SignalPlus Macro Research Report (20240104): BTC fell by more than $5,000 in a short time, and long positions of more than $600 million were liquidated.
The cross-asset de-risking theme continued, and the US ISM data was mixed. The index hovered near a two-year low (47.4), contracting for 14 consecutive months. In the sub-index, the price paid fell more than expected, but employment and new exports Orders are strong.
The number of job vacancies in JOLTS declined in November, with a large number of vacancies in the construction industry. In addition, the number of vacancies in the education and medical services industries has also been adjusted. The turnover rate further dropped to 2.2% in November, while the hiring rate also fell back to 3.5%, continuing the trend. Despite the recent weakening trend in the job market, however, the ratio of job vacancies to unemployed people remains at a high level of 1.4 to 1, much higher than the pre-epidemic level, and the layoff rate has also remained at a low level, indicating that there is currently no urgent and serious crisis. Problem... at least not yet.
The minutes of the December FOMC meeting sparked more excitement in the market. The initial comments suggested that the committee had reservations about early interest rate cuts, saying that interest rates may remain at high levels for longer. Other comments were more balanced, with financial concerns Expressing concern about the easing situation, but also acknowledging that inflation has peaked, members also discussed the possibility of stopping quantitative tightening at some point.
hawkish news headlines
*Several members said rates could remain high for longer than expected
* Fed officials believe policy will remain restrictive for some time
*Many members said the easing of financial conditions could pose challenges
Dovish news headlines
*Fed minutes: Officials believe policy rate is likely at or near peak
* Officials admit forecasts point to rate cut by end of 2024
*FOMC sees upside risks to inflation weakening
*Minutes show discussion on when to adjust balance sheet
Source: WSJ, Bloomberg
On the issue of slowing down quantitative tightening:
“Several participants noted that the Committee’s balance sheet plan indicated that balance sheet reduction would be slowed and ultimately halted when reserve balances are slightly above the level of adequate reserves, and these participants suggested that in order to provide the public With appropriate advance notice, the committee should begin discussing the technical factors that may lead to the decision to slow down the balance sheet as early as possible before making relevant decisions.”
Source: Bloomberg, Federal Reserve
U.S. Treasury yields edged lower that day, as ISM payment prices fell and JOLTS data slowed, putting pressure on companies to hedge early, which had a positive impact on bond buying, while Richmond Fed Barking’s supportive comments (the Fed’s inflation rate substantial progress on the issue) and more balanced FOMC meeting minutes also helped, especially the discussion in the minutes about a possible slowdown in quantitative tightening.
The weak stock market (SPX/Nasdaq fell another 1% yesterday) has also led to some risk-off related operations in bonds. JPM’s latest U.S. bond client survey showed a sharp decline in long positions in fixed income; on the other hand, many investment sentiment surveys showed that long positions in the stock market Its possible to start the new year on the back foot, with Citis POLLS index showing warning signs that investors may be too complacent.
Regarding non-farm employment data, Bloomberg showed market forecasts of +171,000, an unemployment rate of 3.8%, and an hourly wage of 0.3%. However, due to the positive seasonal adjustment during the New Year, the market expected data has a chance to be higher; if employment Higher-than-expected headcount and hourly wages still hovering around 4% year-over-year should make the Fed take a hawkish wait-and-see approach in its assessment of the economy, although we dont expect officials to make any hawkish response to strong economic data; if Risk assets fell sharply after the non-farm payrolls data, and risk rewards may favor bargain hunting strategies.
In terms of cryptocurrency, we have witnessed the first roller coaster ride this year. When the US SEC is about to make a decision and speculative enthusiasm reaches a high point, BTC instantly drops from more than 45,000 US dollars to 41,000 US dollars, and more than 600 million US dollars. BTC long futures were quickly liquidated, marking the largest stop-loss in more than six months. The market blamed the spot sell-off on a comment by Matrixport that suggested the U.S. SEC would reject approval of spot ETFs.
Market reaction to the larger-than-expected comments and price collapse prompted various reactions and clarifications on Twitter, including from Jihan Wu himself and Bloomberg analyst Balchunas, who said that based on market intelligence, there is still a 90% chance of spot ETFs It was approved.
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