Macro news:
The U.S. CPI for March, released last month, grew faster than expected year-on-year, and the month-on-month growth rate was higher than expected for five consecutive months. The core CPI growth rate was higher than expected for three months, which hit the market's expectations of a rate cut. After the meeting last week, Fed Chairman Powell denied that the next step was likely to be a rate hike, but the signal he sent showed that the timing of the rate cut was even more uncertain. Nick Timiraos, a reporter known as the "New Fed News Agency," later wrote that the market's determination of the Fed's inclination is no longer that important, and what is more critical is the economic and inflation data.
After the Fed meeting, the April CPI to be released next Wednesday will be the first heavy inflation data. Will the CPI grow beyond expectations again, undermining the market's confidence in rate cuts?
Steven Englander, chief foreign exchange strategist at Standard Chartered Bank, pointed out in a recent report that if we closely observe housing costs, especially the housing inflation-related indicator in the CPI - owner-occupied equivalent rent (OER), we will find that there is reason to be optimistic that housing inflation may soon decline and pull core inflation down. After Powell's meeting last week, he seemed confident that future declines in housing costs could reduce core inflation.
The rise in OER in the first quarter of this year was an anomaly, and downward pressure will resume in the coming months, and the downward pressure is "likely to be sharp." Englander predicts that average OER inflation in the second quarter will only increase by 0.29% month-on-month, which is not far from the general range from 2015 to 2019, and slows down from the 0.48% month-on-month growth of OER in the first quarter of this year. This is a very important change, because OER has a weight of 33% in the core CPI, so the slowdown in the forecast growth of OER will reduce the core CPI by 0.06 percentage points month-on-month, which means that if more CPI components of inflation cool down, the core CPI growth rate may be lower than the expected level of 0.3%, slowing to 0.2%, or even lower.
This slowdown in OER will encourage people to expect that inflation will resume its downward trend and the decline will be enough for the Fed to start cutting interest rates. Englander mentioned that he noticed that Powell said this last week: Given the current market rent situation, I still expect that these rents will be reflected in measurable housing service inflation over time. Englander pointed out that given the high OER inflation in the first quarter, Powell's confidence in housing inflation surprised him. Moreover, Powell seemed to no longer focus on the so-called super core inflation-services excluding food, energy and housing rents, but instead focused on lower rent inflation as a sufficient reason to cut interest rates, which also surprised him.
market expectation:
Regardless of the CPI results, it is expected that the cryptocurrency market may rebound. The US decision on the spot Ethereum ETF is crucial for the token market. Bitcoin still dominates the market, which may affect the tokens, especially when the market is very volatile.
The cryptocurrency market has been somewhat volatile lately, especially after the fourth Bitcoin halving. The total value of all cryptocurrencies has dropped by more than 3% over the past 24 hours, to about $2.4 trillion as of Wednesday, making it difficult for Bitcoin supporters to control the market. The current quietness of the market could bring a lot of volatility in the coming weeks.
In addition, more large investors joining through spot Bitcoin ETFs could make the situation even more unpredictable. If the U.S. does not approve spot Ethereum ETFs, this could make the token market more difficult. But in the end, the U.S. may approve them before the next election.
The cryptocurrency market may continue to be volatile in the coming weeks until it finds some solid support levels. Therefore, it is important for cryptocurrency investors, especially those who trade derivatives, to be careful and avoid losing all their money. For long-term investors, the next few weeks may be a good time to buy more cryptocurrencies as the market starts to rise again.
Although the market is currently weak, the entire May is a period of adjustment and testing, and it is also an opportunity to intervene. If it continues to decline, don't panic too much. Although the Ethereum ETF was rejected, perhaps this gimmick is retained for later hype. In the long run, the growth space is good, and it is only a matter of time before the ETF is approved.
There is a delay in the review of article publishing, and the market is changing rapidly. The above suggestions are for reference only and are at your own risk! The market changes every day. All I can do is to use my many years of practical experience to give you some slight help, so that your investment decisions and business management are on the right track. Meeting is fate, and I am a person who believes in fate. If you have any doubts in the currency circle, you can pay more attention to the second-level dad, I believe it will be helpful to you.
