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APRIL 25, 2024

SLOW GROWTH

The U.S. economy grew modestly in the first quarter, with Gross Domestic Product rising by 1.6% annually, a lower figure than what it was expected. Consumer spending slowed to a 2.5% increase, while inflation surged, with prices spiking by 3.4%, higher than the Federal Reserve’s target of 2%. This unexpected news caused stock futures to drop and Treasury yields to rise. There is uncertainty about when the Federal Reserve will start lowering interest rates, as speculation suggests this may happen in September. Investors are adjusting their predictions as inflation remains high, potentially leading to one or two rate cuts by the Fed this year. The Federal funds rate currently stands at 5.25%-5.5%, its highest in 23 years, with no rate hikes since July 2023. All eyes are on the central bank for signals about future monetary policy given the mixed economic data.

ETHER ON THE LEAD

Ethereum is dominating the market for non-fungible tokens (NFTs) as it reported daily sales surpassing $7.13 million. Nevertheless, although Ethereum had the highest sales volume yesterday, it has not exceeded $10 million since April 4. Furthermore, Bitcoin followed  Ethereum closely behind, with nearly $7.13 million in daily NFT sales, falling short of the $10 million mark for the third consecutive day. Moreover, Solana secured the third spot with over $5.08 million in daily NFT sales, driven by a large number of unique buyers and sellers, resulting in a significant 108,427 transactions. Additionally, other blockchain platforms like Polygon and Mythos Chain are also showing notable daily activities as Polygon reported sales exceeding $1.78 million with almost 21,000 unique buyers and over 7,600 unique sellers, while Mythos Chain achieved sales of $850,851 with a considerable transaction count of 34,303.

STRONG TREND CONTINUES

According to the U.S. Department of Labor, there was a decrease in seasonally adjusted initial jobless claims last week, with the number dropping to 207,000, below estimates. The four-week moving average also declined to 213,250, while the insured unemployment rate held steady at 1.2% for the week ending April 13, with a decrease in the number of insured individuals who were unemployed to 1,781,000. Additionally, the four-week moving average for insured unemployment decreased to 1,794,000. These figures push further the positive trends in the labor market, potentially influencing the Federal Reserve to maintain higher interest rates for a while.

RISING DEMAND

Investors’ growing interest in high-yield investments is driving the U.S .government to auction over $180 billion in new Treasury securities this week. The successful sale of a $70 billion five-year Treasury note yesterday, yielding 4.65%, was followed by an anticipated $44 billion auction of seven-year notes today. This high demand for Treasury securities exemplifies the market’s confidence in U.S. government bonds as a safe and attractive investment option amid a changing economic environment. Moreover, despite uncertainties surrounding the Federal Reserve’s meeting and the Treasury’s announcement, demand for shorter-term notes remains robust. In addition, market data is currently reflecting resilience despite the recent four weeks of losses as the two-year yield briefly exceeded 5%,  providing a positive outlook.

STRONG Q1 OVERSHADOWED

Meta (META) had a strong first quarter financially, surpassing analysts’ expectations, however, the company’s forecast for the second quarter was lower than anticipated, resulting in a drop in their stock value of almost 13%. The lower forecast is attributed to higher expenses in infrastructure and legal matters. CEO Mark Zuckerberg emphasized investing heavily in Artificial Intelligence technology, while CFO Susan Li mentioned increased financial losses expected in their Reality Labs division. Nonetheless, despite this, it is still worth remarking that Meta’s stock has shown strong performance recently, with the company focusing on AI development and introducing new technologies like a chatbot and an open-source operating system. Additionally, Meta stands to gain from potential increased users if the TikTok ban remains in place.

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