SignalPlus Macro Research Report Special Edition: Barbarians at the Door

Today, our macro research report temporarily breaks the previous order and talks about cryptocurrency first, in order to prepare to welcome our TradFi and investment banking overlords to join the interesting world of cryptocurrency.

As market expectations for ETF approval reach fever pitch,CME’s BTC futures open interest has now surpassed Binance, becoming the largest trading venue dominating open interest, and the party hasn’t even started yet.

The happy times in the cryptocurrency field continue. It was reported that Blackrock registered iShares Ethereum Trust and may eventually submit an ETH spot ETF application. This news made ETH the focus of attention, with the price increasing by 11%. In addition, although the BTC spot ETF SEC approval has not yet been obtained, but Bloomberg analysts believe that the agency is likely to approve all 12 BTC spot ETF applications during the 8-day window starting on November 9. If it does not happen this month, the window will be postponed to 1 On March 10, they believe there is still a 90% chance of the ETF being approved.

Back to macro markets, just as the market was beginning to accept the dovish narrative, another poor 30-year bond auction disrupted an otherwise low-volume, quiet day.

Long-term U.S. Treasury yields rose 20 basis points. In fact, the problem began on Wednesday night. ICBC, Chinas largest bank by asset holdings, was attacked by a cyberattack, which prevented a large number of transactions from being cleared, forcing customers to reroute transactions at the last minute. The clearing problem caused market makers to temporarily be unable to trade with customers cleared through ICBC, which may have caused a large number of investors to withdraw from trading, thereby affecting the results of yesterdays auction.

The $24 billion 30-year bond auction saw its worst tail since 2011 (about 5 basis points), with a bid multiple of 2.24x, indirect bidding interest of just 60%, and end demand of 75%, all since The worst indicator performance since November 2021, the markets reaction was swift and ruthless, with bond yields once soaring 21 basis points, dragging SPX futures down 0.5%, and the U.S. dollar rose to above 151 against the yen.

Adding fuel to the fire, Powell gave an unexpectedly tough talk at the IMF, warning against being misled by a few months of inflation data (referring to the recent price decline) and expressing doubts about whether the Fed has reached an achievable inflation target. We are not confident in our stance and will not hesitate to tighten policy further if necessary.

Some astute readers may have noticed that even though we have entered the end of the interest rate hike cycle and economic data points to a soft landing scenario, Treasury auctions are still having an increasing impact on stocks; as long-term bonds actually Volatility is much higher than implied volatility, and the bond market is sending a signal that even though Yellen tried to ease market concerns in its November refinancing announcement, the bond market is still struggling to cope with the increase in supply size; for active traders, There are always new data points to trade, at least in the short term, after all it’s all about interest rates, isn’t it?

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