The buyers are back!

Thoughts of the Day

After last week’s $900 million outflow from US Bitcoin ETFs, the buyers are back in force. Yesterday, the Bitcoin ETFs saw a net buying of nearly $420 million. With leveraged positions cleared out, BTC’s chance of hitting new highs soon grows.

Once again, the uptrend remains intact. Buy the dips and stay the course!

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Day Ahead

Nothing noteworthy on the horizon today.

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What Happened Yesterday

Market Movements as of New York Close 26 Mar 24

The US Conference Board Consumer Confidence fell to 104.7 (vs 107 expected), down from 104.8 (revised from 106.7) previously. Market impact was limited.

The Consumer Price Index (CPI) in Australia reported a yearly increase of 3.4% in February 2024 (vs +3.5% expected), maintaining the same rate as the last two months. However, this figure marks the lowest CPI since November 2021. When excluding fluctuating items and travel costs, the monthly CPI saw a rise of 3.9% in February, a decrease from January’s 4.1% increase. The AUD fell -0.11% against the USD from 0.6526 to 0.6519 in immediate reaction.

The US Treasury Yield curve inversion widened to 0.32% as the US 2-year bond yield edged +0.02% to 4.56% while the 10-year yield fell -0.01% to 4.24%. 

The US stock futures range traded higher through the Asian and mid London trading session with the S&P 500 future hitting a peak of 5300.5 (+0.37%) before falling -0.20% to 5290 at the New York open.

The US stock market opened higher from Monday. It then continued to trade sideways through most of the New York session before a minor sell-off of around -0.5% occurred near the end of the session. The S&P 500 was down -0.28% (high: +0.33%, low: -0.28%), the Dow Jones edged -0.08% lower (high: +0.32%, low: -0.09%) while the Nasdaq slipped -0.36% (high: +0.56%, low: -0.38%).

The crypto market range traded yesterday, resulting in minute changes in price.
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Headlines & Market Impact

S&P Global downgrades outlooks on five regional US banks to ‘negative’

Notable Snippet: Ratings agency S&P Global on Tuesday downgraded five regional U.S. banks to due to their commercial real estate (CRE) exposures, in a move likely to reignite investor concerns about the health of the sector.

The ratings agency downgraded First Commonwealth Financial (FCF.N)M&T Bank (MTB.N) Synovus Financial (SNV.N) Trustmark (TRMK.O) and Valley National Bancorp (VLY.O) to “negative” from “stable,” it said.

“The negative outlook revisions reflect the possibility that stress in CRE markets may hurt the asset quality and performance of the five banks, which have some of the highest exposures to CRE loans among banks we rate,” S&P said.

Investor concerns over regional banks’ CRE exposure intensified this year after New York Community Bancorp (NYCB.N) flagged a surprise quarterly loss citing provisions on soured CRE loans, which triggered a sell-off in U.S. regional banking shares. The bank has sold assets to shore up its balance sheet.

Investors and analysts have been worried that higher borrowing costs and lingering low occupancy rates for office spaces in the aftermath of the COVID-19 pandemic could result in more lenders taking losses as borrowers default on loans.

Tuesday’s downgrades come a year after the collapse of Silicon Valley Bank and Signature Bank, which heightened investor sensitivity about the health of U.S. regional banks.

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Francis Scott Key Bridge in Baltimore collapses after being struck by cargo ship; 6 people presumed dead, officials say

Notable Snippet: The Francis Scott Key Bridge in Baltimore collapsed early Tuesday after a support column was hit by a large container ship that had lost power, sending vehicles and people into the Patapsco River, authorities said.

Six people remain missing and are presumed dead, Rear Admiral Shannon Gilreath of the U.S. Coast Guard said at a news conference Tuesday evening. Two other people were rescued from the water. 

All eight people were part of a construction crew that was filling potholes on the bridge at the time, Wiedefeld said. Jennifer Homendy, the chair of the National Transportation Security Board, said Tuesday afternoon that the workers were employed by local company Brawner Builders. 

One of the rescued workers was unhurt. The other was treated at the University of Maryland Medical Center and has been discharged, CBS Baltimore station WJZ reported. 

CBS News Baltimore reports that the 1.6-mile span was used by some 31,000 people per day and carried 11.5 million vehicles annually.

The Maryland Transportation Authority said all lanes were closed in both directions on I-695. Traffic was being detoured to I-95 and I-895.

All ship traffic at the port, the second-largest seaport in the mid-Atlantic region, has been halted. According to Census data, the Port of Baltimore handled more than $80 billion in imports and exports in 2023, marking a 20-year record.

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Bank of Japan may be less dovish than markets think

Notable Snippet: The Bank of Japan has ditched its dovish forward guidance in favour of a more “data-dependent” approach to policy deliberations after ending negative rates, sources say, keeping the door open for another near-term hike in borrowing costs.

In its decision last week, the BOJ said it “anticipates that accommodative financial conditions will be maintained for the time being”.

However, a close look at the BOJ statement shows the bank has made no promise to keep interest rates at current low levels but instead conditionally states that borrowing costs could stay low if economic and price conditions don’t change.

“The BOJ has made no commitment about the future rate hike pace,” a source familiar with the bank’s thinking said in the March statement, a view echoed by another source.

“The timing of the next move is data-dependent, which means all options are on the table,” the first source said.

A Reuters poll taken after the March policy shift showed more than a half of economists expect the BOJ to hike rates again this year, though most do not see rate hikes coming at least until the fourth quarter.

Some analysts see the weak yen as a potential trigger for further rate hikes, as the currency’s renewed declines could push up raw material import costs again.

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord