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Bitfinex Arrests, Bond Market Calm, OPEC+ Struggles - What's Moving Markets

Published 02/09/2022, 08:12 PM
Updated 02/09/2022, 08:12 PM
© Reuters

By Geoffrey Smith -- The U.S. arrested and charged two people with laundering proceeds from the notorious hack of crypto exchange Bitfinex in 2016, seizing $3.6 billion in Bitcoin in the process. Bond markets continue to trade more calmly ahead of a key 10-year note auction in the U.S. later. Eurozone bond yields fall after a top ECB official says the market overreacted last week. CVS Health (NYSE:CVS) earnings are due, and Chipotle (NYSE:CMG) is set to open higher after pushing through some chunky price rises in the last quarter. Oil prices edge lower despite fresh signs that OPEC+ can't keep up with rebounding global demand. Here's what you need to know in financial markets on Wednesday, 9th February.

1. Bitfinex heist couple charged

The U.S. arrested and charged two people in connection with the hack of cryptocurrency exchange Bitfinex in 2016, one of the largest crypto heists in history.

New York-based Ilya Liechtenstein and his wife Heather Morgan (aka the self-styled rapper Razzlekhan) have been charged with attempting to launder money and to defraud the U.S. They now face up to 20 years in prison if convicted.

The arrests mark something of a landmark for a crypto industry that has failed to police itself effectively since its inception. It shows that the digital audit trail created by blockchain technology makes it hard, ultimately, to hide behind the anonymity that has attracted many illicit and libertarian users to the asset class. Prosecutors were able to recoup some $3.6 billion in Bitcoin that had been stolen.  

Bitcoin, meanwhile, edged down 0.9% after hitting its highest in nearly a month on Tuesday.

2. Bonds calm down ahead of 10Y auction; Bowman, Mester comments eyed

Bond markets continued to recover some poise ahead of key inflation data from the U.S. on Thursday.

The first big sale of Treasury notes this week passed off without too much incident on Tuesday, but the 3-Year notes failed to rally meaningfully in the wake of the auction, suggesting that caution over the pace of monetary tightening is still the dominant emotion. The Treasury auctions 10-Year notes later Wednesday.

Also of interest will be speeches by Fed Governor Michelle Bowman and Cleveland Fed President Loretta Mester. Bank of Canada Governor Tiff Macklem and the Bank of England’s chief economist Huw Pill will also add some international flavor to the global monetary tightening story later. Eurozone government bond yields, meanwhile, dipped after Bank of France Governor Francois Villeroy de Galhau suggested that markets had overreacted to President Christine Lagarde’s press conference last week.

3. Stocks set to open higher amid pandemic end hopes; CVS earnings due as Chipotle impresses

U.S. stocks are set to open higher later, as the calmer mood music from the bond markets and increasing signs of pandemic-related restrictions being lifted combine to improve sentiment.

By 6:20 AM ET (1120 GMT), Dow Jones futures were up 193 points, or 0.5%, while S&P 500 futures were up 0.7% and Nasdaq 100 Futures were up 0.9%.

Stocks likely to be in focus later include Chipotle, whose quarterly update late on Tuesday displayed an impressive amount of pricing power, while advertising giant Omnicom also impressed with its earnings after the bell. Early reporters are led by CVS, CME Group (NASDAQ:CME), Fox (NASDAQ:FOX) and Yum! Brands (NYSE:YUM), while Walt Disney (NYSE:DIS) headlines the late session.

4. Ukraine war fears ease, despite new Russian maneuvers

The Russian ruble hit a new four-week low, suggesting that local market players are increasingly confident that there will be no invasion of Ukraine.

A diplomacy blitz earlier in the week had appeared to make some progress in taking the heat out of the situation, but both the Kremlin and, later, U.S. Secretary of State Anthony Blinken had downplayed claims by French President Emmanuel Macron that Russia’s Vladimir Putin had assured him there would be no further escalation in the near term.

Russia sent a handful of navy ships into the Black Sea earlier Wednesday for what it called drills. It still has tens of thousands of troops either engaged in military drills or on heightened alert just over the Ukrainian border.

5. Oil edges lower but OPEC+ is struggling to keep up with demand

Crude oil prices edged down further but remain close to the $90 level amid fresh evidence that OPEC and its allies are failing to meet their commitments on pumping more.

Platts’ monthly production survey showed that the OPEC+ group, all together, produced an average of 700,000 barrels a day below its agreed quotas in January, the biggest shortfall yet.

Prices are also still enjoying support from low inventory levels: the American Petroleum Institute reported on Tuesday that U.S. crude stocks fell by more than 2 million barrels last week. The U.S. government’s data are due at 10:30 AM ET, as usual.

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