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MARCH 6, 2024

RISE OF SMALL CRYPTOS

Recently, smaller cryptocurrencies are gaining ground on Bitcoin, with prices soaring to potentially break all-time highs. These smaller tokens have surged by 60% in value in the past month, surpassing the 56% gain of Bitcoin. Investments in Bitcoin were previously five times higher than in second-tier cryptos like Ether, but this has now decreased to two times, thus, there is definitely a growing trend of investors betting on smaller cryptos being the next winners in the market. Some of these smaller cryptos include Shiba Inu and Floki. Nonetheless, it is worth noting that although some see the rise of meme tokens as a sign of market diversification others view it as reckless speculation. Moreover, despite the rise of smaller cryptocurrencies, Bitcoin’s value continues to be ahead of the line in the crypto market, with its value reaching record levels.

JOB GROWTH

According to the latest ADP report, private sector job growth improved in February, with companies adding 140,000 positions. This was slightly below expectations but marked an increase from the previous month. Job gains were seen across various industries, with the leisure and hospitality sector leading the way by adding 41,000 jobs. Additionally, construction saw an increase of 28,000 positions, and the services sector contributed 110,000 jobs, while goods producers added 30,000. Furthermore, annual pay for those staying in their jobs rose by 5.1%, suggesting a potential easing of inflation pressures. Moreover, the report indicates a strong labor market, with ADP’s chief economist noting that while pay gains are trending lower, they still exceed inflation. This data comes ahead of the official nonfarm payrolls release by the Labor Department on Friday, with economists expecting an increase of 198,000 jobs.

SIGNS OF ACTIVITY

As we head into the spring season, the housing market is already showing signs of activity despite the continued rise in mortgage rates. Mortgage applications for home purchases rose by 11% compared to the previous week, although demand remains lower than last year. The increase in new listings, particularly in the $200,000 to $350,000 range, is a positive sign for the upcoming spring buying season. Additionally, there has been a notable 8% increase in homes actively for sale from last year, with the South leading in inventory growth. Furthermore, refinance applications also saw a small uptick, although this may be attributed more to the low number of eligible borrowers rather than the slight rate decrease. Thus, although mortgage rates are on the higher side, the housing market continues to show resilience and momentum.

STILL UNCERTAIN

Following Federal Reserve Chair Jerome Powell’s recent speech, he reiterated his expectation for interest rates to start coming down this year, but refrained from specifying a timeline. Powell emphasized the importance of monitoring inflation risks and the economy’s performance before making decisions about rate adjustments. In addition, Powell also highlighted that maintaining progress against inflation is a key focus, and remarked that although there has been progress towards the Fed’s inflation goal, there is still uncertainty surrounding when policy restraints will be scaled back. Thus, despite speculation of rate cuts, the Fed’s approach suggests that any changes to interest rates will be carefully considered based on the evolving economic conditions and the need to maintain inflation at around 2%. Moreover, Powell will face questions during his appearances before Congress, possibly providing a better understanding of the Fed’s plans and considerations in managing the country’s monetary policy.

INCREASING EURO HOLDINGS

According to a recent report from the OMFIF think-tank, central bank reserve managers are showing increased interest in the euro due to positive rates and shifting geopolitical dynamics. About 20% of central banks surveyed are planning to boost their euro holdings in the next two years, reflecting a growing trend, and while the dollar still dominates global reserves, the euro’s appeal is on the rise following the European Central Bank’s move away from negative interest rates, leading to higher euro area government bond yields. This shift towards the euro is a sign of changing times, with some central banks looking to diversify their currency holdings. Moreover, the positive yield of the euro is making it a more attractive option for reserve managers, prompting adjustments in their currency allocations.

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