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APRIL 3, 2024

BLACKROCK’S DOMINANCE

It has been revealed that, in March, U.S. listed bitcoin exchange-traded funds (ETFs) saw an impressive surge in trading volume, totaling over $110 billion, a significant increase from the volumes seen in January and February. The leading player in this surge was BlackRock’s IBIT, accounting for nearly half of the total volume, followed by Grayscale’s GBTC and Fidelity’s FBTC. In addition, due to IBIT’s significant trading volume, analysts compare it to the gold ETF GLD, highlighting its dominance in the market. Moreover, it is worth noting that although Bitcoin is currently below $66,000, since the SEC approval and launch of U.S. bitcoin ETFs in January when bitcoin was priced around $45,000, the cryptocurrency has climbed to a record highs of over $70,000, and BlackRock has been a key player of such gains, as it has seen substantial inflows and held over $16 billion worth of bitcoin as of the latest data, with a notable portion coming from retail investors.

SOARING EMPLOYMENT

Private sector job growth in the U.S. soared in March, reaching its highest level since July 2023, as revealed by the payrolls processing firm ADP. The data shows that companies added 184,000 workers, with wages increasing by 5.1% from a year ago. In addition, sectors such as leisure and hospitality, construction, and trade experienced notable job gains. Furthermore, the South region saw the most significant increase in employment, with large companies driving most of the growth. Moreover, despite these results, it is worth noting that the ADP report only sets the stage for the official nonfarm payrolls survey, and discrepancies between the two reports are very common. The nonfarm payrolls report will be released Friday morning, and economists anticipate a job growth of 200,000 in March. This data will be very useful to get an sign of what will be the Federal Reserve’s next move.

MINIMAL MOVEMENT

Last week, mortgage rates saw minimal movement as both mortgage demand and applications remained stagnant for the second consecutive week. Prospective homebuyers continue to grapple with exorbitant costs and limited housing supply, while existing homeowners find little incentive to refinance at the currently high rates. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume experienced a slight decrease of 0.6% from the previous week. In addition, the average contract interest rate for 30-year fixed-rate mortgages slightly decreased to 6.91%, with points down to 0.59. Furthermore, refinancing applications fell by 2% compared to the previous year, with rates hovering around 7% for the last few months, affecting nearly 90% of current borrowers. Home purchase loan applications also declined by 0.1% from the previous week and were 13% lower than a year ago, attributing to the ongoing impact of high rates on the housing market.

TESLA’S SLUMP

Tesla’s stock has fallen by over 8%, following the release of data that revealed that for the first quarter of 2024, the company had fewer vehicle deliveries compared to the previous year. This is the first decrease since 2020. In addition, production production also decreased, but it was not as steep as the drop in deliveries. Tesla has been facing challenges like supply disruptions and increased competition from domestic electric vehicle makers in China, although the company has made efforts to boost sales with discounts, these were not successful as interest in Tesla from potential U.S. customers have continued decreasing. Moreover, the release of the new Cybertruck, the model has received mixed reviews. CEO Elon Musk now requires sales staff to demonstrate the latest driver assistance system to customers in the U.S.

CONCERNS BOOST PRICES

Yesterday was a significant day for the oil market as oil prices climbed to their highest levels since October, with the U.S. West Texas Intermediate (WTI) contract for May delivery increasing by $1.44 to settle at $85.15 a barrel, while the Brent contract for June delivery rose by $1.53 to $88.94 a barrel. The escalating tensions in the Middle East, particularly involving Iran and Israel, as well as the drone attack on the Russian oil refinery, have raised concerns about the potential impact on global oil supply. In addition, oil prices have been further boosted up after it was revealed a larger-than-expected decrease in U.S. crude inventories. As a result as of 8:00 AM CST, price for brent futures stand at $89.12 per barrel, while WTI crude futures for May are at $85.32 per barrel. Moreover, alongside the events mentioned, Mexico’s state energy company, Pemex, decided to cut its crude exports to focus on domestic oil processing, causing further concerns about global oil supply. Nonetheless, despite the concerns, the OPEC+ ministerial meeting does not foresee any changes to current oil output policies.

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