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JULY 3, 2023

MARKETS CLOSED

Due to tomorrow being a federal holiday, Fourth of July, the U.S. stock market will be closing earlier today at 1:00 PM ET, and it will remain closed tomorrow.

TOKENS SURGE

Several popular DeFi protocols, including Compound and Maker, have recently experienced a sharp rally in their token prices. Over the past 24 hours, Compound’s token (COMP) has surged by more than 4%, reaching $63.07, while Maker (MKR) has enjoyed a bullish rise of 9% during the same period. These gains come after a sustained upward trend in the past week, with Compound’s token up by an impressive 76.1% since last Monday. Maker has also posted substantial gains of 31.5% in the span of seven days, following a vote to increase yields on its DAI stablecoin. Furthermore, Ethereum (ETH) has exceeded its previous trading range of around $1,965, enhancing buyers’ confidence in the market. The DeFi Pulse Index (DPI), composed of the top 10 DeFi tokens weighted by market capitalization, has also recorded a solid 14.5% increase in the past week.

COOLING WITHOUT RECESSION

According to the Bank of America (BofA) there is a possibility of a significant drop in inflation and a cooling of prices in the U.S. without the country experiencing a recession. This prediction is based on the inverted yield curve of 2-year and 10-year Treasury bonds, which has historically signaled an impending economic downturn. However, BofA suggests that this time the inversion reflects expectations of declining inflation rather than a deteriorating economy, and believes that the U.S. economy will avoid a steep downturn. They point out that the curve inversion does not currently indicate a high risk of recession, but rather signifies expectations for interest rate cuts and inflation reaching its target of 2%. Furthermore, the bank anticipates the Federal Reserve to gradually reduce interest rates, thereby minimizing the likelihood of a recession.

OIL PRICES ROSE

Oil prices have increased as Saudi Arabia announced its plans to extend voluntary output cuts for another month, and Russia committed to reducing its exports. Saudi Arabia is already cutting an additional 1 million barrels per day, which will now continue into August, while Russia plans to decrease its exports by 500,000 barrels per day next month. These measures are part of a wider effort by major oil producers to bolster prices, which have been declining due to factors such as China’s slow recovery, concerns about a possible recession in the U.S., and the increased supply from Russia and Iran. Moreover, the recent announcements are expected to impact speculative trading in the market, as recent data indicated that hedge funds and other investors had the largest number of bearish bets in West Texas Intermediate since 2017. Additionally, the cuts by Saudi Arabia and Russia may stimulate technical buying, as evidenced by Brent crude breaking above its 50-day moving average for the first time since June 22.

KEY EVENTS HAPPENING THIS WEEK

Monday: U.S. manufacturing PMI and ISM manufacturing reports for June, and Construction spending report for May.

Tuesday: Stock market closed due to July 4 holiday.

Wednesday: New York Fed President William speaks.

Thursday: ADP employment report for June, Initial Jobless claims, and Job openings report for May.

Friday: U.S. unemployment rate and hourly wages reports for June.

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