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SPX equity breadth has sharply declined, and expectations for future market volatility have intensified☕
The correlated weakening of bonds + equities has led to a terrible performance of common 'risk parity' strategies in September so far, worsening the risk-off tone and leading to significant forced-selling pressures. SPX equity breadth has collapsed materially with just ~40% of stocks trading above it's 200d moving average, with the synchronized weakening in equities, bond prices, credit CDS, and EM FX helping to reiterate the 'cash is king' mantra for 2023. Furthermore, unlike in the crypto space, cross-asset volatilities have started to rise again, with jumps in equity VIX and rate vol being the most obvious as we have rebounded to the pre-summer highs.
Looking ahead, expect price action to be exceptionally choppy as short-term oversold conditions are balanced against a tricky quarter-end and the ongoing UAW strikes and government shutdown shenanigans. October likely won't see much reprieve early on, so we will continue to adopt a cautious/net bearish approach to our own risk management in the meantime.
#bonds #SPX #VIX #governmentshutdown #macro
The correlated weakening of bonds + equities has led to a terrible performance of common 'risk parity' strategies in September so far, worsening the risk-off tone and leading to significant forced-selling pressures. SPX equity breadth has collapsed materially with just ~40% of stocks trading above it's 200d moving average, with the synchronized weakening in equities, bond prices, credit CDS, and EM FX helping to reiterate the 'cash is king' mantra for 2023. Furthermore, unlike in the crypto space, cross-asset volatilities have started to rise again, with jumps in equity VIX and rate vol being the most obvious as we have rebounded to the pre-summer highs.
Looking ahead, expect price action to be exceptionally choppy as short-term oversold conditions are balanced against a tricky quarter-end and the ongoing UAW strikes and government shutdown shenanigans. October likely won't see much reprieve early on, so we will continue to adopt a cautious/net bearish approach to our own risk management in the meantime.
#bonds #SPX #VIX #governmentshutdown #macro
SVB bank collapsed is caused by stupid bonds not crypto. How FDIC can legally order signature bank purchaser must be not related to crypto, what a ridiculous call. 😂 FDIC have no right to do that, just sit back and do your insurance jobs.
#crypto2023 #FDIC #SVB #crypto #bonds
#crypto2023 #FDIC #SVB #crypto #bonds
The impact of rising interest rates on US #bonds , the potential consequences for #banks , and the broader implications for lending and borrowing in the US.
Key points are:
1. Impact of Rising Interest Rates on Bond Prices: When interest rates rise, the prices of existing bonds with lower yields tend to decrease because they become less attractive compared to new bonds offering higher yields. This is due to the inverse relationship between bond prices and yields. As interest rates increased from 0.10% to 5.50% between March 2022 and the present, the value of a 10-year bond bought at the lower rate has indeed decreased significantly.
2. Bank Investment in Bonds: You've highlighted that US commercial banks had excess cash during and after COVID lockdowns, which they invested in bonds. Some banks hedged against rising yields, but many did not. As interest rates continued to climb, banks holding bonds faced unrealized losses, impacting their financial positions.
3. The Bank Term Funding Program (BTFP): The Federal Reserve intervened by creating the BTFP program, which allowed stressed banks to borrow short-term against their bonds at par value, mitigating some of their losses. However, this comes at an additional cost, as the interest rate on the BTFP loans has also increased.
4. Future Fed Interest Rate Decisions: The Federal Reserve has been increasing interest rates, and you've mentioned a concern about what might happen if rates continue to rise. Banks may face additional challenges and costs in the event of further rate hikes, affecting their lending activities.
5. Private Sector Lending: You've noted that US loans to the private sector have been slowing down, despite the previous peak in January. This slowdown could be a result of various factors, including rising interest rates and the banks' financial stress.
6. Safety of the US Banking System: Your closing statement questions the safety of the US banking system in the face of these challenges.
#cryptocurrency #crypto2023 #bitcoin
Key points are:
1. Impact of Rising Interest Rates on Bond Prices: When interest rates rise, the prices of existing bonds with lower yields tend to decrease because they become less attractive compared to new bonds offering higher yields. This is due to the inverse relationship between bond prices and yields. As interest rates increased from 0.10% to 5.50% between March 2022 and the present, the value of a 10-year bond bought at the lower rate has indeed decreased significantly.
2. Bank Investment in Bonds: You've highlighted that US commercial banks had excess cash during and after COVID lockdowns, which they invested in bonds. Some banks hedged against rising yields, but many did not. As interest rates continued to climb, banks holding bonds faced unrealized losses, impacting their financial positions.
3. The Bank Term Funding Program (BTFP): The Federal Reserve intervened by creating the BTFP program, which allowed stressed banks to borrow short-term against their bonds at par value, mitigating some of their losses. However, this comes at an additional cost, as the interest rate on the BTFP loans has also increased.
4. Future Fed Interest Rate Decisions: The Federal Reserve has been increasing interest rates, and you've mentioned a concern about what might happen if rates continue to rise. Banks may face additional challenges and costs in the event of further rate hikes, affecting their lending activities.
5. Private Sector Lending: You've noted that US loans to the private sector have been slowing down, despite the previous peak in January. This slowdown could be a result of various factors, including rising interest rates and the banks' financial stress.
6. Safety of the US Banking System: Your closing statement questions the safety of the US banking system in the face of these challenges.
#cryptocurrency #crypto2023 #bitcoin
📍 99.9% of the world's money is invested in assets like cash, #stocks , #bonds , #gold , real estate…
♂️ Bitcoin is competing with alt assets, not Altcoins.
♂️ This leaves a huge market for #altcoins. to grow and flourish.
♂️ Smart investors know this, while #bitcoin maxis are missing out.
$DOGE $BTC $WLD
♂️ Bitcoin is competing with alt assets, not Altcoins.
♂️ This leaves a huge market for #altcoins. to grow and flourish.
♂️ Smart investors know this, while #bitcoin maxis are missing out.
$DOGE $BTC $WLD
#Cryptocurrencies are often mistaken for stocks, but this isn’t accurate. Cryptocurrencies, or coins/tokens, are linked with software and belong to a system built on blockchain. They interact, perform functions, and deliver services, but they are not currencies. They are not commodities either. Instead, they act as protocols and create dual-sided marketplaces without the need for a middleman.
Carlotta Perez’s work “Technological Revolutions and Financial Capital” suggests that innovation is at the helm of long-wave economic cycles, and we are now in a new long wave economic cycle, The Age of Autonomy. This new age is driven by new, innovative production capital, such as tokens.
These tokens differ from #stocks or #bonds as they do not represent a claim on an enterprise’s income or assets.
Carlotta Perez’s work “Technological Revolutions and Financial Capital” suggests that innovation is at the helm of long-wave economic cycles, and we are now in a new long wave economic cycle, The Age of Autonomy. This new age is driven by new, innovative production capital, such as tokens.
These tokens differ from #stocks or #bonds as they do not represent a claim on an enterprise’s income or assets.
- **El Salvador's #Bitcoin Adoption and Bond Performance**: El Salvador's President Nayib Bukele's decision to adopt Bitcoin has initially concerned Wall Street. However, despite this, El Salvador's bonds have experienced a significant increase in value, rising by 70% this year. These bonds are now the top-performing USD #bonds in Emerging Markets, according to Bloomberg.
- **Contrasting Reactions**: The adoption of Bitcoin by the El #Salvadoran #government has generated mixed reactions, with some initial concerns expressed by Wall Street. However, the subsequent positive performance of El Salvador's bonds suggests that the decision has led to favorable outcomes for bond investors and the country's bond market.
- **Bitcoin #Adoption and Financial Markets**: The link between El Salvador's Bitcoin adoption and the performance of its bonds highlights the complex interactions between cryptocurrency adoption, financial markets, and investor sentiment. The increase in bond values underscores the potential for unique economic and financial dynamics resulting from government-led cryptocurrency initiatives.
$BTC $WBTC $BTTC
- **Contrasting Reactions**: The adoption of Bitcoin by the El #Salvadoran #government has generated mixed reactions, with some initial concerns expressed by Wall Street. However, the subsequent positive performance of El Salvador's bonds suggests that the decision has led to favorable outcomes for bond investors and the country's bond market.
- **Bitcoin #Adoption and Financial Markets**: The link between El Salvador's Bitcoin adoption and the performance of its bonds highlights the complex interactions between cryptocurrency adoption, financial markets, and investor sentiment. The increase in bond values underscores the potential for unique economic and financial dynamics resulting from government-led cryptocurrency initiatives.
$BTC $WBTC $BTTC
Potential relief bounce expected, US government may shut down👀
Looking ahead, we might see a relief bounce into month-end as we saw with the SPX yesterday, and a variety of short-term technical indicators are flashing oversold signals across both bonds and fixed income. With that being said, we think the only suitable positions for the current market are simply flat or short, and knife-catching to be an exercise in futility. Furthermore, the US govt does appear to be heading into a partial shut-down as early as this weekend as the GOP does not appear to be able to come up with a consensus, adding significant uncertainty to a market that is already reeling from a maelstrom of unfriendly macro forces.
#SPX #bonds #shutdown #GOP #macro
Looking ahead, we might see a relief bounce into month-end as we saw with the SPX yesterday, and a variety of short-term technical indicators are flashing oversold signals across both bonds and fixed income. With that being said, we think the only suitable positions for the current market are simply flat or short, and knife-catching to be an exercise in futility. Furthermore, the US govt does appear to be heading into a partial shut-down as early as this weekend as the GOP does not appear to be able to come up with a consensus, adding significant uncertainty to a market that is already reeling from a maelstrom of unfriendly macro forces.
#SPX #bonds #shutdown #GOP #macro
