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
CORE STRATEGY: REMAINING TACTICALLY CAUTIOUS, TGA RUNDOWN + EARLY JAN FLOWS COULD PRODUCE NEEDED SPARK In our view, this cycle is far from over. However, until bonds find a bottom and the USD peaks, it’s prudent for more tactically-minded crypto investors to remain nimble and ready to capitalize on opportunities once a trend reversal is confirmed. While this could happen as early as next week due to early-January inflows, additional...
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...
CORE STRATEGY Our base case assumes that the macro environment will remain accommodative for crypto through year-end. However, in light of recent market action, we remain alert for signs of a local top (not a cycle top). That said, it is difficult to justify a risk-averse stance at this stage and think it is right to lean into this altcoin rally. Source: TradingView, Fundstrat Source: TradingView, Fundstrat STRONG DOLLAR +...
Today's employment numbers broadly met investor expectations, placating a nervous market. Risk assets rallied, aligning with our view that yesterday's de-risking would not persist through today. Yields continued their downward trajectory, and Fed funds futures also declined, reflecting the market's adherence to the Fed's dovish messaging. Yields Falling: Source: TradingView Fed Funds Futures Showing More Cuts: Source: TradingView Oil prices nearing YTD lows likely assisted in alleviating near-term concerns about...
