*Stay tune with 24 7 Global Trading Matters*
*DAYBREAK - NEED TO KNOW (24 November 2022)*
The Fed concluded it'd "soon be appropriate" to reduce the pace of rate increases, minutes of the November meeting showed, signaling Jerome Powell & Co. are leaning toward downshifting to a 50-bp hike next month. At the same time, "various" officials noted that the peak rate will be "somewhat higher" than previously expected. Some FOMC members said a slower tightening pace would allow them to judge progress on their goals. Fed staff economists briefed officials this month that the chances of a US recession in the next year had risen to almost 50% on risks of slower consumer spending, global economic risks and further hikes. It was the first such warning since the FOMC started raising rates in March. US stocks climbed as investors digested the somewhat dovish FOMC report, with the S&P 500 rising 0.6% in pre-Thanksgiving holiday trading. The Cboe Volatility Index fell to its lowest level in more than three months. Treasuries extended gains, pushing 10-year yields down more than 6 bps to 3.69%, and the dollar weakened further against the G-10 basket. Gold advanced. Asian equity futures are in the green. Corporate: Tiger Global slashed the value of its private funds by almost a quarter this year, contributing to a $42 billion decline in assets. Amazon plans to spend more than $1 billion a year to produce movies that it will release in theaters, people familiar said. Vista is exploring an acquisition of Coupa Software, people familiar said. Other suitors may emerge as the deal is not imminent. Credit Suisse got approval from shareholders to raise about $4.2 billion in capital via a private placement and rights offering. Gautam Adani is courting sovereign wealth funds to raise roughly $5 billion in equity across his business empire and reduce leverage. EY is on track to hire around 220,000 people in the year to July 2023 as the Big Four shrug off economic turmoil. Ukraine suffered nationwide blackouts from a wave of Russian missile strikes against energy facilities in Kyiv and elsewhere, leaving millions of people without without heat, light or water as temperatures dropped below zero. The country's grid operator halted operations at three nuclear power plants. Oil flows at Ukraine's section of the southern leg of Russia's Druzhba pipeline system into Europe resumed after a halt of several hours. Oil tumbled 4% as the EU proposed a higher-than-expected price cap on Russian crude — between $65 and $70 a barrel. Discussions stalled as the group is split over the pricing, and talks could continue Thursday if an deal isn't reached, people familiar said. EIA data showed US gasoline stockpiles rose by 3 million barrels, the largest buildup since July. Demand plunged by the most in nearly two months heading into Thanksgiving. China signaled more monetary easing, including an RRR cut, is imminent as it looks to boost lending and support the flagging economy. Policy tools will be used "in a timely and appropriate manner," the State Council said; the PBOC usually cuts the ratio within days of such announcements. Chinese ADRs gained. Beijing should recalibrate Covid Zero and bolster confidence in the property market to spur growth next year, the IMF said. The potential stimulus comes as China's iPhone city plans to restrict movement in eight districts to help contain a Covid outbreak. Zhengzhou's new cases jumped to 996 from 813 on Tuesday. Foxconn pledged to prevent a repeat of "violent actions" at its facility there. Elsewhere, Beijing asked residents not to leave unless necessary, and auto industry events in Shanghai and Wuhan were disrupted. The SEC's draft for overhauling stock market rules would also expand its oversight of bond and options trading. A proposal being discussed would require that brokers in fixed-income and some derivatives — as well as those handling equities — get their clients the best deal, people familiar said. Brokerages already face a "best execution" rule from the Financial Industry Regulatory Authority, but an SEC directive could lead to tougher enforcement. Chart of the Day: The three-month London interbank offered rate for dollars jumped almost 6 bps on Wednesday to 4.75729%, the highest since October 2008, while the spread of Libor over overnight index swaps widened to 33 bps from 29.6. Such moves are typically driven by expectations of Fed hikes, but with a half-point move already baked in, commercial paper transactions may be the big driver as banks ensure they're funded for the end of the year.
Trade at your own risk. All the information made available here is generally provided to serve as an example only, without obligation and without specific recommendations for action.
