Adding CORE for Thematic & Fundamental Reasons (Core Strategy Rebalance)
PBOC One-Upping the Fed
This week, China’s central bank initiated what we believe are the first steps in a broader effort to stimulate the economy, which is struggling to meet its annual growth target of around 5%. These new measures are aimed at reviving economic activity and restoring confidence, especially in the real estate and equity markets, both of which are facing significant challenges.
The People’s Bank of China (PBOC) has introduced several initiatives to address these concerns:
Lowering short-term interest rates: The PBOC reduced its seven-day reverse repurchase rate from 1.7% to 1.5%, providing a short-term liquidity boost to the financial system. On Wednesday, they also announced that they would be reducing the medium-term loan facility (1-year policy rate) to 2% from 2.3%, the largest cut since this tool was enacted in 2016. Mortgage rate cuts: In response to the prolonged real estate downturn, mortgage rates on existing housing loans will be reduced, aimed at easing pressure on the housing sector and stimulating home purchases. Reserve requirement ratio (RRR) cut: By lowering the RRR by 0.5 percentage points, banks will be required to hold less in reserves, freeing up liquidity to encourage lending and investment. Stock market support: A ne...Reports you may have missed
MARKET UPDATE The PBoC has announced a fresh package of economic stimulus, weighing a $142 billion injection into top domestic banks and pledging to stabilize the housing and stock markets. Domestically, durable goods data came in better than expected, and GDP met expectations, providing more confidence in the stability of the U.S. economy. Crypto is responding positively to both developments, as BTC 2.62% has gained to $65.3k and ETH 1.66% to $2,650,...
AI Miners Continue Outperformance, CB Premium Remains Muted Despite Flows Increasing
CRYPTO MARKET UPDATE The crypto market has been consolidating over the past 12 hours following Bitcoin’s first daily close above its 200-day moving average since last August. BTC 2.62% is hovering just below $64K, while ETH 1.66% is holding above $2,600, and SOL 4.57% remains strong above $150. SEI 4.00% , one of the high-performance L1s that rallied significantly in Q1, is leading the market today, following a similar path to SUI 2.12% . Other notable outperformers...
CRYPTO MARKET UPDATE The last key macro risk for crypto markets this week was Friday’s Bank of Japan (BOJ) meeting, with concerns around potential rate hikes or hawkish commentary. However, the BOJ held rates steady, reaffirming its stance not to raise rates in unstable market conditions. In response, crypto markets surged overnight, with BTC 2.62% briefly crossing $64K, ETH 1.66% rising above $2,570, and SOL 4.57% climbing past $152. Since the U.S. market...
OUR VERDICT: POWELL NAILED IT Yesterday, Powell did exactly what risk assets wanted him to do—their actions were dovish, with a 50-bps cut and guidance for two more by year-end, but their economic commentary remained reassuring. Many bears point to this as hawkish, and since it's hawkish, it's implicitly bad for risk assets (including crypto). In our view, if Powell had taken a significantly more dovish stance than he did,...
