The rise in inflation appears to have unsettled investors again and is bringing more fear and uncertainty back to the market. Volatility is likely to continue as long as uncertainty, which may only be alleviated by a Fed announcement on interest rates and asset purchases. . . The post Market Recap: Inflation Keeps Rising, Stocks and Cryptos Slide is not financial advice.
(@APompliano) February 10, 2022Top stories
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