Crypto Bounce Into Year-End Likely, But All Eyes on 10Y (Core Strategy Rebalance)
Core Strategy: Focus on Majors, Keep Head on Swivel Until Bonds/DXY Relent
We think it's right to expect a bounce into year-end, potentially starting tomorrow if PCE data comes in soft. In our view, this cycle is far from over, but until bonds find a bottom and the USD tops, it’s likely best for the more tactical investor to stay nimble and prepared for opportunities upon confirmation of this trend reversal. With that in mind, we raised our allocation to stables to 25% in our Core Strategy Portfolio.
Taking Inventory
Pre-FOMC, we anticipated that heading into year-end, with the market pricing in an elevated level of hawkishness (only two cuts were priced for next year in the futures market, and the 10Y was approaching YTD highs), a hawkish Fed would result in a “buy the news” event. Alas, it did not, as Jerome Powell donned his best hawk costume and took a bite out of rate-sensitive assets. Below, we take stock of how we got here and where we might be heading next.
Why We Have Been Bullish
To begin, it’s essential to revisit why we’ve been bullish so we can assess whether these reasons remain valid.
Regulatory Risk Repricing – This is an obvious but difficult-to-quantify factor. Over the past four years, th...Unlock this article by joining our Community!
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