BITCOIN ETFs SURGED
Bitcoin exchange-traded funds (ETFs) have been experiencing a surge in prices as they recorded significant inflows, with BlackRock’s iShares Bitcoin Trust leading the way with $157.6 million yesterday. Additionally, the WisdomTree Bitcoin Fund and the Fidelity Bitcoin Trust also saw notable increases in inflows. However, the Grayscale Bitcoin Trust faced outflows of $182.9 million. Furthermore, Bitcoin prices have continued their upward trend since rebounding from the temporary dip they experienced earlier this week, and as of 8:00 AM CST, Bitcoin is trading close to the $60,500 mark. This has been attributed to institutional investor support and positive sentiment from futures investors. Institutions like JPMorgan and Morgan Stanley have expressed confidence in Bitcoin, with the latter even allowing its financial advisors to promote specific Bitcoin funds to clients. Overall, the market appears to be optimistic about the future performance of Bitcoin and related ETFs, with prices and investments reflecting this positive sentiment.
SPLIT ON EXPECTATIONS
Currently, economists are divided on the Federal Reserve’s upcoming interest rate decision, with most forecasting only a small quarter-point reduction at the September meeting. Nearly four-fifths of economists surveyed foresee the Fed reducing rates to a range of 5% to 5.25%. This contrasts with calls from major Wall Street banks, such as JPMorgan Chase & Co. and Citigroup Inc., which are pushing for a more substantial cut. In fact, while such banks predict a half-point cut, the consensus among economists is for gradual quarter-point reductions in the upcoming meetings, reflecting a cautious approach to the changing economic landscape.
CAUTIONARY ADVICE
Kansas City Federal Reserve Bank President Jeffrey Schmid has remarked that he is hesitant to support the idea of reducing interest rates taking into account that inflation is still above target and the labor market seems to be healthy. Schmid believes that recent declines in inflation are encouraging, and stated that further reports of low price pressures would increase his confidence in the inflation rate eventually reaching the central bank’s target of 2%. Nevertheless, while some analysts predict a potential half-point cut in interest rates in September, Schmid emphasized that the decision will be data-driven and dependent on the overall economic conditions. Moreover, it is worth noting that despite the weaker-than-expected jobs report in July, Schmid pointed out that the labor market still appears healthy, with business contacts in the Kansas City Fed region expressing optimism and resilience. Overall, Schmid, who is viewed as more conservative in his approach to monetary policy, emphasized the need to be cautious when assessing economic progress, particularly in light of a previous period of high inflation.
TENSIONS ESCALATED
Following yesterday’s stock market rebound, U.S. crude oil prices have surged over 4% this week amidst concerns of potential disruptions in production and transportation in the Middle East due to rising geopolitical tensions. Current energy prices show West Texas Intermediate at $76.72 per barrel, up 0.7%, and Brent at $79.64 per barrel, gaining 0.7%. Meanwhile, RBOB Gasoline remains steady at $2.40 per gallon, with a year-to-date increase of 14.2%. In addition, natural Gas is up to $2.13 per thousand cubic feet, with a slight gain of 0.56%, but experiences a year-to-date decline of 15%. Moreover, it is worth noting that the Middle East remains tense following the assassination of Hamas leader Ismail Haniyeh, with fears of retaliatory strikes between Israel, Iran, and the Hezbollah militia. Efforts are being made by the U.S., Egypt, and Qatar to mediate for a ceasefire between Hamas and Israel to ease tensions in the region.
INTERNATIONAL NEWS
In July, China experienced a higher-than-expected increase in consumer prices, driven by seasonal factors like weather conditions and low base prices for pork from the previous year. This spike has raised concerns about sluggish domestic demand and the need for additional policy support to stimulate economic growth. Moreover, despite a slight recovery in consumption demand, the Chinese economy is facing deflationary pressures, with falling consumer prices and weak consumption and investment demand leading to intense price competition in various sectors. As a result, companies are seeing decreased profits, and consumers are delaying purchases in anticipation of further price drops. Furthermore, in response to the current situation, the government may implement coordinated fiscal and monetary measures in the second half of 2024 to address these challenges and revitalize domestic demand. This situation highlights the importance of boosting consumer spending, especially as global demand cools, potentially hindering China’s economic growth targets for the year.
