STAGFLATION
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#Write2earn NAVIGATING CRYPTOCURRENCY MARKETS AMIDST U.S. #STAGFLATION CONCERNS #Fed #MarketAnalysis $BTC $ETH
Cryptocurrency markets are seeing declines as worries over U.S. stagflation resurface, posing a serious threat to risky assets.
Bitcoin (BTC), the primary cryptocurrency by market value, hovered around $62,400 currently, down by 2.5% over the past 24 hours, according to data from CoinDesk Indices. Ether (ETH) also experienced a 3% drop, trading at $3,200.
The market seems to be at a crossroads, with conflicting narratives on the horizon, debating which direction to head.
As outlined in a note by QCP over the weekend, the specter of stagflation—a scenario marked by high inflation and low economic growth—is looming large.
QCP pointed out, "The disappointing U.S. GDP figures indicate a slower economy, while the uptick in Core PCE suggests a persistent inflation challenge for the Fed."
Recent U.S. GDP data revealed that the world's largest economy expanded at an annualized rate of 1.6% in the first quarter of the year, down from the previous quarter's 3.4% growth.
Concurrently, the Personal Consumption Expenditures (PCE) Price Index, favored by the Fed to gauge inflation,
showed a rise to a 3.4% annualized rate in the first three months of the year, up from 1.8% in the final quarter of 2023.
The combination of slower economic growth and stubborn inflation has diminished the likelihood of Fed rate cuts.
While most traders on Polymarket predict no rate cuts as the most probable outcome, with a 35% chance, the possibility of a single rate cut is gaining ground, now at 29% compared to 26% a week ago and 14% at the beginning of the month.
QCP also mentioned Janet Yellen's fiscal approach, utilizing the Treasury General Account (TGA), which holds nearly $1 trillion in assets, and the Reverse Repurchase Program (RRP) with $400 billion, could infuse up to $1.4 trillion into the financial system, bolstering all risky assets.
Cryptocurrency markets are seeing declines as worries over U.S. stagflation resurface, posing a serious threat to risky assets.
Bitcoin (BTC), the primary cryptocurrency by market value, hovered around $62,400 currently, down by 2.5% over the past 24 hours, according to data from CoinDesk Indices. Ether (ETH) also experienced a 3% drop, trading at $3,200.
The market seems to be at a crossroads, with conflicting narratives on the horizon, debating which direction to head.
As outlined in a note by QCP over the weekend, the specter of stagflation—a scenario marked by high inflation and low economic growth—is looming large.
QCP pointed out, "The disappointing U.S. GDP figures indicate a slower economy, while the uptick in Core PCE suggests a persistent inflation challenge for the Fed."
Recent U.S. GDP data revealed that the world's largest economy expanded at an annualized rate of 1.6% in the first quarter of the year, down from the previous quarter's 3.4% growth.
Concurrently, the Personal Consumption Expenditures (PCE) Price Index, favored by the Fed to gauge inflation,
showed a rise to a 3.4% annualized rate in the first three months of the year, up from 1.8% in the final quarter of 2023.
The combination of slower economic growth and stubborn inflation has diminished the likelihood of Fed rate cuts.
While most traders on Polymarket predict no rate cuts as the most probable outcome, with a 35% chance, the possibility of a single rate cut is gaining ground, now at 29% compared to 26% a week ago and 14% at the beginning of the month.
QCP also mentioned Janet Yellen's fiscal approach, utilizing the Treasury General Account (TGA), which holds nearly $1 trillion in assets, and the Reverse Repurchase Program (RRP) with $400 billion, could infuse up to $1.4 trillion into the financial system, bolstering all risky assets.
📊 Market Turmoil: Fed's Rate Cuts Backfire, Inflation Surges 📊
📉 The Market is Broken 📉
The Fed's recent actions seem to have backfired. Despite cutting rates by 50 bps in September, we’re seeing unexpected market reactions. Here’s a quick breakdown:
🔶 Interest Rates Surge:
The 10-year note yield has jumped by 60 bps in a month, now above 4.20%, and the average 30-year mortgage is nearing 7.0%—the highest since July.
🔶 Mortgage Demand Collapse: Mortgage rates have soared from 6.1% to 6.8% in just four weeks, with demand hitting its lowest since the 1990s.
🔶 Rising Inflation: Core CPI inflation hit 3.3% in September, its first increase since March 2023, while unemployment dropped as the U.S. added 254,000 jobs—contradicting the Fed’s expectations.
🔶 Rate Cuts Priced-Out: Markets no longer expect more rate cuts this year, with a 33% chance that we see no cuts at all in 2024.
📅 November is Critical: The upcoming election, Fed meeting, and labor/inflation data will be pivotal. The Fed needs to tread carefully to avoid stagflation, a damaging scenario seen in the 1970s.
Gradual rate cuts are the answer—not aggressive 50 bps moves.
#MarketUpdate #FedPolicy #InterestRates #STAGFLATION #Inflation
The Fed's recent actions seem to have backfired. Despite cutting rates by 50 bps in September, we’re seeing unexpected market reactions. Here’s a quick breakdown:
🔶 Interest Rates Surge:
The 10-year note yield has jumped by 60 bps in a month, now above 4.20%, and the average 30-year mortgage is nearing 7.0%—the highest since July.
🔶 Mortgage Demand Collapse: Mortgage rates have soared from 6.1% to 6.8% in just four weeks, with demand hitting its lowest since the 1990s.
🔶 Rising Inflation: Core CPI inflation hit 3.3% in September, its first increase since March 2023, while unemployment dropped as the U.S. added 254,000 jobs—contradicting the Fed’s expectations.
🔶 Rate Cuts Priced-Out: Markets no longer expect more rate cuts this year, with a 33% chance that we see no cuts at all in 2024.
📅 November is Critical: The upcoming election, Fed meeting, and labor/inflation data will be pivotal. The Fed needs to tread carefully to avoid stagflation, a damaging scenario seen in the 1970s.
Gradual rate cuts are the answer—not aggressive 50 bps moves.
#MarketUpdate #FedPolicy #InterestRates #STAGFLATION #Inflation
