ACTIVE BULLISH SENTIMENT
Activity on a popular cryptocurrency exchange, Bitfinex, is challenging worries about the usual downward trends in Bitcoin’s price during September. Despite historical data showing a typical 4% drop in Bitcoin’s value in September since 2009, recent actions on Bitfinex are suggesting a different outcome this year. Traders on the platform have been increasing their bullish positions, with a significant rise in borrowed funds being used to purchase Bitcoin. This surge in margin longs, alongside a notable increase in interest rates charged on borrowed funds, indicates a strong belief among traders that Bitcoin will defy its usual bearish trend this September. Additionally, there is heightened activity in the bitcoin perpetual futures market, with open interest-weighted global average funding rates showing a positive shift, reflecting a dominance of bullish sentiment. Furthermore, the market is also witnessing increased demand for bitcoin call options, particularly with whales making long positions across the board, which further signals a positive outlook for the cryptocurrency market.
SURGING STOCK MARKET
Despite concerns about potential market volatility and economic uncertainties, the U.S. stock market has been experiencing a significant surge, with major indexes reaching new all-time highs and sparking enthusiasm among American investors. The S&P 500 has risen by 18% this year, leading to the creation of more millionaires and a notable increase in net worth for many individuals. In addition, a record number of 401(k) retirement accounts now boast a value of over $1 million, signaling strong growth in stock market investments. Furthermore, inflows into small-cap funds have been remarkable, contributing to a swift recovery in major indexes like the Nasdaq and S&P 500; and both individual and professional investors are expressing confidence in the market’s upward trajectory, with many seizing the current opportunities to invest and capitalize on the ongoing stock market rally.
OUTLOOK ADJUSTED
Goldman Sachs Group Inc. recently shifted its stance on copper, lowering its long-term price forecast for 2025 by nearly $5,000 as a result of weakening demand in China. The bank’s analysts had previously been bullish on the industrial metal, envisioning prices reaching $15,000 a ton, but revised their expectations to an average of $10,100 for the upcoming year. This adjustment follows a disappointing economic recovery in China, leading to a downturn in global copper prices. Moreover, despite copper’s previous surge above $11,000 a ton, prices have since dropped by approximately 18%, driven by rising inventories and heightened exports from China, and while Goldman acknowledged the potential 41% profit for clients from their previous bullish recommendation, the bank now approaches commodity markets with caution due to uncertainties surrounding China’s economic future. On the other hand, Goldman remains optimistic about gold, identifying it as a favorable hedge against geopolitical risks and anticipating a rise to $2,700 per ounce by early 2025.
RETIREMENT SAVINGS REALITY
A new research is suggesting that the effectiveness of automated retirement savings, such as automatic enrollment and escalation in 401(k) plans, may not be as significant as previously assumed. Workers cashing out their accounts when leaving a job and other factors can diminish the impact of these policies in the long run. However, behavioral economists, who have played a key role in studying the benefits of automatic enrollment, have found that the increase in savings rates from auto-enrollment is lower than initially projected. The high percentage of workers who withdraw funds from their 401(k) plans before retirement, known as ‘leakage,’ adds to the challenges faced by these automated savings initiatives. Ultimately, although automatic enrollment has been successful in getting more individuals to participate in retirement savings, addressing leakage and improving savings rates remain critical for ensuring financial security in retirement.
INTERNATIONAL NEWS
The UK recently conducted a successful bond sale, raising over £110 billion ($144 billion) in investor orders, signaling strong demand for government debt following a recent election victory. The Debt Management Office sold £8 billion in new bonds with a 4.375% coupon, attracting significant interest from investors and matching a previous record-high orderbook. This achievement reflects positive market sentiment and confidence in the government’s fiscal management. The newly appointed Chancellor faces the task of addressing a £22 billion deficit as she prepares to unveil the government’s budget for the coming year. Moreover, it is worth noting that while the 4.375% coupon may appeal to investors, concerns linger about inflation and the potential impact of budget decisions on the bond’s duration.
