SLIGHT REBOUND
Bitcoin and other major cryptocurrencies have experienced a significant recovery this morning pushed by Federal Reserve Chair Jerome Powell’s recent statements on inflation. Powell emphasized the dangers of reducing interest rates “too little or too late” as the Fed strives to bring inflation down to its 2% target without causing a surge in unemployment. And since, historically, cryptocurrencies have risen when borrowing costs decrease and financial conditions become more relaxed, Bitcoin rose 2.1% within the last 24 hours, while Ether, Solana and Cardano were up by 1.1%, 0.7%, and 3% respectively. Nevertheless, it is important to remark that despite this recovery, market volatility remains, as noted by analysts at Bitget Research. This is mainly due to the bankrupt Japanese exchange Mt. Gox, which has begun repaying its creditors, and the German state of Saxony’s rapid sale of approximately $2.2 billion in Bitcoin seized earlier this year.
there are concerns over potential selloffs continue to drive market instability.
Nevertheless, though it is still below its mid-March high of nearly $74,000 that followed the SEC’s approval of several spot ETFs. Despite this rebound, The ongoing uncertainty is partly The recent uptick in cryptocurrency values also included Although there is a slight recovery,
SOARING HOPE
Wall Street’s bullish sentiment on stocks is intensifying as optimism is rising due to the confluence of positive economic indicators and possible robust corporate earnings. Major financial institutions such as Goldman Sachs, JPMorgan Chase, and Morgan Stanley have forecasted new highs for key indices, buoyed by resilient consumer spending, job growth, and rising wages. In addition, investment research firm Oppenheimer has also raised its outlook for the stock market, emphasizing the potential for continued gains. Recent upgrades in year-end targets for major indices reflect this widespread confidence, with expectations of notable gains from current levels, and while the tech sector continues to perform strongly, there is also a significant diversification of growth across various industries, easing concerns about over-reliance on a few large companies. Moreover, as investors are also increasingly heartened by the potential for future interest rate cuts by the Federal Reserve, there is the belief that there could be an additional market stimulus. Furthermore, the buoyant outlook is bolstered by long-term investment strategies and the indication that high-profile bearish analysts are revising their stances, signaling a notable shift in market sentiment. Overall, the optimism on Wall Street is palpable, with expectations of sustained market momentum and broad-based economic resilience paving the way for potential record highs ahead.
RENEWED INFLOWS
According to the World Gold Council (WGC), global physically-backed gold exchange-traded funds (ETFs) experienced their second consecutive month of inflows in June, driven primarily by additions from Europe- and Asia-listed funds. This shift occurred during the ongoing geopolitical and economic uncertainties, which had previously pushed gold prices to a record high of $2,449.89 per ounce on May 20. Nonetheless, it is important to highlight that despite the recent gains, gold ETFs have endured three consecutive years of outflows due to high global interest rates. In fact, although the June inflows, which total 17.5 metric tons ($1.4 billion), increased the total assets under management to $233.3 billion, the overall holdings remain near their lowest since 2020 at 3,105.5 tons. Moreover, for the first half of 2024, total outflows amounted to $6.7 billion, or 120 tons, marking the largest loss since the first half of 2013, with outflows dominated by funds in Europe and North America, and Asia has been the only region to consistently see inflows.
HESITANT TO REFINANCE
Home prices have gone up more than 40% since before the pandemic, giving homeowners a lot more equity in their homes. This rise was mainly thanks to more applications for FHA and VA loans. However, despite the increase, it is important to highlight that many people are not refinancing their mortgages because interest rates have more than doubled in the last two years, making it too expensive. According to the Mortgage Bankers Association, applications for refinancing dropped for the fourth week in a row, falling 2% last week, but still, demand for refinancing is 28% higher than it was a year ago. In addition, although homeowners had a total of $17 trillion in equity by the end of the first quarter of 2024, which is $1.5 trillion more than the year before, the current interest rates, averaging around 7% for a 30-year fixed mortgage, discourage refinancing. Meanwhile, applications for new home purchases went up by 1% last week but are still 13% lower than the same time last year. Moreover, as of this week, mortgage rates have stayed the same, but they might change soon with new economic data coming out, including the latest consumer price index report.
INTERNATIONAL NEWS
The China Securities Regulatory Commission (CSRC) recently announced a series of measures aimed at stabilizing the stock market and ensuring fairness among investors. Effective from July 22, new regulations will make it more challenging to borrow stocks for short selling, an often-criticized practice that can drive down stock prices. Additionally, China Securities Finance Corp., the largest stock lender in the country, will cease lending stocks starting on July 11, and all existing loans will be settled by the end of September. These measures come as part of the CSRC’s response to mounting investor concerns regarding market volatility and unsatisfactory returns. The regulatory body has also highlighted the necessity for more stringent daily supervision, pledging to rigorously enforce rules against illegal trading activities. Through these comprehensive efforts, the CSRC aims to bring greater stability to the stock market while providing better protection for investors, ultimately fostering a more transparent and fair trading environment.
