Thursday, November 10 was the day many waited for to determine which direction the economy may be headed next and what investor sentiment might be, at least for now anyway. This morning the latest CPI data was released in the most recent report, and it revealed positive news for the economic situation which has been riddled with elements of inflation through much of 2022.
The most recent CPI data reflected that numbers were below the anticipated rate of 8%. In fact, the 7.7% CPI rate was a healthy .5% lower than September’s reading of 8.2%. This change shows that the effects of recent rate hikes instituted by the Federal Reserve along with other factors could be rendering positive effects, helping to accomplish the Fed’s goal of slowing consumer spending in this season.
In Almost An Instant, The Market Turned Green
From the start of the trading day, the S&P 500, DOW and NASDAQ all experienced sharp increases in price action. Green candles also filled the cryptocurrency market. Bitcoin is trading between $17,400 and $17,800 at the time of writing, up around 10% on the day. Earlier in the day, Bitcoin was able to scrape at the $18k price level, showing signs of significant buy pressure since the start of the trading day.
The latest Bitcoin news prior to today was centered around the sharp price decline experienced through the early parts of the week. Yesterday BTC fell below the $16,000 threshold for the first time since 2020. ETH was down as much as 20% at different points of the trading day on Wednesday, while FTT, the network token of the currently financially-vulnerable FTX exchange, was down over 50% at its worst points on Wednesday. FTT has since recovered significantly during the trading day, and is up just below 60%, trading around $3.60 per coin at the time of writing.
Ethereum (ETH), BNB, Solana (SOL) and others were no different. Solana was down by as much as 45% through different points of the trading day on Wednesday the 9th. The recovery today saw SOL rise by as much as about 30%, back to a respectable price level just under the $19 mark. Just yesterday SOL dropped into the $11 per coin price level at its lowest. At the time of writing, the SOL token is down from its high of the day, trading around $17, up 21% still on the day. Ethereum is trading around $1,300, up almost 20% on the day, while BNB climbed over $300 per coin again, and is up around 13% on the day.
Does The FTX Trouble Affect Anything?
Embattered crypto spot and derivatives exchange, FTX, has been in the news for issues surrounding insolvency. Most recently, Binance backed away from a deal that was being structured in order to make arrangements for the largest exchange in the world to acquire the number two by volume, FTX. On Monday, customers were not able to withdraw from the platform, but withdrawals had been restored as of Thursday morning.
CEO and founder, Sam Bankman-Fried, also published a statement clarifying that the exchange’s US division had maintained withdrawals through the company’s most recent liquidity issues. The positive change was believed to have an effect on the crypto market, as liquidity was made available to millions of users who had not had access prior to today.
The next steps are still unclear for FTX and sister company Alameda Research, which happens to also be a major backer in Solana blockchain projects. That was believed to be a major reason behind the price of SOL dropping so significantly on the prior trading day also – the belief that blockchain projects would no longer be funded by Alameda Research due to the news of potential insolvency.
What’s Next For The Economy And The Financial Marketplace?
There’s no way to tell with certainty, what the next phase or even the next day may look like for the stock, foreign exchange and crypto markets. Investor sentiment has been up and down more frequently and is believed to have a significant influence on rapid price changes seen recently. The markets can always deliver variable degrees of volatility, but this week has been one which has already had massive highs and lows due to varying information being released at different times.
In these times filled with economic uncertainty largely due to rises in inflation, and the interest rates by the Federal Reserve subsequently, in an effort to combat it. This could be the reason why positive news regarding the consumer price index (CPI) data had such an impact across the markets today.
Investors’ hopes that the Federal Reserve may consider slowing rate hikes were strengthened with the release of the CPI report. Typically, the Fed uses data provided by the CPI report as one of the main sources to determine how to proceed with future federal funds rate adjustments. A positive CPI rate could mean the Fed may lean towards at least lowering the most recent 75 basis point increases, of which there have been for four months in a row. The last rise was implemented a little over a week ago, on November 2.