SAFE LANDING RISKS

Concerns have arisen about the U.S. economy’s ability to achieve a soft landing, leading traders to increase the likelihood of a 50-basis point Federal Reserve interest rate cut to 37%. In addition, economists anticipate job growth of 165,000 in August, up from 114,000 in July, with a close watch on job openings data and jobless claims. The recent weak Institute for Supply Management survey suggests continued subdued factory activity in the U.S., sparking questions about potential delays in Fed actions. In response, safe-haven currencies like the Swiss franc have strengthened, while the euro remains steady and the British pound is unchanged against the dollar.

RECORD OUTFLOW

Since yesterday, there has been a downward trend in U.S. Bitcoin ETFs, as concerns about economic growth and a sell-off in Nvidia influenced market sentiment. The 11 ETFs recorded a net outflow of $287.8 million, the highest since May 1, with Fidelity’s FBTC seeing the most withdrawals at $162.3 million. Additionally, Grayscale’s GBTC experienced an outflow of $50.4 million. Following the release of the U.S. ISM manufacturing PMI data for August, which sparked concerns about economic slowdown and impacted risk assets such as cryptocurrencies, the price of Bitcoin dropped by 2.7% to $57,500. Moreover, as of 8:00 AM CST, Bitcoin has continued on a downward trend, trading slightly above $56,500.

REGULATORY STRUGGLES 

Nvidia is currently facing antitrust investigations by the U.S. Justice Department and other authorities, focusing on potential violations related to its dominance in AI processors. The DOJ has issued subpoenas to various companies, including Nvidia, to gather evidence and assess potential anticompetitive practices. Concerns include allegations that Nvidia has made it difficult for customers to switch suppliers and has favored buyers who exclusively use its AI chips, potentially restricting competition. Nvidia argues that its market dominance is a result of product quality and performance rather than anticompetitive behavior. However, the company’s significant growth and acquisitions in the AI market have raised regulatory scrutiny, with analysts projecting considerable revenue growth in its data center unit. This regulatory scrutiny has led to volatility in Nvidia’s stock prices, with experts expecting further declines as the investigation progresses.

GOLDEN OPPORTUNITY

Despite the historical trend of gold prices declining in September since 2017, as indicated by Bloomberg data, Goldman Sachs analysts are recommending investors to consider investing in gold. Gold futures are currently trading above $2,515 per ounce, with a projected target of $2,700 per ounce, reflecting the continued surge in the precious metal’s value. In addition, global physically backed gold ETFs have seen inflows for three consecutive months, with North American investor activity outpacing that of Europe and Asia in July, according to the latest World Gold Council data. Factors such as increased central bank demand, geopolitical uncertainties, and the possibility of Federal Reserve rate cuts are contributing to the overall bullish outlook for gold. Overall, as investors await the upcoming Fed meeting, and seek security in uncertain times, the outlook for gold remains positive.

SHIFT IN DEMAND

In the current mortgage market, there has been a noticeable shift towards refinancing as interest rates have continued to decline for the fifth consecutive week. Data from the Mortgage Bankers Association indicates that total mortgage application volume saw a modest 1.6% increase compared to the previous week, with the average contract interest rate for 30-year fixed-rate mortgages dropping slightly to 6.43%. Despite a 0.3% decrease in refinance applications for the week, there has been a significant 94% increase in comparison to the previous year, driven by borrowers seeking to lower their monthly payments by taking advantage of lower rates. On the other hand, applications for home purchases rose by 3% week-over-week but remain 4% lower than the same period last year, reflecting the ongoing challenges in the housing market due to high home prices. With mortgage rates holding steady, attention now shifts to upcoming economic data releases, including the monthly employment report, which will likely impact the market sentiment in the coming days.