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APRIL 19, 2024

REBOUND AS TENSIONS CALMED

Bitcoin made a comeback as tensions eased during the recent conflict between Israel and Iran. Bitcoin’s value initially fell to $59,643 following the news that Israel had retaliated against Iran. However, reports of safety at Iranian nuclear facilities in Isfahan calmed nerves, boosting Bitcoin’s price back up. As of 8:00 AM CST, Bitcoin’s value was trading above $65,000. The ongoing conflict in the Middle East overshadowed the upcoming Bitcoin halving event, which historically leads to price increases, nontheless, with Bitcoin hitting a record high before the halving, experts such as those from JPMorgan Chase & Co. and Deutsche Bank AG are unsure of its impact this time.

INTEREST RATE DILEMMA

The Federal Reserve is now hesitant to lower interest rates due to disappointing inflation data, sparking a reevaluation of monetary policy. Chair Jerome Powell and colleagues have expressed their cautiousness about potential rate cuts, citing the need for confidence-building measures before adjustments can be made. Concerns about the strong economy and labor market performance have reignited discussions about the restrictive nature of current monetary policy. Thus, although most policymakers believe interest rates have peaked, there is still room for the possibility of rate hikes to control price growth. Nonetheless, despite the uncertainty, expectations remain hopeful for interest rates to happen eventually, however, economics now predict two rate cuts this year rather than the three cuts initially expected.

FADING RALLY

U.S. Treasuries bonds have experienced a decline in value due to reduced demand for safe-haven assets. This shift was driven by optimism that the conflict between Israel and Iran would not escalate further. The yield on 10-year Treasuries decreased slightly to 4.59% after an announcement by a senior Iranian official indicating that Iran had no immediate plans to strike back at Israel. Looking ahead, market analysts suggest that the rise in yields may be less pronounced if there is continued demand for safe-haven assets. Moreover, while economic uncertainties and potential shifts in interest rates are looming, investors and traders are closely monitoring the situation in order to anticipate and respond to potential market movements.

DEFYING THE ODDS

Despite challenges faced by other lenders regarding lower-income consumers, American Express seems to remain resilient as it exceeded Wall Street expectations for its first quarter performance. Amex reported a profit of $3.33 per share, well above the anticipated $2.96 per share, driven by increased spending from affluent customers as recession fears subsided. In addition, billed business, representing transaction values on Amex cards, saw a 6% growth to $367 billion in the first quarter. Furthermore, while many U.S. lenders increased provisions in response to risks, Amex remained positive about consumer resilience, maintaining revenue growth expectations of 9% to 11% for the year, with a profit forecast of $12.65 to $13.15 per share.

INTERNATIONAL NEWS

Japan’s consumer inflation has eased while remaining above the Bank of Japan’s target, with prices excluding fresh food rising 2.6% in March, slightly slower than the previous month. Nonetheless, despite this moderation, inflation has stayed at or above the 2% target for two years, potentially supporting further policy adjustments. Furthermore, inflation in processed food has slowed, with concerns over potential price increases in the face of a weak yen and Middle East uncertainties impacting oil prices. Moreover, wage hikes from recent negotiations may lead to real wage gains for workers and influence future policy decisions by the central bank. As of now, many economists expect a rate hike in October, with the BOJ projected to raise its inflation forecast for the current fiscal year and anticipate 2% price growth in the upcoming fiscal year.

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