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SEPTEMBER 22, 2023


Binance Holdings Ltd. and its CEO, Changpeng Zhao (CZ), have taken legal action by filing court papers seeking the dismissal of a lawsuit brought against them by the U.S .Securities and Exchange Commission (SEC). Let’s remember that the SEC alleged that Binance and Zhao mishandled customer funds, misled investors and regulators, and violated securities rules. In response, Binance and Zhao have argued that the SEC has exceeded its authority and accused the regulator of imposing penalties retroactively, without providing clear guidance on cryptocurrencies. In addition, Binance.US, a separate entity, has also requested the dismissal of charges against it in a separate filing. The regulatory scrutiny has had negative repercussions for both Binance and Binance.US, as they have experienced a decline in market shares, resulting in layoffs and changes in leadership. As of now, the SEC has not provided any comment on the matter.


The yield on 10-year U.S. Treasury bonds has continued its upward trend as it climbed above 4.5%, marking its highest level since 2007. This uptick has been driven by concerns over the combination of substantial U.S. fiscal deficits and ongoing inflation, along with a more hawkish approach from the Federal Reserve. Consequently, it is anticipated that U.S. government debt will experience its third consecutive year of losses. Moreover, despite experiencing the largest rate increases in decades, the U.S. economy has demonstrated remarkable resilience, prompting investors to shift away from bonds. Additionally, the surge in oil prices and a significant fiscal deficit have also contributed to expectations of further declines in bond prices. The present economic outlook suggests that the Federal Reserve may persist in raising interest rates, exerting further pressure on bond yields, and some experts like prominent investor Bill Ackman remains pessimistic about bonds and foresees additional increases in long-term rates.


According to Bank of America (BofA) strategists, investors are currently selling off their stocks at a rapid pace due to concerns about higher interest rates and the potential onset of a recession. After the Fed announcement, which happened on September 20, global equity funds saw outflows of $16.9 billion, with U.S. stock funds being hit the hardest. The team, led by Michael Hartnett, explicitly warns that persistently elevated interest rates could lead to a severe economic downturn by 2024. In addition, alarming indicators such as a steepening yield curve, increasing unemployment rates, heightened delinquencies and defaults, along with a surge in personal savings, further validate these concerns. Moreover, despite the S&P 500’s positive performance this year, Hartnett maintains a bearish stance on the market, a sentiment that is echoed by other strategists skeptical of the ongoing U.S. equity rally. Ultimately, how market leaders respond to falling bond yields will play a pivotal role in shaping the future direction of stocks.


Gold prices have inched higher following weak economic data out of Europe and the decision of key central banks to maintain interest rates. However, these gains were limited by a stronger dollar. As a result, spot gold rose by 0.3% to reach $1,924.70 per ounce, while U.S. gold futures also climbed 0.3% to $1,945.40. In addition, silver, platinum, and palladium experienced modest increases as well. The expectation of persistently high rates in the U.S. has strengthened the dollar to a six-month peak and caused Treasury yields to rise, thereby curbing gold’s gains. Furthermore, although gold is typically sought as a safe-haven investment during times of economic uncertainty, increasing interest rates diminish its appeal as it does not generate additional income.


The latest survey conducted by the HCOB’s flash eurozone Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, revealed significant challenges weighing on the eurozone economy. This survey indicated a potential contraction in the economy for this quarter, and unfortunately, there are no clear signs of a forthcoming return to growth. September’s index showed a marginal increase, but it is important to note that it still remains below the crucial 50 mark, which suggests an economic contraction. Additionally, the forecasts from Hamburg Commercial Bank have worsened, projecting a contraction of 0.4% for this quarter. These findings underscore the negative impacts of recent interest rate hikes by central banks and raise legitimate concerns about the possibility of a recession in the eurozone.

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