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DECEMBER 14, 2023

ECOSYSTEM SURGED WITH INCREASED VALUE

The Cardano ecosystem has experienced a substantial surge in value, potentially influenced by increased interest in Ethereum alternatives such as Solana and Avalanche. The total value locked (TVL) of all Cardano-based projects has exceeded $440 million, surpassing the previous peak of $330 million set in April. This growth has been particularly notable in certain projects, with lending protocol Indigo and on-chain exchange Minswap witnessing their TVL surge by over 50% to nearly $100 million each. Furthermore, the supply of the Djed stablecoin, pegged to the U.S. dollar, has increased by over 45% in the past week, indicating a heightened influx of capital as investors seek to capitalize on yields. Meanwhile, relatively smaller protocols LendFi and Spectrum Finance have experienced a staggering 90% surge in value locked, pointing to a readiness among users to take on riskier bets. This substantial on-chain growth has had a positive impact on the price of Cardano’s ADA token, which has soared by 17% in the past 24 hours and nearly 80% over the month, with leveraged futures bets on further ADA price volatility shooting up by 100% in the same period.

EFFECTS PERSIT DESPITE FALLOUT

While the era of the Federal Reserve’s interest rate hikes may be coming to a close, the aftermath continues to weigh heavily on consumers as the series of rate increases, which began in March 2022, has put significant financial pressure on individuals. For instance, the 11 hikes in rates have led to a spike in credit card rates, which have soared to record highs, reaching almost 21%, placing a significant financial burden on households. Additionally, the housing market has been impacted, with mortgage rates hitting 8%, reducing the purchasing power of potential homebuyers. Furthermore, federal student loan rates have climbed, impacting borrowers. Therefore, although the Federal Reserve’s decision to potentially cease rate hikes may offer some relief in the future, the current financial strain experienced by consumers remains a significant concern, and there are predictions of a slight improvement in housing affordability, borrowing costs are expected to remain high.

JOBLESS CLAIMS PLUMMET

The latest report from the Labor Department indicates a thriving labor market in the U.S. as the number of Americans filing for jobless benefits decreased by 19,000 to reach 202,000 for the week ending December 9, surpassing analysts’ expectations which were around 224,000 claims. However, the number of individuals collecting unemployment benefits increased by 20,000 from the previous week to a total of 1.88 million as of the week that ended December 2. Despite the slight rise in the number of people collecting benefits, the overall trend in jobless claim applications is still indicative of fewer layoffs, reflecting the strength of the job market. Additionally, the four-week moving average of jobless claim applications, which helps smooth out weekly fluctuations, fell by 7,750 to 213,250, further solidifying the positive trend in the labor market. These figures suggest continued strength in the job market despite the backdrop of high-interest rates and increased costs, providing a positive outlook for the U.S. employment landscape.

UPWARD TREND IN CONSUMER SPENDING

In November, consumer spending in the U.S. increased, reflecting a rise in retail sales as the holiday shopping season began. The Commerce Department reported a 0.3% uptick, exceeding expectations and indicating continued purchasing power among shoppers. Various sectors saw heightened spending, particularly at restaurants and online, although some areas, like department stores and certain consumer goods, experienced declines in sales. Despite these fluctuations, positive indicators, such as increased employment and a decrease in inflation, are being observed in the economy. As a result, while companies like Hasbro Inc. have made substantial job cuts due to reduced spending, the National Retail Federation remains optimistic about the winter holiday season, projecting a 3% to 4% increase in sales compared to the previous year. It should be noted, however, that the monthly retail sales report only provides a partial view of consumer spending, as it does not encompass all aspects, such as services like healthcare and travel.

INTERNATIONAL NEWS

The Bank of England (BOE) has decided to keep its rates unchanged as the Bank’s Monetary Policy Committee voted 6-3 to keep rates at 5.25%, aligning with economists’ expectations. However, unlike the Federal Reserve, the BOE disagreed with predictions of rate cuts as the bank expressed the need for British interest rates to remain high for an extended period, contrary to forecasts of rate cuts. In addition, since there were not discussions regarding rate cuts, there were concerns about inflation in the U.K. Additionally, the BOE’s recent announcement has raised concerns about U.K. inflation, prompting traders in the U.S. to reassess and anticipate a potential delay in monetary policy tightening. This reevaluation caused shifts in the bond market, with prices of British government bonds fluctuating. Furthermore, the pound gained by 0.74% to $1.2711, reaching a 10-day high.

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