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JUNE 30, 2023

NEW ETH/BTC RATIO FUTURES

The Chicago Mercantile Exchange (CME) Group has announced its plans to launch Ethereum/Bitcoin (ETH/BTC) ratio futures on July 31st, pending regulatory approval. These futures will provide investors with the opportunity to speculate on or hedge against the performance of Ethereum in relation to Bitcoin. While Ether and Bitcoin have traditionally been closely correlated, the evolving market dynamics have led to potential divergences in their performances, creating intriguing opportunities for relative value trading. By introducing ETH/BTC ratio futures, investors will be able to seamlessly trade both assets within a single transaction, without the need to commit to a specific directional view. CME Group hopes that this new contract will provide opportunities for a wide range of clients, allowing them to hedge positions or execute trading strategies in a cost-effective manner.

INFLATION COOLED DOWN

According to the U.S. Bureau of Economic Analysis, inflation, as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, dropped to 3.8% on a yearly basis in May. This decrease from 4.3% in April was lower than what the market had expected, which was 4.6%. Similarly, the Federal Reserve’s preferred gauge of inflation, the Core PCE Price Index, also showed a slight dip from 4.7% to 4.6% during the same period, falling slightly short as analysts expected it to remain unchange.

JOBLESS CLAIMS DECREASED

The number of Americans applying for unemployment benefits dropped significantly by 26,000 last week, reaching 239,000. This decline, the largest since October 2021, was better than the expected 265,000. This is a positive sign for the economy and could lead the Federal Reserve to raise interest rates in July. The recent increase in jobless claims had some economists concerned about potential layoffs as a result of the Fed’s rate hikes, however, the strong labor market has helped boost wages and defy predictions of a recession. The recent decline in claims is partially due to policy changes in Minnesota and suspected fraud in Ohio.

JPMORGAN’S TREASURY SHIFT

JPMorgan Chase & Co. seems to have changed its positive outlook on Treasuries as the bank’s fixed income strategists are reducing their holdings in five-year Treasuries, citing that they do not longer believe in the long-term potential. This shift was triggered by the recent release of the strong U.S. growth and labor data, which has led to a global bond sell-off. As a result, the yield on five-year notes has risen significantly this month, and the selloff continued, with yields on two-year and ten-year notes increasing.

INTERNATIONAL NEWS

Inflation in the Euro zone is reportely to have reached 5.5% in June, slightly lower than what analysts had predicted. The decline in inflation can be attributed to falling energy prices, while the persistent high core inflation may be influenced by increased German rail ticket costs. However, core inflation, which excludes energy and food prices, stubbornly remained high at 5.4%. Moreover, although headline inflation is now at its lowest point since January 2022, it remains significantly above the European Central Bank’s target of 2%. Consequently, European Central Bank President, Christine Lagarde, emphasized that inflation is still too high and it is premature to claim victory over rising prices.

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