BTC halving completed! 

Thoughts of the Day

The 4th Bitcoin halving took place on April 19, 2024, at 8:09 pm EST. The highly-anticipated event had minimal market impact. The media attention shows that BTC continues to gain acceptance. Also, over $15B of new money has flowed into BTC ETFs since the launch in January. As mainstream adoption grows, we are likely to see higher BTC prices in the weeks ahead!

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Week Ahead

Monday: ECB President Lagarde is slated to speak at Yale University, may provide comments on monetary policy for the Euro Area.


Wednesday: Australian Monthly CPI (expected: +3.4% Year-on-Year in March as it did in Feb)

Thursday: Advanced print for US GDP Growth Rate (expected: +2.5% in Q1’ 24, prev:+3.4% Q4’ 23)

Friday: BoJ is expected to keep interest rates at 0% in its monetary policy decision.
US PCE Price Index (expected: +2.6% YoY in March, prev: +2.5% print in Feb)

University of Michigan Consumer Survey (inflation expectations for the year ahead: +3.1% vs +2.9% prev, 5-year horizon: +3% vs +2.8% prev, consumer sentiment expected: 77.8 vs prev: 79.4)

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What Happened Yesterday

Market Movements as of New York Close 19 Apr 24 (21 Apr for Crypto)

Goolsbee (2025 voter, known dove):
“Progress on US inflation has stalled.” “The Fed’s current restrictive monetary policy is appropriate.” “Makes sense to wait to get more clarity before moving.”
(Goolsbee continues to reiterate that the disinflationary trend has stalled and more time is needed for the next monetary policy action.)

The US Treasury Yield curve inversion rose to 0.35% as the US 2-year bond yield fell -0.01% to -4.97% and the 10-year yield slipped -0.02% to 4.62%.

Recap: Explosions were heard in Isfahan in central Iran, in the As-Suwayda Governorate of southern Syria, and in the Baghdad area and Babil Governorate of Iraq in early Asian hours on Friday. A U.S. official soon confirmed to ABC News Israeli missiles have hit a site in Iran, indicating that this might be a retaliation following the strikes by Iran last weekend. However, Iranian authorities downplayed the explosions as merely the result of the activation of Iran’s Air Defense Systems a few hours later and that their nuclear sites are safe.

The S&P 500 futures fell as low as -1.66% in the early Asian hours as explosions were heard in Iran which were later downplayed by the Iran authorities as an activation of their Air Defense Systems. Stock futures recovered and started moving higher after the announcement. Hence, the S&P 500 futures was almost unchanged when the New York session began.

The US stock market opened unchanged from Thursday. It traded lower for the bulk of the New York session possibly due to some pessimism from Netflix which said it would no longer provide subscriber counts. The S&P 500 finished -0.88% lower (high: +0.16%, low: -1.15%), the Dow Jones gained +0.56% (high: +0.87%, low: +0.02%) while the Nasdaq fell -2.05% (high: -0.18%, low: -2.42%). The Dow rose on the back of better than expected earnings from American Express.

American Express (NYSE: AXP, +6.23%) beat expectations for first-quarter profit thanks to strong spending by affluent consumers. Earnings: $3.33 vs $2.96 expected.

The crypto market climbed higher over the weekend as the situation in the Middle East did not escalate further. Bitcoin halving happened on Saturday with little fanfare as it was widely anticipated.
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Headlines & Market Impact

Fed survey cites inflation, US election as key financial stability risks

Notable Snippet: Persistent inflation and higher-for-longer interest rates were cited as key risks to financial stability in the Federal Reserve’s latest survey of U.S. central bank contacts, with geopolitical troubles and the 2024 U.S. presidential election also mentioned as “a potentially significant source of shocks.”

“Contacts noted several areas of uncertainty including trade policy and other foreign policy issues related to escalating geopolitical tensions,” the Fed said on Friday in its semi-annual survey of 25 market participants, academics and other contacts. “They also noted policy uncertainty associated with the U.S. elections in November,” when the Democratic incumbent Joe Biden faces Republican former President Donald Trump.

The survey results were included as part of the Fed’s latest Financial Stability Report, which looks at issues like leverage and risk-taking throughout the economy to try to identify potential trouble spots.

The report was released more than two years after the Fed launched the most aggressive interest rate hiking cycle since the 1980s in a bid to slow a surge in inflation, a move that was broadly predicted to tip the economy into recession and aggravate stresses in the financial sector.

The latest report, much like those preceding it through the Fed’s battle with inflation, shows little evidence of widespread risks to the financial system despite borrowing costs remaining at their highest levels in a quarter of a century.

But that overall impression of resilience may suggest potential problems for Fed officials who feel the economy needs to slow for inflation to sustainably return to the central bank’s 2% target. The strength of household and business balance sheets, the stability of the banks, and the lack of imminent bubbles or other threats suggest that a slowdown won’t come through the financial or credit channels that have typically been an important part of monetary policy transmission.

Contacts were interviewed through March, when Fed officials began to have doubts about an ongoing drop in inflation and noted that rate cuts might not come as fast as expected.

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BOJ’s Ueda says ‘very likely’ to hike rates if inflation keeps rising

Notable Snippet: Bank of Japan Governor Kazuo Ueda said on Friday the central bank “very likely” will raise interest rates if underlying inflation continues to go up, and begin reducing its huge bond buying at some point in the future.

The central bank must maintain loose monetary policy for the time being as underlying inflation remains “somewhat below” its 2% target, and long-term inflation expectations are still near 1.5%, Ueda said.

Having ended its various unconventional monetary easing measures in March, however, the BOJ has brought more flexibility to its policy and may change its short-term interest rate target depending on how upcoming data unfold, he added.

“We will proceed cautiously, initially assessing the impact of our recent policy changes on the economy and inflation, then considering further adjustment as deemed appropriate, perhaps extracting insights on the neutral rate along the way,” Ueda told a seminar hosted by the Peterson Institute for International Economics.

The BOJ will also begin to cut its purchases of Japanese government bonds (JGBs), though the timing and extent of the reduction are yet to be determined, Ueda said.

“Irrespective of what the data will say in the near future, we will like to find a way and timing to reduce the amount of JGB purchases,” he said, adding that the central bank will take time in reaching a decision.

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Why the oil market shrugged as Iran and Israel appeared on the brink of war this week

Notable Snippet: If investors only looked at the price of oil at the end of this week, they wouldn’t have known that Israel and Iran, OPEC’s third-largest crude producer, briefly stood on the brink of an unprecedented war.

U.S. crude oil and global benchmark Brent finished out the week about 3% lower, despite the fact that Iran and Israel traded direct strikes against each other’s territory for the first time. Fears that oil prices could shoot to $100 a barrel or above did not materialise.

In fact, U.S. oil futures closed Friday at $83.14 a barrel which was the lowest settlement price since late March, days before the current spiral of escalation began with Israel’s strike on an Iranian diplomatic compound in Damascus, Syria on April 1.

Investors seem to believe that Israel’s limited retaliatory strike, which does not appear to have caused any significant damage or casualties, provided Iran with an off ramp to refrain from counterattacking.

The market has essentially erased the risk premium associated with the Iran-Israel tensions after traders bid up prices last week on war fears.

“Traders aren’t buying that either Israel or Iran is actually interested in escalating the tensions and are merely engaged in largely symbolic, face-saving exercises,” said Manish Raj, managing director at Velandara Energy Partners. “These skirmishes did not impress the oil markets, which believe that no disruption to oil flows will occur.”

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Stock Indices

Phan Vee Leung
CIO & Founder, TrackRecord