SAILING TO THE TOP

Bitcoin has surged to a three-year high, dominating the cryptocurrency sector with almost 55% of the $2.4 trillion market value. This rise is driven by robust demand for U.S. ETFs holding Bitcoin, with BlackRock and Fidelity attracting $56 billion in assets. It is worth noting that institutional investors have significantly contributed to the success of these spot Bitcoin ETFs, and although there are still uncertainties, including reduced expectations for loosened U.S. monetary policies, the crypto market sentiment remains upbeat as Bitcoin and Ether have been enjoying price increases recently, and other cryptocurrencies like Polygon, Cardano, and Dogecoin have also joined the positive momentum.

ROBUST SPENDING

In March, retail sales outpaced forecasts as they rose by 0.7%, surpassing the expected 0.4% growth. This significant increase, along with a consecutive uptick in retail sales following a decline in January, indicates a robust and resilient consumer spending pattern. Excluding auto and gas, sales spiked by 1%, well above the estimated 0.3% rise. These results show that there is a continuing strength in consumer spending, which is also aligning with a solid economic foundation in 2024. Thus, although the possibility of rate cuts being implemented this year has not been fully put aside, experts think the Federal Reserve can hold off on lowering interest rates without causing problems for the economy.

ABOVE EXPECTATIONS

Goldman Sachs exceeded expectations in the first quarter, reporting its highest earnings per share since 2021, largely driven by robust performance in its investment banking unit. The company’s key role in major mergers and acquisitions, such as advising on Exxon Mobil’s acquisition of Pioneer Natural Resources, significantly contributed to its strong financial performance. CEO David Solomon emphasized their strategic focus on core strengths to serve clients and deliver for shareholders, while the Federal Reserve’s effective management of the economy helped maintain stability during interest rate hikes and inflation control without causing a downturn. Furthermore, global mergers and acquisitions surged by 30% in the first quarter, reaching approximately $755.1 billion, indicating increasing corporate confidence. Let’s remember that other financial institutions like JPMorgan Chase and Citigroup also experienced improved profitability thanks to favorable dealmaking conditions. Moreover, Goldman’s 32% increase in investment banking fees, totaling $2.08 billion, fueled a 28% rise in overall profit to $4.13 billion, surpassing analysts’ expectations, and this positive performance drove a 3.6% increase in Goldman Sachs shares.

TREASURY REVERSAL

The recent de-escalation of tensions between Iran and Israel has prompted a reversal in the Treasury market, with hopes for stability overshadowing inflation concerns. The 10-year yield surged by six basis points to 4.58%, retracing a drop from the previous day and nearing a five-month peak. While the immediate threat of retaliation has eased, fears of heightened Middle East instability persist, potentially driving up oil prices and reigniting worries about inflation. This uncertainty could further delay the anticipated Federal Reserve rate cut, with traders now anticipating a wait until July for easing measures to begin. Moreover, economic data releases and Fed guidance due this week will be closely watched for insights into consumer resilience against escalating costs.

KEY EVENTS HAPPENING THIS WEEK

Monday: Business inventories report for February, U.S. retail sales report for March, Empire State manufacturing survey and home builder confidence index reports for April, and speeches from New York Fed President John Williams and San Francisco Fed President Mary Daly.

Tuesday: Housing starts, building permits, industrial production, and capacity utilization reports for March, and speeches from Fed Chair Jerome Powell and Fed Vice Chair Philip Jefferson.

Wednesday: Fed Beige Book and speeches from Cleveland Fed President Loretta Mester and Fed Governor Michelle Bowman.

Thursday: Existing home sales and U.S. leading economic indicators reports for March, Philadelphia Fed manufacturing survey for April, initial jobless claims report for week ending on April 13, and speeches from Fed Governor Michelle Bowman, New York Fed President John Williams and Atlanta Fed President Raphael Bostic.

Friday: Speech from Chicago Fed President Austan Goolsbee.