By Geoffrey Smith
Investing.com -- Bitcoin surges to a record high, a day after the Federal Reserve grumbles after the financial stability risks of crypto. Lael Brainard has been interviewed by President Joe Biden for the top job at the Fed, according to reports. Stocks are grinding higher ahead of producer price inflation data for October, and there are two key releases from the U.S. for the oil market to digest. Here's what you need to know in financial markets on Tuesday, 9th November.
1. Bitcoin hits all-time high
Bitcoin surged to a new all-time high of $68,493, supported by a monetary policy backdrop that has turned more friendly in recent days as central banks have backed off raising rates.
While there have been few triggers specific to Bitcoin itself, risk assets have flourished since Federal Reserve Chairman Jerome Powell emphasized that the Fed hadn’t yet put the U.S. on a glidepath to higher rates, despite starting to wind down its bond purchases.
Other digital coins have also ridden the recent rally, notably Ethereum, which has gained over 70% in the last two and a half months.
Bitcoin’s latest highs come a day after the Federal Reserve highlighted stablecoins – rather than Bitcoin itself – as one of the chief risks to U.S. financial stability.
2. Competition for Powell
Jerome Powell has competition. Bloomberg reported on Monday that Fed governor Lael Brainard was interviewed by President Joe Biden for the central bank chair during her visit to the White House last week.
Brainard is widely seen as an inflation ’dove’ and her recent public statements have shown no hurry to raise interest rates. Her interview comes after vocal and repeated interventions from Democratic lawmakers such as Senator Elizabeth Warren opposing Powell’s reappointment for a second term.
Powell’s current term ends in February, and both vice-chair Richard Clarida and Randall Quarles, the Fed’s head of banking supervision, will step down in the two months prior to that – something that will give the Democrats the chance to shape the Fed’s board more to their taste. While that could mean lower rates for longer, it may also mean a less indulgent line on financial stability issues.
3. Stocks grind higher ahead of PPI data
U.S. stocks are set to continue their drift ahead of the latest update on the inflation front at 8:30 AM ET (1330 GMT), in the form of October’s producer price index.
By 6:20 AM ET, Dow Jones futures were down 36 points, or 0.1%, while S&P 500 futures were flat and Nasdaq 100 futures were up 37 points.
Stocks likely to be in focus later include brokerage Robinhood (NASDAQ:HOOD), which fell in premarket after announcing a data breach, and AMC Entertainment (NYSE:AMC), whose numbers late on Monday showed how far it still has to go to get back to pre-pandemic levels of business.
DR Horton (NYSE:DHI) heads the list of early earnings reporters, while Wynn Resorts reports after the bell.
4. Covid-19: more cases, more treatments
Another stock likely to be in focus later is Regeneron (NASDAQ:REGN), which announced trial results for its antiviral Covid-19 pill on Monday showing a high (82%) degree of efficacy in reducing serious illness.
It’s the third such drug to show such effects, after ones developed by Merck (NYSE:MRK) and Pfizer (NYSE:PFE), and adds to the growing list of remedies that can reduce the risks arising from economies staying open and active.
However, the start of the northern hemisphere winter means that the near term still promises to be challenging: new infection rates have stopped falling in the U.S., and far exceeded previous record peaks in central and eastern Europe.
The three parties likely to form Germany’s next government issued published a draft bill earlier Tuesday that would impose the so-called ‘3G’ system across almost all of public life for adults. That system requires people to show either proof of vaccination or naturally-acquired antibodies, or a negative test result.
5. Oil rises ahead of STEO, API
Oil prices edged higher again, ahead of two key releases from the U.S. later in the day. First will be the government’s Short-Term Energy Outlook, which will update its forecasts for prices and output in the U.S., followed by weekly inventory data from the American Petroleum Institute.
Crude stocks are expected to have risen for a seventh straight week, by some 1.90 million barrels, against a backdrop of surging prices that have started to hurt demand. Some reports have suggested that the STEO may be used by the government to justify sales of crude from the Strategic Petroleum Reserve – although the causal link between the two is far from clear.
By 6:30 AM ET, U.S. crude futures were up 0.4% at $82.22 a barrel, while Brent crude was up 0.3% at $83.70 a barrel.