Dollar Reigns Supreme
Fed Raised Rates Above Futures
This week, the Fed went ahead and raised interest rates another 75 bps in its attempt to stimy demand and bring down the prices of consumer goods. While the rate hike was already priced in by the market, the Fed’s revised dot plot was not. The Federal Reserve’s forecast for rates (green line below) was well above the futures market expectations. Thus, asset prices continued to dive, crypto included. The S&P 500 would go on to close at a new YTD low.
The CPI print and subsequent Fed actions have led to an increase in correlations between crypto and equities. As demonstrated by the chart below, short-term correlations with the $QQQ have dramatically increased, particularly for ETH.
Naturally, the US treasury market witnessed extreme volatility, plummeting dramatically relative to the rest of the market.
Below we can see the dramatic effect the increased tightening expectations had on the 2-year yield. The US 2Y at one point reached 4.26%, the highest level in 15 years.
The dollar continued to exhibit strength, rising to multi-decade highs in a parabolic way.
Silver Linings
There was a semblance of good news at the end of the week, as crypto performed relatively well compared to equities....Reports you may have missed
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