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US Stocks, Crypto Dip, Treasury Yields Rise Amid Dollar

As Treasury yields climbed further, risk on assets, including US stock indexes and cryptocurrency markets, remained volatile. With BTC and ETH trading at the $19,000 and $1,300 levels, the total market capitalization of the cryptocurrency industry remained below the $1 trillion threshold.

US Stocks Close Lower

Stocks fell as investors evaluated firms’ resistance to a variety of obstacles in the most recent earnings reports and traders gambled that the Federal Reserve will keep raising interest rates until inflation is defeated.

The Stoxx 600 Index in Europe decreased by more than 1%, with Adidas AG experiencing the biggest decline in more than two years after the German sportswear manufacturer lowered its operating margin and sales projections. Futures for Wall Street stocks declined.

Twitter Inc. experienced a drop of up to 16% in premarket trading following reports that officials in the Biden administration are debating whether the US should evaluate any of Elon Musk’s business undertakings for national security reasons, including the acquisition of the social media platform.

Snap Inc. fell 26% in premarket trading in New York after the social-media firm missed third-quarter revenue projections, indicating a weakening in the online ad market. Meta Platforms Inc., Pinterest Inc., and Alphabet Inc., the parent company of Google, were also down.

According to analysts at Bank of America Corp., equities funds are still receiving investments despite the extremely negative outlook. Inflows into international stock funds totaled $9.2 billion in the week ending October 19, according to a banknote quoting EPFR Global statistics. Stock markets still have the potential to decline due to persistently high prices and rising risks of a recession.

Prior to Friday’s US$2 trillion options expiry and yet another round of corporate earnings, U.S. stock volatility is not showing any signs of slowing down. Investors keep an eye on company results for hints about how businesses are coping with a myriad of challenges, such as rising rates and falling demand. The S&P 500 index is expected to rise for the week, but it hasn’t risen for two weeks in a row since mid-August. 

The Dollar Rose Amid Elevated Treasury Yields

As traders factored in a higher peak Fed policy rate, the yield on the 10-year U.S. note increased to its highest level since 2007. More intervention may be required to stabilize the Japanese currency, according to concerns that the yen has fallen past the widely watched 150 to-dollar barrier.

The trend for US Treasury securities is similar to that of 2007, and market pressure may continue until yields hit levels last seen right before the 2008 financial crisis when the 2-year rate peaked at just over 5% and the 10-year rate nearly reached 5.30%.

It is no surprise given rates’ present levels that the dollar continues to be supported, pressured by most risk assets, and equities market volatility is still strong.

Swaps pricing a 5% peak policy rate in 2023 and pessimistic comments from Fed members could boost the dollar going forward. In 1984, when then-Fed Chairman Paul Volcker implemented a series of swift interest rate hikes, the yield on 10-year Treasuries was on track for a 12-week string of increases. 

UK Inflation and Politics Dampen Sterling

Investors continue to pay close attention to the UK, where the Conservative Party is determined to put an end to Liz Truss’ dismal premiership with a quick leadership election. A detailed fiscal plan may be delayed by the selection process, according to reports, which caused the pound to lose more than 1% of its value and 10-year UK government bond yields to increase.

The cryptocurrency markets crashed when the UK’s inflation report, which showed that inflation for September was 10.1%, was made public.

The price of Bitcoin, the largest cryptocurrency in the world by market cap, may soon reach $19,600 with the re-entry of bulls in the cryptocurrency markets on Thursday. 

Crypto Market Traded Low

The global crypto market cap fell by about 0.09 percent over the previous day, and top cryptocurrency prices were trading in the red early today. On the last day, Bitcoin’s price dropped by around 0.5 percent and is currently ranging at $19,000. Bitcoin is currently down 1.14 percent, trading at $19,057. It now has a 39.94% domination, an increase of 0.04 percent.

On the other hand, Ethereum also fell by over 0.2 percent, but Dogecoin’s price was rising and was colored green. The native token of the Ethereum blockchain network decreased by 1.80% and is currently trading at $1,280. The price of BNB, the native cryptocurrency of Binance Smart Chain, fell by 0.49 percent.

Dogecoin, a virtual currency based on memes, fell 3.1 percent on Friday. It was valued at $7.8 billion on the market. The value of the trade was $233.5 billion. Solana also decreased 5.8% to $27.5, with a market cap of about $10 billion. In the past 24 hours, Solana saw trades of $786.3 million.

Investors have been on edge due to concerns about inflation and the recession. Cryptocurrency’s market capitalization decreased from $935 billion on October 14 to $911 billion on October 21. 

The markets crashed hard after the UK’s inflation statistics, which showed that inflation for September was 10.1%. The m-cap decreased from $926 billion to $915 billion just on Thursday.

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  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.