SignalPlus Macro Research Report (20230616): Risk sentiment heats up, USDT becomes the main source of liquidity

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Dear friends, welcome to the SignalPlus macro research report. SignalPlus macro research reports update macro market information for you every day, and share our observations and opinions on macro trends. Welcome to track and subscribe, and follow the latest market trends with us.

Master Yoda said:

As the saying goes, "It's easier said than done," the Fed's lack of action and subsequent "hawkish rhetoric" was seen as a bluff, and risk sentiment continued, with the SPX up another 1%, with 87% of constituents Both are on the rise, the index is up around 6% so far this month, and has risen more than 15% so far this year; Also raising rates with hawkish rhetoric (July rate hike 'likely', core inflation revised up to 5.1%). In addition, in response to the rapidly weakening Chinese economic data, the People's Bank of China adopted a dovish stance and cut the MLF interest rate by 10 basis points. Investors are still expecting China to introduce an immediate stimulus plan, driving the Hang Seng Index to rise by 2%.

On the data front, initial jobless claims hovered near last week's high (262,000) as the labor market continued to slow significantly, pushing the 4-week moving average to its highest level since November 2021; Sales overall rose 0.3%, with retail sales (excluding autos) up 0.1%, with volatility in auto sales pushing up overall sales, though other items were little changed; New York Fed Manufacturing The industry index surged 38.4 points, while measures of hiring and prices paid fell, again providing a growth-friendly mix. Overall, this set of economic data is in line with the current ongoing boom and is conducive to the ongoing risk rebound, especially after the Federal Reserve yesterday shied away from raising interest rates in June.

The Fed's period of silence has officially ended, with St. Louis Fed Bullard (hawkish), Fed Governor Waller and Richmond Fed Barkin all due to speak later today, and the chairman himself to testify before the Senate in a week's time, all Fed officials are expected to Both will continue their "inflation is too high, so more rate hikes are coming, but it's not a foregone conclusion, so no guarantees" narrative, but we think the market could act like a rebellious teen nagging to their parents. These warnings were ignored.

From a trading perspective, momentum indicators across all major stock exchanges have moved into very positive territory, while falling volatility has helped risk parity and systematic funds expand exposure in the rally; Participation in equities by households and retail investors has spiked again following the disruption, and with big tech stocks outperforming all other strategies, these retail participants have been rewarded exceptionally well; reminding our longtime readers once again that the stock market is not the economy, so far this year The performance of the capital market once again proved this point.

In addition, the continued shrinking of stablecoin circulation, especially the collapse of BUSD, has led to the rising USDT dominance as the main source of liquidity. However, this popularity is also a double-edged sword, as investors increasingly rely on As a liquidity choice for exiting the market, Tether has caused serious supply imbalances in iconic DeFi liquidity pools such as Curve, causing USDT to temporarily decouple in the 3 pool liquidity pool composed of DAI/USDC/USDT, resulting in further FUD , to remind everyone to pay attention to safety.

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