PRO-CRYPTO STANCE
Bitcoin’s price has continued its upward trend, as this morning, the cryptocurrency has surpassed the $82,0000 mark for the first time due to the possibility of a pro-crypto Congress. Let’s remember that unlike President Joe Biden’s tougher stance on digital assets, which has led to regulatory crackdowns that have adversely affected the crypto industry, the president-elect Donald Trump has a more pro-crypto stance, and this has energized the digital-asset industry, with Bitcoin hitting record highs and smaller coins like Dogecoin also experiencing gains. Trump’s promises to position the U.S. at the forefront of the digital-asset sector, along with plans for a strategic Bitcoin reserve and crypto-friendly regulators, have instilled confidence among investors. And although there are still some uncertainties surrounding policy implementations, traders are optimistic about Trump’s pro-growth and deregulation agenda.
RATE CUT CONCERN
Federal Reserve Chair Jerome Powell recently expressed uncertainty about how President Trump’s proposed economic policies could influence the Fed’s strategy for future rate cuts. Despite announcing a second rate cut, Powell noted there is currently no concrete model in place to gauge the potential impact of these policies on the economy. In addition, many economists are warning that Trump’s proposed measures, such as tariffs, tax cuts, and immigration changes, may lead to heightened inflation and a larger deficit, posing challenges for the Fed in implementing further rate cuts. Thus, as a result of this, many experts have adjusted their predictions for rate cuts, with some leaning towards rates staying 50 basis points higher due to the anticipated policies. Moreover, it is worth noting that Powell emphasized the Fed’s cautious approach in light of these uncertainties, indicating that future rate cut decisions will be closely monitored.
LOSING SHINE
Due to the potential cautious approach of the Federal Reserve under the administration of U.S. President Trump, gold prices experienced a decline for the second consecutive day, while the U.S. dollar strengthened. This trend was influenced by an increase in risk appetite among investors within the financial markets, and as a result the dollar index rose by 0.3% following a weekly gain, while spot gold fell by 0.9% to $1,662.59 per ounce, with U.S. gold futures also decreasing by 1% to $1,667.10. Let’s highlight that if the Fed’s efforts to manage inflation are complicated due to Trump’s policies, there could be an upward pressure on yields and a stronger dollar, ultimately restricting the potential increase in gold prices.
INTERNATIONAL NEWS
China’s economic developments had a significant impact on Asia-Pacific markets, with mixed reactions seen in response. Despite Beijing’s announcement of a 10 trillion yuan stimulus package to address local government debt issues, analysts expressed doubts about its effectiveness in stimulating growth. The country’s inflation rate, which fell to 0.3% and missed expectations, added to concerns about China’s economic health. And as China geared up for its Singles’ Day event, a key indicator of consumer spending trends, market reactions varied. The Hang Seng index in Hong Kong declined by 1.62%, while mainland China’s CSI 300 saw a modest increase. Meanwhile, Japan’s Nikkei 225 showed slight growth, with the broader Topix index experiencing a modest decline.
KEY EVENTS HAPPENING THIS WEEK
MONDAY: Bond market closed due to the Veteran’s Day holiday.
TUESDAY: NFIB optimism index report for October, and speeches from Fed Gov. Christopher Waller, Richmond Fed President Tom Barkin and Philadelphia President Patrick Harker.
WEDNESDAY: Consumer price index (CPI), core CPI, and monthly U.S. federal budget reports for October, and speeches from New York Fed President John Williams, Dallas Fed President Lorie Logan, St. Louis Fed President Alberto Musalem and Kansas City President Jeff Schmid.
THURSDAY: Producer price index (PPI) and core PPI reports for October, initial jobless claims for week ending on November 9, and speeches from Fed Gov. Adriana Kugler and Fed Chair Jerome Powell.
FRIDAY: Business inventories report for September, import price index, U.S. retail sales, industrial production and capacity utilization reports for October, empire State manufacturing survey for November, and speech from New York Fed President John Williams.
