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APRIL 17, 2024

BERISH TREND

Ethereum (ETH) has been trading just above $3,000, as the Ethereum Trend Indicator has also signaled a bearish trend. Meanwhile, Bitcoin (BTC) has also been on a downward trend, hovering around $64,000. Such trends have been due to various factors such as higher U.S. treasury yields, a stronger dollar, and geopolitical tensions in the Middle East. Consequently, short-term put options for BTC and ETH were more costly than call options, reflecting cautious sentiment among traders. Moreover, market liquidations over the past 12 hours revealed a mixed picture, with $31.1 million in long positions liquidated and $36.49 million in short positions liquidated. Nonetheless, despite the current bearish sentiment, it is worth noting that the CoinDesk 20 index remained stable at 2,174.

PATH TO NO LANDING

According to a recent Bank of America survey, there is a rising belief among investors in a “no landing” scenario for the U.S. economy, where growth continues, but inflation remains below the Fed’s 2% target. This shift, with 36% of respondents now seeing this as the most likely outcome, shows a departure from concerns about recession towards debates on economic data’s role in inflation progress. Recent strong growth in retail sales for March prompted upward revisions in GDP projections for the first quarter, with Goldman Sachs now forecasting 3.1% growth and the Atlanta Fed seeing 2.8%, up from previous estimates. Additionally, increasing inflation expectations have led some economists to speculate that the Fed may not cut rates this year, setting the stage for a “no landing” scenario in 2024. Nationwide’s chief economist, Kathy Bostjancic, notes that sustained consumer spending and inflation could challenge the Fed’s confidence in returning inflation to its 2% target, suggesting a potential shift in monetary policy.

HIGHER YET BELOW PEAKS

Recent upticks in mortgage rates have signaled a trend that is unlikely to reverse any time soon, a pattern supported by the latest Bureau of Labor Statistics. With the addition of 303,000 new jobs in March and a decrease in the unemployment rate, mortgage rates are currently at around 6.88% for a 30-year fixed mortgage and 6.16% for a 15-year fixed mortgage – both showing slight increases from the previous week yet remaining around the four-week average. Nevertheless, despite these rates feeling high compared to lows seen in the recent past, they still fall below historical peaks, making the current climate a potentially favorable window for prospective homebuyers. Additionally, in the midst of a slowdown in house price growth and a surge in new construction, contemplating locking in a rate now and potentially refinancing to a lower rate in the future may prove to be a prudent move for those considering a home purchase.

LOW RISK FOR NOW

The International Monetary Fund is currently not concerned about a potential global recession despite the uncertainties currently happening around the world. Projections indicate that the global economy is poised to expand by 3.2% in the years 2024 and 2025, primarily driven by robust economic performance in the United States and certain emerging markets. Nevertheless, ongoing conflicts in regions like the Middle East and the Russia-Ukraine conflict pose potential threats that could impact developments such as oil prices and overall economic growth. Should oil prices continue to rise, there may be a subsequent increase in costs in the year 2024. Thus, while things are looking good for now as stated by the IMF, there are still potential risks that need to be watched carefully in the future.

TARIFFS WON’T IMPACT INFLATION

White House Economic Adviser Jared Bernstein is supporting the idea of placing higher tariffs on metal products from China to protect national security and help American steel production. He reassured that these tariffs, proposed by President Biden to help steelworkers in Pennsylvania, will not have a big impact on U.S. inflation. Bernstein stressed the importance of safeguarding the steel industry, which is crucial for the American economy and national security. These tariffs, specifically targeting Chinese steel and aluminum, aim to benefit American steelworkers but could strain relations with China. Despite this, Bernstein clarified that the tariffs are necessary to support domestic steel production without causing serious economic harm, as they are designed to be focused and strategic in order to minimize any inflationary effects.

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