Hot things: CPI and Solana
CPI Still Hot
Despite oil prices falling and inventories growing, lagging CPI data came in hot this week. It was expected to be an eye-popping 8.8% but still managed to surprise to the upside. The CPI print of 9.1% was the highest in four decades as gas prices soared 11% month-over-month.
Due to the perceived lack of inflation relief, markets immediately reacted to the news, upping the consensus Fed Funds target for the next FOMC meeting by 25 BPS. At the time of writing, the futures market is pricing in a 100 BPS hike in two weeks.
The yield curve also promptly inverted, as inflation concerns are now compounded by recession fears. This was the second time this year that the yield curve inverted in the traditional sense and the third time since 2019. Interestingly the yield curve inversion in 2019 closely preceded a reversal of the last Fed tightening regime.
This might seem bad, but the day's events had a clear silver lining. Overall, risk assets did not experience the same gap down in prices that they were victims to following the CPI report in June. Following a pre-market sell-off, both the $QQQ and $BTC rallied back to finish the day of trading in the green.
Reports you may have missed
INFLOWS RESUME On Monday, market sentiments were rattled by a surprisingly strong manufacturing PMI figure, marking the first expansionary reading in 18 months. This led to a rise in rates, with risk assets across the board experiencing selloffs amid renewed inflation concerns and fears that the Federal Reserve might need to implement further measures to cool the economy. However, in our crypto comments video on Tuesday, we outlined a couple...
Adding RON and IMX As a Different Flavor of ETH-beta and Gaming Exposure (Core Strategy Rebalance)
MARKET SHRUGS AT HOT CPI The latest Consumer Price Index (CPI) data indicated a hotter inflationary environment than forecasted for February. Despite the surprise in the numbers, market participants appeared largely unmoved, suggesting that the potential impact had already been factored into their calculations prior to the release. This resilience reflects a broader sentiment that a rates-driven selloff, in response to the CPI figures, is not a significant near-term risk....
RESEND: Bitcoin ETF Equilibrium Price Dynamics: ETF likely to drive significant rise in daily demand
BY POPULAR DEMAND, WE ARE RE-SENDING THIS BITCOIN PRICE IMPACT OF SPOT ETF REPORT FROM JULY 24, 2023 The Bitcoin spot ETF was finally approved. And we are seeing the surge in price of Bitcoin because of attractive supply and demand dynamics.We received multiple requests to resend this report from July 24, 2023 which looked at supply and demand dynamics if a spot ETF was approved.In short, we believe a...
FLOWS BEGET MORE FLOWS We have recently discussed the potential return of crypto being correlated with equities due to the new category of market participants entering the fold. However, price action this week suggests that inflows into the BTC ETFs may be throwing water onto that theory. It seems apparent that, at least in the near-term, that the ETF flows narrative is gaining steam, and it is likely that the...
Articles Read 1/1
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In 0668b2-9b64ae-72b14e-a05c7e-9a5569
Already have an account? Sign In 0668b2-9b64ae-72b14e-a05c7e-9a5569
