Has inflation and the Fed’s moving towards interest rate hikes finally hit the markets? The 10-year and 2-year yields spiked to highs not seen for 2 years, sending stocks down. Bloomberg Intelligence thinks that Fed will be forced to move on tightening faster and forecasts five 25 basis point rate increases in 2002; March, June, July, September, and December.
Markets now have a 50-basis point hike in March fully discounted at about a 1 in 3 chance. The Fed is now being blamed for too much accommodation and waiting too long to tighten.
Ford (F) will book an $8.2 billion gain in the fourth quarter for investment profits in EV startup Rivian Automotive (RIVN). Ford had invested $500 million in 2019 and holds about 12% of the company. Rivian’s IPO sent Rivian’s market cap to over $100 billion but the value has since retreated to around $66 billion.
After an appeal from airline carriers to federal government, AT&T (T) and Verizon (V) have agreed to pause rollout of 5G service near airports. The 5G frequencies can bleed over to frequencies used by newer aircraft safety systems. Several international carriers have cancelled flights or substituted aircraft for US destinations.
US chip stocks are up premarket after German chip equipment maker AMSL NV (AMSL) posted strong earnings and said their chip designing machines will help grow chip sales more than 20% in 2022. NVDA, AMD, INTC, and MU are all up premarket.
Corporate earnings include UNH, BAC, PG, MS, and STT premarket, DFS and UAL post-market.
The economic calendar includes Building Permits and Housing Starts @ 8:30am ET. Secretary of the Treasury Janel Yellen will speak to the US Conference of Mayors @ 8:00am ET.
Volatility increased again on Tuesday and remains elevated.
Size bias is bullish into the US session open.