U.S. diesel has sailed above $6 per gallon and is now hitting record after record on a daily basis. It has risen 15% in a month, and is up 70% over the past year, based on American Automobile Association figures. The potential squeeze on households and businesses is not going unnoticed — Senate Majority Leader John Thune said on Tuesday he could be open to a diesel export ban, to help lower prices.
Diesel doesn't grab the headlines as much as crude oil, but it should. Some estimates suggest diesel accounts for around 70% of intermediate fuel usage in the U.S. Its impact on transportation, delivery and production costs is significant, and these ultimately end up in more expensive consumer goods and services, and higher core prices.
Senate blocks crypto bill
The U.S. Senate delivered a blow to the crypto industry on Tuesday, blocking a once-in-a-generation bill to create a regulatory framework for digital assets, which crypto companies say would put them on more solid legal footing. The deep-pocketed industry has spent hundreds of millions of dollars campaigning to advance the bill, dubbed the Clarity Act, which would have provided clearer rules for exchanges, token classifications, custody and broader institutional participation.
So what now? It seems Democrats on the Hill are deeply skeptical, and the legislative calendar is such that resolution in the near term is unlikely. If so, worries over transparency and policy-driven uncertainty will persist, potentially acting as a drag on market sentiment and prices. Will bitcoin be able to regain a lasting foothold above $80,000 any time soon?
Fed raises rates and markets react
The U.S. Federal Reserve raised interest rates on Wednesday for the first time in more than three years and signaled more tightening lies ahead, triggering a sharp rise in the dollar, a slump in the Dow and S&P 500, and a significant flattening of the Treasury bond yield curve.
Today's key market moves included:
Stocks: MSCI World -0.7% to a 6-week low. Asia was in the green, Europe and the UK rose too. Wall Street was in the red — Nasdaq flat, S&P 500 -0.4%, Dow -1.2% to a 3-month low.
Sectors/shares: Eight sectors on the S&P 500 fell, three rose. Energy -3%, tech +0.1%. The S&P transportation index fell 2% to its lowest since June 1.
FX: The dollar rose for a sixth day in a row to its highest since late July. The dollar index was above 100, and dollar/yen above 156.
Bonds: Short-dated U.S. yields rose, long yields fell, resulting in dramatic curve flattening — 2s/30s down to 61 bps, flattest since March last year.
Commodities/metals: Average U.S. diesel hit a new record at $6.31/gallon. European diesel futures hit a record $210/bbl. Oil -3%, gold -1%.
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