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DECEMBER 6, 2023


The increasing prices of Bitcoin are causing substantial losses for traders who have placed highly leveraged short futures bets, with losses of around $90 million in just one day. These losses have occurred as a result of surging trading volumes and open interest, along with growing optimism surrounding the potential approval of a U.S. Exchange-Traded Fund (ETF). Additionally, expectations of rate cuts in the U.S. have further contributed to the situation by buoying risky bets like technology stocks and Bitcoin. The prospect of sovereign adoption, along with new leadership in major economies showing a more favorable attitude toward Bitcoin, has added further momentum. Meanwhile, a group of leveraged traders staked a $200 million Bitcoin futures position over the weekend, signaling a significant demand for Bitcoin exposure. Moreover, continual updates and changes to spot ETF applications are also shaping the cryptocurrency landscape, with some believing that the positive trend will continue.


In October, U.S. job openings dropped to a 2 and a half year low, indicating a waning demand for workers as a result of higher interest rates. Job openings, which represent the number of available and unfilled job positions fell by 617,000 to 8.733 million, the lowest level since March 2021. In addition, the 1.34  job vacancies for every unemployed person in October, the lowest level since August 2021, illustrates a shift in the labor market, where fewer workers are resigning, which could eventually alleviate wage inflation. This unexpected decline in job openings, along with data indicating a decrease in inflation, aligns with the view that rates have peaked, and a potential future move by the Federal Reserve could involve a rate cut in the second quarter of 2024. Furthermore, the report revealed a decrease in job openings across various sectors and regions, alongside declines in hiring which dropped by 18,000 to 5.886 million, signaling a possible slowdown in wage growth and price pressures in the economy; and although layoffs increased slightly, overall the labor market suggests no drastic changes are needed.


Gasoline prices in the U.S. have recently hit an 11-month low, offering some welcome relief to consumers just in time for holiday shopping. For instance, in Indiana, the average gas price stands at $3.008 per gallon, almost 50 cents cheaper than the same period last year. This drop is largely attributed to the easing of benchmark global oil prices, which have now reached their lowest level since July. Furthermore, despite recent announcements of fresh oil supply cuts by the Organization of the Petroleum Exporting Countries (OPEC+), global oil supplies are less tight compared to previous months. Consequently, the cost of crude, the major component in retail gasoline pricing, has experienced a decline. Moreover, it is projected that the national average price of gasoline could decrease by up to half a cent daily through the end of the year, possibly falling below $3 a gallon for the first time since early 2021, according to the American Automobile Association. This dip in gasoline prices could have a positive impact on consumer confidence.


Last week, mortgage rates in the US hit their lowest level in almost four months, triggering a surge in demand for refinancing. The contract rate on a 30-year fixed mortgage dropped by 20 basis points to 7.17% in the week ending Dec. 1, with Mortgage News Daily recording the 30-year fixed mortgage rate at 7.08% on Tuesday. This marks a significant decrease of 69 basis points over the past five weeks, the largest drop in a similar time period since late 2008. Additionally, expectations that the Federal Reserve will halt interest rate increases and potentially cut rates early next year have driven this decline after the rates peaked near 8% in October. Furthermore, this decline is anticipated to lead to an increase in housing inventory and sales as homeowners can move without the burden of high rates. Moreover, refinancing activity saw a jump of nearly 14%, the most since February, while purchasing activity experienced a slight drop, remaining close to its peak levels since mid-September.


Traders are increasingly betting on the European Central Bank implementing interest rate cuts in 2024, following a series of dovish comments from policymakers and the release of euro-area consumer prices, which grew less than expected in November, by 2.4% year-on-year from 5.3% in August. This surge in confidence has led to markets fully pricing in the expectation of six quarter-point rate cuts by the European Central Bank in 2024, bringing the key rate to 2.5%. Moreover, despite some slight adjustments, the sentiment toward monetary easing has strengthened, with Deutsche Bank revising its outlook to forecast 150 basis points of cuts. This change in market expectations reflects a significant shift, as just three weeks ago, such a scenario was hardly contemplated. If these predictions materialize, the European Central Bank would be the first among major central banks to cut rates in the coming year and implement the most aggressive easing cycle. Nonetheless, some experts have issued warnings, advocating for caution and advising against excessive optimism. Furthermore, the ECB has expressed uncertainty about future inflation, while economic indicators underscore weakness in the European economy, contributing to fluctuation and volatility in the market.

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