Last week was Thanksgiving week in the US, with light volumes and markets staying in a holding pattern for the most part. US equities are about to make history once again, with 2024 turning into one of the best performing years in history, with the last 5 out of the past 6 years yielding high double digit returns.
Market breadth remains supportive with net 52-week high-lows looking healthy, market uptrend remains in tact with VIX volatility on the down-swing, while treasury yields have calmed down with 10yr yields nearly 35bp lower from their October highs following the announcement of Scott Bessent as Trump’s new Treasury secretary.
Along with his alleged ‘pro-crypto’ stance, Bessent is also known to be a fiscal hawk and supporter of an independent Fed, and his announcement of his 3–3–3 plan (fiscal deficit down to 3% of GDP, boosting real GDP growth to 3%, and raising US energy production by 3 million barrels per day) have brought a calming sense of relief to US fixed income. The yield curve premium has steadily at the current levels since his nomination.
While the jury is still out on his core views, journalists who are digging through his old speeches have noticed that he is a ‘long term bull’ on gold on increased central bank accumulation. Will this have a spill over effect on Bitcoin especially with all the recent noise over a strategic reserve portfolio? It’ll be an interesting 4 years ahead, to say the least.
Traders will return to a busier week this week with the last NFP of the year. Fed cuts are still priced at around 65% despite nascent worries of an inflation pickup, though a substantial part of forward cuts (2025–2027) have been priced out given the underlying economic strength. In terms of payrolls, the street is expecting a bounce back in headline job figures to around the +160K area, with unemployment rate steady at around the ~4.3% level. Risk is likely to the weak side given recent weaknesses in PMI surveys and high frequency job data, but risk sentiment is likely to stay buoyant outside a truly surprising miss either way.
Crypto bullishness remains pervasive across the board, though the star this week is with Ripple as XRP has rallied by a staggering 73% following expectations that the govt will be dropping their long-running lawsuits. The significant rally has helped XRP surpass USDT as the 3rd largest crypto token by market cap, with whale addresses active in aggressive buying (and now selling) XRP over the past month in anticipation of this development.
The bulk of the current rally has been concentred in the ‘majors’ (sans ETH), with BTC leading the charge and altcoins still struggling to even get back to its January peaks currently. While the recent successes of L2 and protocol-turned-blockchain (eg. Hyperliquid) have contined to dominate the crypto mindshare. we are seeing some signs of life in Ethereum through ETF inflows, registering +330M on Friday. Will we see a positive spill-over rally for more secondary majors before the end of year?
In any case, the underlying metrics for crypto continue to look positive, with stablecoin market value finally surpassing the highs seen during the Terra-Luna days. Recall that stablecoins are usually the first stop for most fiat-users entering into crypto, and a higher market cap (fixed price, thus all quantity driven) suggests higher mainstream participation.
Will we see even more acceleration in the new year as investors put more fresh capital to work? One can certainly hope!
