Expectations for rate cuts have dropped sharply, and the US refinancing storm is coming! Liquidity has become a new market indicator, and the bull market in the cryptocurrency circle is about to start!
Recently, Wall Street's expectations for the Fed's rate cuts have undergone earth-shaking changes, from seven expected rate cuts at the beginning of the year to less than two now. Federal Reserve Governor Bowman has even bluntly stated that if inflation cannot reach the Fed's target line of 2%, rate cuts in the short term will become meaningless. However, while expectations for rate cuts have cooled, the US Treasury's quarterly refinancing storm is about to sweep in, and liquidity has become a new market indicator.
On May 1, the US Treasury will unveil the mystery of quarterly refinancing. With less than seven months left before the 2024 US presidential election, fiscal policy may usher in major changes. This quarterly refinancing report may suspend the US Treasury's pace of accelerating bond issuance over the past year, injecting new liquidity into the market, with an estimated scale of an astonishing $1 trillion.
Against this background, liquidity in the cryptocurrency circle has become a key indicator for pulling the market. Expectations for rate cuts have slowed down, and it's time for strategies such as TGA, RRP, and slowing the pace of balance sheet reduction to surface. These strategies will jointly promote market liquidity and pave the way for the arrival of a big bull market in the cryptocurrency circle.
The release of US GDP data also reflects that the market's expectations for interest rate cuts are converging. Although the US GDP growth rate slowed significantly in the first quarter, a closer look at the data shows that this was mainly affected by strong import growth. After deducting the negative factors of imports, GDP actually made up the gap with expectations. In addition, both service consumption and private investment maintained steady growth, providing strong impetus for economic growth.
However, behind the economic growth, the US debt problem has become increasingly prominent. The proportion of debt to GDP has continued to rise, and the debt scale of non-financial enterprises has also reached a record level. As one of the developed economies with the most serious debt problems, the United States is in the process of brewing a potential crisis.
Faced with this situation, what strategy the US Treasury will adopt has become the focus of market attention. BitMEX co-founder Arthur Hayes proposed several possible options, including exhausting TGA to zero to stop issuing treasury bonds and shifting more borrowing to short-term treasury bills. These strategies will inject a lot of liquidity into the market and promote economic development.
In summary, with the cooling of interest rate cut expectations and the advent of the refinancing storm, liquidity has become a new indicator of the market. Investors in the cryptocurrency circle should pay close attention to market dynamics, seize the opportunities brought by liquidity, and welcome the arrival of the bull market!
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