MASSIVE INFLOWS

Bitcoin has surged above $71,000, marking a 3% increase in the last 24 hours. Additionally, the broad-based CoinDesk 20 index saw a 2.65% rise. Fidelity’s FBTC led with the highest inflow of $378 million, followed by BlackRock’s IBIT at $270 million and Grayscale’s GBTC at $28 million. This surge in inflows was the most significant since March and the second-highest overall since the launch of 11 bitcoin ETFs in January. The increase in activity follows a period of bullish sentiment after a challenging few weeks from mid-April to early May, where some days recorded zero net inflows and even outflows from major ETFs like BlackRock’s IBIT. Analysts reported that ETFs gathered $3.3 billion in the previous four weeks, pushing the year-to-date total past the $15 billion mark.

JOB CREATION SLOWED

In the latest report released by ADP, it was observed that private job creation slowed more than anticipated in May, suggesting a continued sluggishness in the labor market. The data revealed that companies added 152,000 jobs during the month, lower than the revised figure of 188,000 in April, and below the consensus estimate of 175,000 set by Dow Jones. This drop in job creation to the lowest level since January could potentially signal a concerning trend in the current economic landscape. It highlights the challenges that businesses may be facing in terms of hiring and growth, underscoring the need for careful monitoring and potential intervention to address the slowdown in job creation. These findings hint at the possible need for further analysis and proactive measures to bolster the labor market and stimulate sustained economic recovery in the months ahead.

MORTGAGE RATES ROSE

Last week, mortgage interest rates increased to their highest level since early May, resulting in a decline in mortgage demand for the second consecutive week. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume dropped by 5.2% compared to the previous week. This decrease was further attributed to an adjustment made to accommodate the Memorial Day holiday. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 7.07% from 7.05%, with points increasing to 0.65 from 0.63 for loans with a 20% down payment. Despite indications of slower economic growth from incoming data, the upward movement in mortgage rates was observed. Refinancing applications saw a 7% decline from the prior week, while applications to purchase a home fell by 4% in the same period. As home prices continue to rise and competition remains robust, buyers are facing challenges beyond higher interest rates, and the market is seeing a reliance on first-time homebuyer demand, particularly supported by government lending programs such as VA loans.

MIXED MOVES

Metal prices are experiencing a mixed trend currently, with the price of gold futures seeing a slight increase of 0.2% to $2,352 per troy ounce, while base metals are on a downward slide. The stability in gold prices this week is attributed to the anticipation surrounding Friday’s nonfarm payroll data, which is expected to provide insights into the Federal Reserve’s potential monetary policy adjustments. Let’s remember that gold is non-interest bearing asset, typically moves inversely to interest rate changes, often rising with expectations of rate cuts. On the other hand, copper has fallen by 0.2% to $9,909 per ton, influencing the decrease in other base metals. Despite approaching the $10,000 per ton threshold, copper’s trading pattern is characterized by caution amidst a growing interest in buying at lower prices and increasing LME stocks. Furthermore, aluminum too witnessed a decline of 1.1% to $2,632 per ton, marking a comprehensive decrease across base metals. The uncertainty prevailing regarding price trajectories continues to impact market sentiments.

401(K) SAVINGS INCREASED

The average 401(k) plan savings rate recently hit a record high of 14.2% during the first quarter of 2024. This is close to the recommended 15% benchmark by Fidelity for a comfortable retirement. Employees contributed an average of 9.4% of their income while companies chipped in an average of 4.8%, including matches and other payments. Both individual and company contributions to 401(k) plans have been on the rise over the years. Many companies automatically enroll eligible employees into 401(k) plans, with default contribution rates around 4.1%. However, nearly 40% of plans start contributions at 5% or higher. Automatic contribution increases and escalations have also helped boost savings rates. It is worth noting that in 2023, over 33% of participants increased contributions, with three-quarters of these increases being automatic adjustments, and about 78% of plans that auto-enroll employees also have auto-escalation features. These positive trends indicate a promising outlook for 401(k) savings rates.