North American News
Closing Stock Market Summary As The S&P Sets A New Record
- Dow: +260.36 at 42,175.11
- Nasdaq: +108.09 at 18,190.27
- S&P 500: +23.11 at 5,745.37
Market Highlights
The S&P 500 set a new record high today, bolstered by a surge in semiconductor stocks following Micron’s impressive earnings report. Positive economic signals and supportive policy adjustments from global central banks further propelled the market.
Key Drivers
- Micron Technology (MU): Up 14.7% to $109.88, significantly contributing to the semiconductor sector’s strength.
- China’s Fiscal Stimulus: Promises from the Politburo and recent rate cuts by the PBOC enhanced investor sentiment.
- Initial Jobless Claims: Reports indicated a decrease, reinforcing the notion of a robust labor market.
Notable Stock Movements
- Dell Technologies: Shares surged by 5.26% to $126.49 after news of a DOJ investigation into Super Micro Computer (SMCI), whose shares plummeted 12.17% to $102.40.
- Caterpillar (CAT): Climbed 3.4% to $391.16, reaching an all-time high, marking a 27.4% rise from its August 5 low.
Sector Performance
- Materials Sector: Rose 2.0%, supported by a 3.6% increase in copper futures to $4.65/lb.
- Energy Sector: The weakest performer, declining 2.0%, influenced by a 3.0% drop in WTI crude futures to $67.68/bbl.
- Industrials Sector: Gained 0.5%, driven by positive moves in Southwest Airlines (LUV), which rose 5.0% after raising Q3 guidance and announcing a $2.5 billion share repurchase program.
- Consumer Discretionary Sector: Slight increase of 0.1%, with CarMax (KMX) jumping 5.0% post-earnings, while Amazon (AMZN) and Tesla (TSLA) faced slight declines.
Treasury Yields
Yields backed up following today’s economic data, reflecting the market’s optimism:
- 2-Year Note Yield: Increased to 3.62% (+7 bps).
- 10-Year Note Yield: Rose to 3.79% (+1 bp).
Economic Data Review
- Initial Jobless Claims: Decreased by 4,000 to 218,000; ongoing low claims point away from imminent recession fears.
- Durable Goods Orders: Flat month-over-month in August; excluding transportation, orders rose 0.5%.
- Q2 GDP: Final estimate unchanged at 3.0%.
- Pending Home Sales: Increased by 0.6% in August after a decline in July.
Looking Ahead
Economic Calendar for Friday:
- 08:30 ET: August Personal Income, Personal Spending, PCE Price Index, Core PCE Price Index
- 08:30 ET: August Advanced International Trade in Goods, Retail Inventories, Wholesale Inventories
- 10:00 ET: Final September University of Michigan Consumer Sentiment
In summary, the market experienced robust gains today across major indices, driven by positive earnings reports, supportive global economic policies, and favorable economic data. As investors look forward to upcoming economic indicators, the outlook remains optimistic for further growth.
US treasury sells $44 billion of 7- year notes at a high yield of 3.668%
- WI level at the time of the auction was 3.675%
- High yield 3.668%
- WI level at the time of the auction 3.675%
- Tail -0.7 basis points six-month average of 0.1 basis points. Last month the tail was 0.9 bps
- Bid to cover:, 2.63X versus six-month average of 2.54X. Last month it was 2.5X
- Directs (the % of domestic buyers) 20.26% versus six-month average of 16.8%
- Indirects (the % of international buyers) 70.8% versus six-month average of 70.1%
- Dealers (the dealer take the rest) 8.94% versus six-month average of 13.0%.
US pending home sales for August 0.6% versus 1.0% expected
- Pending home sales for August 2024
- Prior month -5.5%
- Pending home sales for August 0.6% versus 1.0% expected
- Index comes in at 70.6 versus 70.2 last month
- Month over month, contract signings rose in the Midwest, South and West but dropped in the Northeast.
- Compared to one year ago, pending home sales decreased in the Northeast, Midwest and South but increased in the West.
Details:
- The Pending Home Sales Index (PHSI) increased to 70.6 in August, down 3.0% year-over-year.
- The Northeast PHSI dropped -4.6% to 61.6 in August, down 2.2% year-over-year.
- The Midwest index rose +3.2% to 70.0 but declined 3.6% from last year.
- The South PHSI increased +0.1% to 83.6, down 5.3% year-over-year.
- The West index grew +3.2% to 58.0, up 2.7% year-over-year.
- Housing affordability has improved due to falling mortgage rates, expected to continue as long-term mortgage rates approach 6%.
- Mortgage savings on a $300,000 loan could be around $300 per month compared to a few months ago.
NAR Chief Economist Lawrence Yun said:
“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August. However, contract signings remain near cyclical lows even as home prices keep marching to new record highs.”
US initial jobless claims 218K versus 225K estimate
- US initial and continuing claims
- Prior week 219K revised to 222K
- Initial jobless claims 218K vs 225K est
- 4- week moving average initial jobless 224.75 vs 228.25
- Continuing claims 1.834M vs 1.838M estimate. Prior week revised to 1.821M from 1.829M prior
- 4-week moving average continuing claims 1.836M versus 1.842M last week.
The largest increases in initial claims for the week ending September 14 were in Texas (+2,216), New York (+1,842), California (+1,108), Georgia (+1,014), and Michigan (+787), while the largest decreases were in Massachusetts (-1,969), Wisconsin (-794), Connecticut (-569), Nebraska (-517), and Louisiana (-224).
US Q2 final GDP +3.0% vs +3.0% expected
- Final second quarter GDP for 2024
- Prelim reading was +3.0%
- Final Q1 was +1.4% (unrevised)
Details:
- Consumer spending +2.8% vs +2.9% second reading
- GDP final sales +1.9% vs +2.2% second reading
- GDP deflator +2.5% vs +2.5% second reading
- Core PCE +2.8% vs +2.8% second reading
- Corporate profits after tax +3.5% vs +1.7% second reading
- Business investment 3.9% from 3.9% second reading
Consumer spending, a key driver of economic activity, was revised slightly downward to 2.8% from the initially reported 3.0%. Despite the small downward adjustment, this still represents a significant improvement from the 1.9% growth seen in Q1.
Business investment figures saw a more notable revision, dropping to 3.9% from the 4.7% reported in the preliminary estimate. That should be a drag in the coming quarters and reflects less confidence in the outlook than believed. That was balanced out partly by strong corporate profits.
Contributors and subtractors to the 3.0% growth:
- Consumption: +1.90% (vs +1.57% second reading, last quarter +0.98%)
- Government: +0.52% (vs +0.53% second reading, last quarter +0.31%)
- Net International trade: -0.90% (vs -0.72% second reading, last quarter -0.65%)
- Inventories: +1.05% (vs +0.82% second reading, last quarter -0.42%)
Kansas City Fed manufacturing index for September -18 versus +6 last month
- Kansas City Fed manufacturing index drops to -18, hitting lowest level since July 2023. Volatile movement continues
- Prior month +6
- KC Fed manufacturing index -18 versus +/month
- Composite index is -8 versus -3 last month
US August durable goods orders 0.0% vs -2.6% expected
- US August durable goods orders
- Ex-transport +0.5% vs +0.1% expected
- Prior ex-transport +0.1% (unrevised)
- Excluding defense, new orders rose -0.2% vs +10.3% prior
- Nondefense capital goods orders (ex-aircraft) +0.2% vs +0.0% expected
- Prior nondefense capital goods orders -0.2% (revised from -0.1%)
- Unfilled orders: +0.4% vs +0.2% prior
- Inventories inched +0.1% vs +0.1% prior
Fed’s Bowman: Discount window is for emergencies
- Bowman highlights downsides to banks borrowing from the discount window
- There are downside risks to discount window
- You do need to be signed up for it and you do need to test
- Don’t necessarily need to preposition collateral at discount window
- Fixing discount window by modernizing it is important
- Could be unintended consequences by forcing banks to use discount window, or hold collateral at it
Fed’s Cook: Optimistic AI can boost productivity
- She does not speak on monetary policy or her economic Outlook.
- Optimistic AI can boost productivity
- AI has potential for negative employment impacts
Treasury Secretary Yellen: There is a bit more slack in labor market than previously
- Former Fed chair and current Treasury Secretary Janet Yellen speaking on CNBC
- Banking system is well-capitalized.
- A good deal of thought is going into how to shore up liquidity, access to Fed’s discount window.
- US labor market, inflation suggests were on a path to a soft landing.
- There is a bit more slack in a labor market than previously
- Appears to be an expectation among Fed that rates will come down further
- Over time if we stay on that path rates will decline to neutral
- It will be necessary to get US deficits down in order to keep the interest costs manageable
- The last mile of inflation is housing.
- Looking back the largest single risk was unemployment would go higher, and into place stimulus measures.
- Inflation is now down considerable, and real wages adjusted for inflation are starting to rise again
- Inflation remains top Biden administration priority
- Ties with China have gone closer
- We have found constructive ways to discuss differences.
- US / China cooperating in necessary areas
- The value of the USD should be determined by the markets.
Fed’s Kugler gives guidance on Non Farm Payrolls numbers to watch
- It looks like under 100K is going to be a problem for the Fed
- Below 100K monthly job gain would be ‘very low’, must be mindful of potential downward revisions.
- Breakeven number for monthly job gains is anywhere from 100K to 240K.
- We have a resilient labor market, we don’t want demand to fall further when it’s not necessary.
- Makes sense to cut rates to remove some restrictiveness.
- We are way above any estimates of neutral.
- Fed funds rate determines policy; balance sheet shrinking is not a key part of achieving mandates.
- We are not celebrating, we are not there yet, on 2% inflation goal.
Commodities
Gold Surges to New All-Time High as Buyers Eye $2,700
Market Overview
- Current Gold Price: $2,670
- Previous All-Time High: $2,685
Gold has reached a remarkable new all-time high of $2,685, driven by a combination of China’s stimulus measures and escalating tensions in the Middle East. While the US Dollar has shown signs of recovery, the recent 50 bps rate cut by the Federal Reserve has fueled bullish sentiment, paving the way for potential further gains in bullion prices.
Key Highlights
1. Record Prices Amid Stimulus and Geopolitical Tensions
- Gold hit $2,685 on Thursday as the greenback regained some strength after earlier losses during the Asian and European trading sessions. The surge is attributed to China’s commitment to stabilize its real estate market by implementing additional fiscal stimulus. The People’s Bank of China (PBoC) recently lowered the 7-day reverse repo rates by 20 bps, from 1.70% to 1.50%.
- Rising tensions in the Middle East, particularly missile strikes between Israel and Hezbollah, have further supported gold prices, drawing investors to safe-haven assets.
2. Federal Reserve’s Impact on Gold Sentiment
- The 50 bps rate cut by the Federal Reserve last week, combined with expectations of a more aggressive easing cycle, has propelled gold to record highs. Even with a robust US Dollar, the outlook for continued monetary easing keeps bullish trends intact.
3. Positive Economic Indicators
- Recent US economic data indicates a potential ‘soft landing’ scenario:
- GDP Growth: The US GDP for Q2 was finalized at 3%, surpassing expectations of 2.9%.
- Durable Goods Orders: Remained unchanged at 0% in August, beating forecasts of a -2.6% contraction but falling short of July’s impressive 9.8% growth.
- Jobless Claims: Initial claims for the week ending September 21 fell to 218K, below the expected 225K and previous week’s 222K.
Market Developments
4. Gold ETF Inflows
- According to the World Gold Council, global physically-backed gold ETFs saw modest net inflows of 3 metric tons last week, reflecting ongoing interest in gold as an investment vehicle.
5. Rate Cut Expectations
- Market participants have largely priced in at least a 25 bps rate cut by the Fed in the near future. However, the CME FedWatch Tool indicates that the likelihood of a 50 bps cut has decreased slightly to 51.3%, down from 60% the previous day.
Outlook
As gold prices continue to rally, buyers are setting their sights on the $2,700 level. The combination of supportive macroeconomic conditions, central bank easing, and geopolitical uncertainties creates a fertile environment for gold bulls. Traders and investors should remain attentive to economic data releases and geopolitical developments that may influence gold’s trajectory in the coming weeks.
Bottom Line: With gold achieving new heights, the market sentiment remains positive, fueled by economic stability and strategic central bank policies, positioning gold as a critical asset in uncertain times.
OPEC+ likely to go ahead with planned Dec oil output increase – report
- Report from Reuters, citing OPEC+ sources
Oil was roiled earlier today by an FT report saying Saudi Arabia was no longer targeting $100 oil. Now we’re getting more leaks with a Reuters sources report saying that the planned Dec output hike is still going ahead but will have a small impact given planned compensation cuts from some members.
UBS is forecasting Brent crude oil back to US$87 by year end
- Demand to rise, supply deficit persists.
UBS cite various supply and demand factors for their forecast. Beginning with Federal Reserve’s growth-oriented monetary policy contributing to a favourable environment for oil prices. UBS point out that Brent crude often benefits from positive market sentiment, which has improved since the Fed began easing its policies. In the long run, the Fed’s efforts to boost economic growth are likely to increase oil demand both in the US and globally.
On the supply side, global growth has been slow, increasing by just 0.3% from December to July, according to the International Energy Agency. This has maintained a supply deficit in the oil market. US production has slowed, and key producers like Brazil and Libya have also experienced weak output.
With the Fed’s easing cycle and the current supply-demand dynamics, UBS expect oil prices to rise to approximately $87 per barrel by year-end.
EU News
European equity close: Big gains across the board
- Great day for Europe as it cheers China stimulus
- Stoxx 600 +1.1%
- German DAX +1.6%
- France’s CAC +2.2%
- UK’s FTSE 100 flat
- Spain’s IBEX +1.4%
- Italy’s FTSE MIB +1.5%
Eurozone August M3 money supply +2.9% vs +2.6% y/y expected
- Latest data released by the ECB – 26 September 2024
- Prior +2.3%
Germany October GfK consumer sentiment -21.2 vs -22.5 expected
- Latest data released by GfK – 26 September 2024
- Prior -22.0; revised to -21.9
The reading is an improvement to the month before. However, in the grand scheme of things, German consumer sentiment remains depressed mostly. GfK notes that:
“After the sever setback in the previous month, the slight improvement in consumer sentiment can be interpreted as stabilisation at a low level. The consumer climate has not made any progress since June 2024 so the slight increase cannot be interpreted as the start of a noticeable recovery.”
SNB cuts key policy rate by 25 bps to 1.00% from 1.25% previously
- The Swiss central bank announces its monetary policy decision for September 2024
- Prior 1.25%
- Prepared to intervene in FX market as necessary
- Inflation pressures have again decreased significantly compared to the previous quarter
- That reflects the appreciation of the Swiss franc over the last few months
- Stronger franc partly contributed to downward revision in inflation forecasts
- Inflationary pressure abroad is likely to continue to ease gradually over the next quarters
- Further rate cuts may be necessary to ensure price stability over the medium-term
- Sees 2024 Swiss economic growth at around 1.0% (unchanged)
- Sees 2025 Swiss economic growth at around 1.5% (unchanged)
- Sees 2024 inflation at 1.2% (previously 1.3%)
- Sees 2025 inflation at 0.6% (previously 1.1%)
- Sees 2026 inflation at 0.7% (previously 1.0%)
Deutsche anticipates faster rate cut cycle by the ECB going into next year
- The firm says a 50 bps rate cut by the ECB in December is a distinct possibility
They are sticking with the view that the ECB will begin delivering back-to-back rate cuts, but starting from December. A further weakening in the economic outlook is the main cause for the shift in their call, after having previously forecasting the ECB to deliver on 25 bps rate cuts every quarter until a terminal rate of 2.00% to 2.50% around the end of next year.
“We are moving to a faster normalization call, with the ECB to reach the same terminal rate of 2.00 to 2.50% six months earlier in mid-2025. We expect this more rapid easing cycle to be achieved with back-to-back 25 bp cuts from December, but we do not rule out a 50bp cut in December.”
Germany’s leading economic institutes sees GDP contracting again this year
- They downgraded their 2024 forecast for the German economy in the latest projections
The joint economic forecasts for the autumn now shows that these institutes are expecting the German economy to shrink by 0.1% in 2024. Their previous forecast was for the German economy to grow by 0.3% this year. The projected drop now will follow from the 0.3% contraction in the economy seen last year.
“In addition to the economic downturn, the German economy is also being weighed down by structural change. Decarbonisation, digitalisation, and demographic change – alongside stronger competition with companies from China – have triggered structural adjustment processes that are dampening the long-term growth prospects of the economy.”
SNB chairman Jordan: Swiss franc rise a major factor of inflation decline
- Remarks by SNB chairman, Thomas Jordan
- Further rate cuts may be necessary in the coming quarters
- Stronger franc, lower oil and electricity prices contributed to lower inflation forecasts
- Swiss economic growth will be ‘rather modest’ in the coming quarters
- But sees no risk of deflation
- Further rate cuts might be necessary to ensure price stability
- Primary tool for the SNB will be interest rates but FX intervention could be used if necessary
ECB October policy decision reportedly to be “wide open”
- Reuters reports, citing seven sources on the matter
The report says that the doves at the ECB are preparing to fight for a rate cut next month after weighing up the softer economic data as of late. The sources say that the poor PMI data and a slowdown in wages are stirring up confidence among those who are in favour of lower rates.
However, the report notes that any push to cut rates in October will be met with strong opposition from the hawks. Some sources are hinting that if there is a compromise, it will see no rate change next month but the ECB is likely to drop a strong hint on a move in December if the data doesn’t improve.
Asia-Pacific-World News
China’s Politburo reaffirms will lower RRR and implement forceful interest rate cuts
- Remarks by the Chinese Politburo, following the conclusion of their meeting held today:
- Will ensure necessary fiscal spending
- Will step up force of counter-cyclical adjustments of fiscal, monetary policies
- Will strive to achieve full-year economic, social development targets
- To make efforts to stop falls in property market and to get it stabilised
- Will increase efforts to attract and stabilise investments
PBOC sets USD/ CNY reference rate for today at 7.0354 (vs. estimate at 7.0367)
- PBOC CNY reference rate setting for the trading session ahead.
In open market operations (OMOs):
- PBOC injects 292bn via 14-day RR, sets rate at 1.85%
- 524 bn yuan reverse repo expire today
- net 232bn liquidity drained from the market in OMOs today
Reports that China is considering injecting US$142bn of capital into top banks
- Chinese stimulus measures
China news headline from Bloomberg and Reuters.
China injected capital into big banks during the global financial crisis back in 2008. That was the last time it did so. Pondering doing it again now.
More on China considering a 1 trillion yuan injections of capital into banks
- First since the GFC
The capital injection would be into China’s biggest state banks, struggling with shrinking margins, faltering profits, rising bad loans. The broader economic picture weighing is of slowing growth and an ongoing mammoth property sector crisis. Four of China’s five largest lenders reported lower Q2 profit. The banks took the hint from central government to lower lending rates in an effort to trigger improved loan demand.
Funding for the injection will mainly come from the issuance of new special sovereign bonds.
BCA suggest that the stimulus announced from China is 1990s Japan all over again
- BCA warn of a deflationary spiral
In a note, analysts at Bank Credit Analyst suggest that the monetary easing measures introduced by the People’s Bank of China (PBoC) may offer a short-term lift to market sentiment. However, drawing parallels to Japan’s housing crisis of the 1990s, they warn that monetary easing alone is unlikely to halt a deflationary spiral or drive a lasting recovery in consumer spending. The report stresses that without a recovery in the labor market or significant fiscal measures aimed at boosting household disposable income, any improvement in sentiment is expected to be fleeting.
The analysis highlights that the 50 basis point cut to existing mortgage rates could potentially save homeowners approximately 150 billion renminbi annually in interest payments, providing some relief by reducing financial burdens and easing cash flow. Yet, on a larger scale, these savings are not expected to significantly increase household consumption or deliver a substantial boost to the broader economy.
UBS analysis predicts market support from October stimulus; Renminbi hedging recommended
- More on UBS’ views on the China stimulus
The analysis highlights a positive shift toward a more accommodative policy stance, though it falls short of the significant stimulus measures seen in past years that drove sustained market rallies. According to the note, monetary easing alone is unlikely to break the ongoing deflation-deleveraging cycle. Instead, it calls for greater fiscal intervention, suggesting that additional stimulus could arrive in October through a budget revision, particularly if third-quarter GDP remains significantly below the 5% target.
In the context of China’s equity markets, the analysis predicts near-term support following the stimulus news, provided there is evidence of effective implementation. Expected rate cuts and capital market measures are likely to benefit state-owned enterprises (SOEs) in high-dividend sectors such as utilities, telecoms, energy, and financials. However, caution remains regarding property developers, though leading property agencies may gain from the easing policies.
Reserve Bank of Australia consumer forecasts are too optimistic, December rate cut likely
- Commonwealth Bank of Australia reiterate their end of 2024 RBA rate cut forecast
Commonwealth Bank of Australia rgue that the RBA’s latest household consumption forecasts, updated in August, “look too rosy”.
CBA point to the 1.1% rebound in household consumption the RBA is projecting, and argue:
- This represents a significant increase compared to the 0.3% growth seen in the first half of the year.
- Such a sharp rise in spending growth hasn’t been reflected in CBA’s internal data up until late September.
- It also doesn’t align with the current cautious spending patterns, given the ongoing low consumer confidence.
CBA conclude:
- We expect the RBA will need to downwardly revise their consumption forecasts in November.
- Indeed, the RBA this week already noted that there are downside risks to this forecast
- Such a shift, alongside an expected further lift in unemployment and trimmed mean inflation in line with our forecasts, would set up the RBA to deliver rate relief before year-end
CBA is forecasting a 25bp rate cut at the RBA 9 – 10 December meeting.
RBA says around 2% of owner occupiers in real danger of defaulting
- Reserve Bank of Australia Financial Stability Review
Reserve Bank of Australia Financial Stability Review, September 2024.
Headlines via Reuters:
- The Australian financial system is resilient, and risks are contained.
- Risks include stress in China’s financial sector and a lack of significant response from Beijing.
- Low global risk premia and high leverage increase the danger of a disorderly downturn in global asset prices.
- The financial system is vulnerable to digitalisation and the concentration of AI/cloud providers.
- The growth of superannuation to one quarter of the financial system could amplify shocks.
- The risk of widespread financial stress in Australia remains limited.
- A small but rising share of Australian home borrowers are falling behind on payments.
- Only around 2% of all owner-occupier borrowers are in real danger of defaulting.
- Less than 1% of owner-occupier loans are more than 90 days in arrears.
- Around 0.5% of home loans in arrears are estimated to be in negative equity.
- The vast majority of borrowers are expected to be able to continue servicing their debt.
- The RBA sees a risk that households could take on excessive debt once interest rates fall.
- Australian banks are well-capitalized, profitable, and have low exposure to bad debt.
- Strengthening the operational resilience of banks is a priority for regulators.
BOJ July minutes – Calls for further gradual, but timely, interest rate increases
- Bank of Japan July meeting minutes
Headlines via Reuters:
- Members shared a view over the need for vigilance to the risk of inflation overshoot.
- Many members said it was appropriate to raise rates to 0.25%, adjusting the degree of monetary support.
- A few members said it was appropriate to adjust the degree of monetary support moderately.
- One member said economic conditions were good enough to somewhat push up the current very low policy rate.
- One member said they must be vigilant to the impact of rising inflation, driven in part by the weak yen, on household sentiment and small firms’ costs.
- A few members said it was appropriate to gradually adjust very low rates now to avoid being forced to hike rates rapidly later.
- One member said the BOJ must adjust the degree of monetary support further if the strength of capital expenditure and wage growth could be confirmed.
- One member said they must carefully look at various risks in proceeding with monetary normalisation.
- One member said BOJ must avoid creating too much market expectation of future rate hikes as inflation expectations have yet to be anchored at 2%
- One member said it was difficult to move rates mechanically as there was high uncertainty on Japan’s neutral rate level
- Cabinet minister representative said must be vigilant to impact of weak yen, rising inflation on households’ purchasing power, downside risks to overseas economies
Japanese consumers face rising costs across the board as inflation pressures persist
- Big range of price increases coming next month in Japan
The Bank of Japan will be watching on as Japan braces for another round of price hikes in October.
In addition to price increases, wages are set to rise. The minimum wage to increase by 51 yen to 1,055 yen (national average).
- Postal rates to jump ~30%, first increase in 30 years excluding tax hikes
- Standard letter rate up from 84 to 110 yen
- Postcard rate rising from 63 to 85 yen
- Food and beverage prices continue surging
- ~3,000 items affected, some seeing 30%+ increases
- Major beverage companies hiking prices on October 1 shipments
- Snack and processed meat producers also raising prices
- OTC payments for some off-patent drugs to rise
Cryptocurrency News
Crypto Today: Bitcoin, Ethereum, and XRP Experience Gains Amid Declining Fraud and Hack Losses
Market Overview
- Bitcoin: +3% at $65,100
- Ethereum: +3% at $2,650
- XRP: +1% at $0.593
Bitcoin (BTC) has surged past the critical psychological level of $65,000, showing resilience as it broke a significant resistance point around $64,700. Meanwhile, Ethereum (ETH) and XRP also witnessed gains of over 3% and 1%, respectively, as the crypto market shows signs of recovery amid reduced losses from hacks and fraud.
Key Highlights
1. Bitcoin and Ethereum Rally
- Bitcoin is trading at $65,100, experiencing a 3% increase today. This move comes alongside a positive net flow of $105.9 million into Bitcoin ETFs, marking five consecutive days of inflows.
- Ethereum is currently around $2,650, also up nearly 3%. The altcoin is testing the $2,707 resistance level, with $43.2 million in net inflows recorded for Ethereum ETFs.
2. XRP’s Slight Gain
- XRP is trading at $0.593, up over 1%. A sustained move above the upper trendline of its key price boundary near $0.615 could trigger a significant rally, while a drop below $0.573 poses a risk of a substantial correction.
Market Updates
Decline in Fraud and Hack Losses
The web3 ecosystem experienced a significant decline in losses from hacks and fraud, totaling approximately $413 million in Q3 2023, which is down 40% from nearly $686 million in the previous quarter, according to Immunefi. Major losses were reported from incidents involving the Indian exchange WazirX and Singapore’s BingX, which lost $235 million and $52 million, respectively.
- DeFi vs. CeFi: The report indicates a shift in the success rate of attacks between decentralized finance (DeFi) and centralized finance (CeFi). While DeFi faced more attacks (31 incidents), the total stolen amount decreased by 79% year-on-year to around $104 million. In contrast, CeFi experienced only three successful attacks but saw total losses rise by 66% year-on-year to $309 million.
Industry Developments
- Stablecoin Innovations: Ethena Labs has announced the launch of a new isolated stablecoin product, UStb, designed to help mitigate risks associated with its existing synthetic stablecoin, USDe. This product aims to provide additional stability during adverse funding conditions.
- SHIB Surge: Shiba Inu (SHIB) is the largest gainer among the top 100 cryptocurrencies, soaring over 20% in the last 24 hours. It has broken through a key resistance level at $0.000002005 and could rally further toward $0.000002398 if the momentum continues.
Outlook
The positive price action across Bitcoin, Ethereum, and XRP signals a resilient crypto market amid improving conditions. However, traders should remain vigilant as volatility persists, especially with the recent uptick in SHIB and concerns over potential corrections indicated by momentum indicators. The ongoing developments in stablecoins and the overall decline in fraud and hack losses may further bolster investor confidence in the market.
Bottom Line: As Bitcoin, Ethereum, and XRP show upward movement, the reduction in fraud and hack losses presents a more secure environment for investors, potentially fostering further growth in the crypto space.
Bitcoin Remains Steady Amid Favorable Macro Trends and Growing Institutional Interest
Market Overview
- Bitcoin: +0.2% at $64,000
Bitcoin (BTC) continues its upward momentum, trading around $64,000 on Thursday, despite facing resistance at $64,700 earlier this week. BTC has been consolidating in the $62,000 to $64,700 range for the past week, reflecting cautious optimism among traders. Global macroeconomic trends, including central bank easing and institutional demand for BTC-related products, are providing support to Bitcoin’s price.
Key Drivers
1. Supportive Macroeconomic Developments
QCP Capital’s latest report highlights several global developments that bode well for risk assets, including Bitcoin. Most notably, the People’s Bank of China (PBoC) rolled out policies aimed at rejuvenating its struggling housing and equity markets. The introduction of a 500 billion RMB swap facility, allowing non-bank financial institutions to buy Chinese shares, sparked a 8% surge in Chinese A50 futures and a rally in broader Asian markets. As other central banks, including the Federal Reserve, ease their monetary policies, Bitcoin could benefit from increased liquidity flowing into riskier assets.
2. Institutional Demand on the Rise
Ki Young Ju, founder of CryptoQuant, reported increasing US dominance in Bitcoin holdings, alongside a rebound in spot ETF demand. The launch of BlackRock’s Spot BTC ETF (IBIT) continues to draw inflows, while options trading for this ETF received SEC approval, signaling growing acceptance of Bitcoin in mainstream financial markets. These developments add fuel to the idea that institutional interest in Bitcoin remains robust, despite price consolidation.
Concerns Looming
1. Mt. Gox Wallet Movements
While optimism surrounding Bitcoin is on the rise, Arkham Intelligence data shows potential risk stemming from the Mt. Gox wallet movements. The now-defunct exchange, which holds 44,899 BTC valued at approximately $2.85 billion, recently emptied four wallets after receiving $370,000 worth of BTC from Kraken. The market is watching closely for any major sell-offs, as the distribution of BTC to Mt. Gox creditors could trigger volatility if large amounts are transferred to centralized exchanges for liquidation.
Outlook
With macroeconomic conditions favoring risk assets and institutional demand driving Bitcoin’s long-term prospects, analysts see further upside for BTC. However, caution remains around the potential impact of large Mt. Gox repayments and the overall economic landscape. Investors should remain vigilant, as a breach of the $64,700 resistance could spark a more significant rally, while further consolidation within the current range is likely if uncertainty prevails.
Bottom Line: Bitcoin’s outlook remains promising, supported by macroeconomic trends and institutional demand, though traders should watch out for potential market-moving events like Mt. Gox’s BTC liquidation.
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