Fundamental Analysis Friday 13 February 2023
Dollar in stable condition, high-beta currencies, benefits, forex, trading, trade

Author: Steve Tee


The much-anticipated CPI news will be releasing this Tuesday 8:30am EST. Markets will likely be consolidated till that very day. Inflation rate is projected to drop to 6.2% year on year and US interest rate is now already at 4.75%. 7 times the Federal Reserve raise rates since 2022 and inflation is still sitting above 6%, a mile away from Jerome Powell’s target of 2%-3%. Many speculate that a Fed pivot is coming soon to avoid crashing the US economy and global markets as a whole, in the name of battling inflation. As we all know, as interest rates increases, so does the cost of US debt. Credit is getting more expensive and banks are tightening lending requirements. Many corporations that enjoyed cheap credit in the past decade are now faced with higher repayment and difficulty to secure funding.

Bloomberg reported that JP Morgan cuts hundreds of mortgage staffs as their mortgage-origination slumps by 60% last year, thanks to Fed’s aggressive rate hikes in 2022. They already layoff estimated 3,000 employees beginning January 2023, and things are beginning to get worse for the banking sector. More layoff breaking news, whereby Disney announced to cut 7000 jobs to reduce cost and reorganize, CNBC reports. Even in PC sector, Dell announced that it will slash 6,650 jobs, which is massive. It’s competitors such as HP Inc and IBM, are also affected, laying off 6,000 and 4,000 respectively. Latest party to join the layoffs wave is Yahoo Inc, where they announced 20% cuts from its total workforce. It makes one wonder, with the so-called robust employment data, why are these giant MNCs laying off so many of its staffs?

With the national debt ceiling policy still unresolved, things are really looking ugly for US. Egypt just confirmed their participation in BRICS+ nation past week and this momentum is slowly bubbling up to challenge US Dollar hegemony. Investors are definitely looking for alternatives to the US markets as they don’t shine like a safe haven anymore.

On a side note, Russia has decided to cut oil production by 500,000 barrels per day beginning March. Sanctions are backfiring on the G7s pretty badly and this will raise crude oil prices, causing more damage to US economy.