CME Basis Suggests We Are Near a Tradable Low, Plus Some Thoughts on Positioning Ahead of the Election
A Rough Stretch Amid Rising Uncertainty Skews Risks to the Upside
The past five trading days have been challenging for the crypto market, marked by significant uncertainty stemming from various geopolitical and economic events. Among the notable sources of market distress are:
- Geopolitical Tensions: Iran’s missile attack on Israel has led to heightened anticipation of an Israeli response, with oil prices spiking to $74.
- Natural Disasters: A devastating hurricane in the Southeast U.S. is expected to disrupt numerous companies and jobs for weeks, possibly months.
- Labor Strikes: The potential longshoremen strike, which threatens to halt all trade via ports in the Eastern half of the U.S., has added further pressure.
- Fed Hawkishness: During an interview on Monday, a somewhat “hawkish” Fed Chair Powell shifted futures pricing from a 50-bps cut to a 25-bps cut at the next meeting.
- Economic Data Uncertainty: Market participants are also nervous ahead of tomorrow's jobs report, despite a hotter-than-expected Services PMI this morning.
On balance, these events have nudged the market toward the "no landing" scenario on our Fed landing map.
Reports you may have missed
Crypto Receives a Boost from Strong Jobs Print, WULF Sells Hash Rate to Expand AI Capabilities
CRYPTO MARKET UPDATE The crypto market is moving higher today, lifted by stronger-than-expected jobs numbers. The BLS reported 254k jobs added last month, far exceeding the market estimate of 140k, while August's figures were revised up from 142k to 159k. The unemployment rate also dropped to 4.1% from 4.2%. In response, rates rallied, the DXY spiked, and the futures market largely priced out the possibility of a 50 bps rate...
MARKET UPDATE August PCE data came in slightly below expectations, with Core MoM PCE reading 0.1% vs. 0.2% expected, reaffirming that inflation is receding steadily. Debates over the size of the Fed’s next rate cut have already begun, with odds for 50bps increasing slightly after the PCE data, rising to 52.1% compared to 49.3% yesterday. Stocks are relatively flat to end the week, with the SPY 0.24% gaining 0.14% and the...
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)...
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 has gained to $65.3k and ETH to $2,650,...
