Fundamental Analysis Friday 10 February 2023
Near-term inflation, forex, inflation USA

Author: Steve Tee


It’s the end of the week and DXY did not show much enthusiasm after Powell and Williams gave a fairly hawkish speech about interest rates. DXY is still side ways and not exactly responding organically. Labor market is still resilient at the moment, however jobless claims in the US hit 196,000 for the week ending Feb 4. Even though it is still low, many analysts felt it higher than expected. Yahoo also made announcements that they will be laying off 20% of its staff by the year ending 2023.

Yield curve is still inverted, meaning 2-year Treasury exceeds the 10-year Treasury. What this usually translate into is investors are worried and nervous because this inversion of the yield curve normally signals an incoming recession near future. This is evident in the indices, complimented with Jerome Powell’s hawkish speech, DJIA, S&P500 and Nasdaq fell for 2 straight days.


Over to the Swiss, Credit Suisse posted its largest loss since 2008. Forth quarter of 2022, they suffered losses of $1.5 Billion, maintaining their losing streak since 2021 and now snowball its annual loss to $7.9 Billion. Credit Suisse has been plagued with much scandals and financial troubles and this can usually lead to a domino effect. The financial world is interconnected and intertwined in such a way when one big guy falls, it tends to push over the others and cause them to lose equilibrium. They may not fall immediately but definitely they are wobbly. Creditors and debtors of Credit Suisse are definitely seeing red now, with expectations that if Credit Suisse do not take action to pull itself out of this losing rabbit hole, it will contagion over to all its business partners and stakeholders. Easiest way out is government bailout, via money printing and/or more borrowing. Kicking the can down the road that will delay and snowball bigger issues to the near future.