NEW VOLATILITY FUTURES

The prominent cryptocurrency exchange, Bitfinex, has introduced a new option for trading, which consists of perpetual futures tied to bitcoin and ether volatility indices created in partnership with Volmex. These futures contracts, based on Volmex’s bitcoin-implied volatility index (BVIV) and ether-implied volatility index (EVIV), offer traders the chance to speculate on expected price turbulence in these top cryptocurrencies over a 30-day window. The contracts are settled in tether (USDT), which is a stablecoin pegged to the US dollar, simplifying the process for users looking to wager on the anticipated speed of price changes in the market. This move by Bitfinex aims to empower individual investors by offering a direct path to profit from market volatility without needing complicated options strategies. Notably, this step aligns with a trend started by Deribit, a widely recognized crypto options exchange, which released standard futures contracts linked to its exclusive bitcoin volatility index, DVOL, just a year ago.

UNCERTAIN TIMMING

Federal Reserve Chair Jerome Powell has suggested that policymakers will take a cautious approach in determining when to lower interest rates, and that they will be waiting for clearer signs of lower inflation levels. Despite a recent uptick in prices, Powell emphasized that this did not significantly alter the broader trajectory of inflation, and reiterated his belief that it may be appropriate to start reducing rates at some point in the year. Nonetheless, Powell has stressed the importance of being confident in a sustainable decrease in inflation towards the target of 2%. Following Powell’s remarks, investors were reiterated that a rate cut at the upcoming meeting is very unlikely, and it is possible that the soonest date they may be implemented may be in July. Thus, although the Federal Open Market Committee maintained a three rate cuts outlook at their last meeting, at the moment, it is uncertain if they will materialize.

LAYOFFS SPIKED

Based on the lastest report from the the Labor Department shows that initial claims for U.S. unemployment benefits rose last week to the highest level since January. This increase, up by 9,000 to 221,000 in the week ending March 30, surpassed the predicted 214,000. The number of continuing claims, however, decreased to 1.79 million. Moreover, following the release of this data, it is clear that despite the overall strength of the labor market, there are still some hurdles due to recent uptick in layoffs, with job-cut announcements hitting a year-high in February, and this trend may lead to an increase in joblessness in the near future. Furthermore, the data suggests that many companies are trying to do more with fewer resources.

EXTRA ETF FEE

Some asset managers using Fidelity Investments’ brokerage platform are facing a decision: either pay a service fee to support their exchange-traded funds (ETFs) or pass it on to investors. This fee, set to take effect in June, could deter investors from buying ETFs subject to the charge, nonetheless, it is worth noting that only a small percentage of ETFs and mutual funds on Fidelity’s platform will be affected by this change. In addition, for those firms on Fidelity’s list, they can avoid the fee by paying a maintenance fee, and Rayliant is already planning to do so. The actively managed ETFs provided by Rayliant have performed well this year, particularly the Rayliant Quantitative Developed Market Equity ETF RAYD, which has seen a 12% gain since the start of the year. Moreover, this move by Fidelity to introduce service fees is not uncommon in the asset management industry, with the fees being used to cover operational costs.

INTERNATIONAL NEWS

The ascent of euro-area banking stocks has accelerated, reaching record levels of overbought conditions. The relative strength index of the Euro Stoxx Banks benchmark peaked at an unprecedented 90, surpassing the previous high in 1993. The subindex, which includes major euro-area banks like Deutsche Bank AG, has surged over 20% in 2024, outpacing the broader Stoxx 600 Index. Italy’s BPER Banca SpA and Spain’s Banco de Sabadell SA are among the top gainers, with banks benefitting from higher bond yields and optimistic lending prospects amid expectations of central bank rate cuts. Nevertheless, it is worth noting that despite the rapid rise, European banks remain undervalued compared to historical levels, trading at a discounted 7.3 times forward earnings. Moreover, looking ahead, analysts predict a strong first quarter for European banks, with deposit volumes stabilizing and interest rates set to decline gradually.