US equities whipsaw on CPI, S&P downgrade – Oil and BTC at critical levels

We had roller coaster of a ride on US markets in Tuesdays session, US markets initially moved higher on a CPI figure that came in line with expectations taking a little bit of pressure off the fed and no more news of banks going bust.

The punchbowl was taken away later in the session though as news of a US drone and Russian jet colliding paired with S&P downgrading  First Republic Bank to negative credit watch saw the markets reverse, then a late day rally saw a strong finish in all the major indexes with the Nasdaq again outperforming finishing up over 2% and the Dow up over 1% or 336 points.

Some big US banks were the winners from the SVB implosion, with the likes of JPM and Wells F seeing record deposits incoming as depositors fled smaller banks, Wells finishing up almost 5%

In FX , a choppy session with the USD finishing mostly unchanged against major peers, though the USD did rally strongly against the JPY, recouping some of the last 3 days losses against the Yen. Rate odds for the Feds March meeting did increase to 75% for a 25bp hike from 60% yesterday which also lent the greenback some support.

Oil prices plunged as lingering recession fears saw WTI hit 3 month lows with a 71 handle and testing the support levels set back in December last year, this also brings it in to the price range where the US administration is looking to refill their SPR so we could see some interesting price action going forward.

Bitcoin burst higher again, breaking through the major resistance at 25k before pulling back, this is a big level to watch as it has been the upper band of the range BTC has been in since July last year.

In economic announcements we have retail sales and PPI figures out of the US later today which will add another piece to the Fed puzzle as to the health of the US economy and further indicators on inflation.

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