The world’s most important stablecoin, Tether, is fluctuating as the collapse in the cryptocurrency sector deepens. The US Producer Price Index (PPI) for April will be released a day after another troubling consumer inflation report. The U.S. market will extend its losses for the sixth consecutive day and even solid streaming growth can’t help Walt Disney. The U.S. Securities and Exchange Commission (SEC) is investigating Ilon Musk’s untimely disclosure of his bid to buy Twitter , and oil prices declined amid a general decline in risk assets. Here’s what you need to know about the financial market on Thursday, May 12.

1. TETHER FALTERS AS CRYPTOCURRENCY DEBACLE DEEPENS

The world’s largest stablecoin fell below its notional 1:1 level against the dollar on Thursday as the global cryptocurrency sell-off intensifies.

Tether fell to 93.35 cents in early European trading – more than 6.5 percent below its peg to the dollar – but recovered most of its losses after Tether Chief Technology Officer Paolo Ardoino said in an interview broadcast on Twitter that most of Tether’s reserves are now held in risk-free U.S. Treasuries. He said Tether’s network is meeting the demand for redemption without any difficulty.

Demand for ransomware is growing as crypto investors exit their positions following the collapse of assets linked to Terra USD, a stablecoin that was largely backed by bitcoin and algorithmic trading. Bitcoin fell more than 12% to its lowest level since December 2020, while etherium fell more than 22%. The only beneficiary of this move was USD Coin, a stablecoin that, like Tether, is backed by dollar reserves.

2. PPI AND JOBLESS CLAIMS DATA

The last act in the US inflation drama is due at 08:30am ET (12:30pm GMT) when producer price inflation (PPI) data for April is released. Analysts expect factory prices to rise just 0.5%, up from 1.4% in March. This should bring the annualized PPI down to 10.7% from 11.2%.

These figures come a day after the monthly Consumer Price Inflation (CPI) report showed a mixed picture with a strong increase in travel demand and further significant increases in food and housing prices, but with declines in some goods, especially used cars, which were in strong demand a year ago.

At the same time, the U.S. Labor Department will also release weekly jobless claims data. Initial claims are expected to hover just below the 200k level, despite their surprisingly strong increase last week.

3. MARKET TO CONTINUE FALLING; DISNEY SHARES FALL DESPITE GROWTH IN STREAMING SERVICE

The U.S. stock market will continue its opening losses, unable to quell fears of slowing growth as central banks around the world grapple with rampant inflation (with the exception of China, where the slowdown is the result of a real estate market crisis and a hard-fought pandemic).

By 06:15 a.m. ET (10:15 a.m. GMT), the Dow Jones futures were down 207 points, or 0.7%, while the S&P 500 futures were down 0.8% and the Nasdaq 100 futures were down 1.2%.

The stock likely to take center stage is Walt Disney, which will open down nearly 5% to a 2-year low in response to a weaker-than-expected earnings report after Wednesday’s close. That’s despite the fact that its Disney+ streaming channel, which has been under scrutiny since Netflix’s sharp decline in subscribers in the first quarter, added nearly 8 million new subscribers, which was well above expectations.

Any disappointment from that pales in comparison to Softbank, which reported a $13 billion loss for the fiscal year just ended due to massive write-downs on some of its assets, such as cab services company Didi Global, Singapore-based Grab and food delivery company DoorDash. Softbank shares lost 8% in Tokyo the day before.


4. SEC TO VERIFY MUSK’S INFORMATION ON TWITTER: WSJ

The U.S. Securities and Exchange Commission is investigating Ilon Musk’s untimely disclosure of his Twitter stake, The Wall Street Journal reported Wednesday night, citing informed sources.

Musk announced the size of his purchase 10 days later than SEC rules allow. That allowed him to buy more shares without alerting others.

This news is unlikely to help mend Musk’s planned acquisition of the social media platform, given its already controversial political aspect. A further decline in the value of Tesla stock, which Musk had intended to pledge as collateral for part of the loan for the purchase, also complicates the process. Twitter shares will begin trading at $45.26, the lowest since Musk made his offer to privatize the company at $54.20 per share.

5. OIL FELL IN PRICE, BUT THE MAYA WARNED OF CONTINUED SHORTAGES IN THE FUEL MARKET

Crude oil prices fell Wednesday, unable to escape global growth fears that are affecting risk assets around the world.

By 06:30 am ET (10:30 GMT), the price of WTI crude was down 1.6% to $104.02 per barrel, while Brent crude was down 1.5% to $105.87 per barrel.

In its monthly oil market report released earlier, the International Energy Agency kept its forecasts for global oil supply and demand roughly unchanged, but warned that the global fuel market could face additional shortages in the coming months as demand in China rebounds following a series of new COVID-19 measures.