Market Rebound and Risk Sentiment
After a brutal sell-off, US equity markets rebounded, lifting global risk sentiment. Traders reconsidered whether the recent market meltdown was an overreaction to weak US economic data.
Swap markets adjusted expectations for Fed rate cuts this year to 105 basis points of easing, down from 150 basis points. Wall Street’s fear gauge, the VIX index, experienced its largest plunge since 2010.
Political Developments and Central Bank Actions
In political news, Kamala Harris has selected Tim Walz as her vice-presidential running mate, a choice expected to have significant implications for the upcoming election. Meanwhile, the Reserve Bank of Australia (RBA) has kept interest rates at a 12-year high of 4.35%, as expected. The RBA continues to stress the importance of vigilance against inflation risks, signaling a cautious approach to monetary policy.
Earlier today, the Bank of Japan’s Deputy Governor pledged not to raise interest rates during periods of market instability. This announcement led to a more than 2% decline in the Yen against the US dollar, while Japanese stocks saw gains. The central bank’s commitment to stability is likely to have far-reaching effects on global financial markets.
Market Performance and Asset Movements
The MSCI US index saw a 1.0% rebound yesterday, with the real estate sector outperforming with a 2.2% gain. Yields on US Treasuries also bounced back, with the 10-year yield trading around 11 basis points higher at 3.90%, and the 2-year yield advancing by 10 basis points to 3.99%. The US Dollar Index edged higher by 0.27%, while gold pulled back by 0.83% to USD 2,390 per ounce. Brent crude remained steady at USD 76.5 per barrel, supported by the market rebound.
Asian equity indices were mostly higher in early trading, reflecting the positive sentiment from the US markets. US equity index futures suggest that US stocks will open 0.5% higher, indicating continued optimism among investors.
Cryptocurrency Market Dynamics
In the cryptocurrency market, spot Ether ETFs saw a combined inflow of $98.4 million on August 6, marking their best day outside of their launch day on July 23. Fidelity’s spot Ethereum ETF recorded the second-largest inflow on the same day, with $22.5 million. This significant inflow suggests growing investor interest and confidence in Ethereum as a long-term investment.
More than 400,000 BTC has moved to permanent holder addresses over the past 30 days, indicating a clear sign of accumulation. CryptoQuant founder and CEO Ki Young Ju has predicted that within a year, entities such as traditional financial institutions, companies, and governments will announce their acquisition of Bitcoin in Q3 2024. This prediction aligns with the broader trend of increasing institutional interest in cryptocurrencies.
Bitcoin and Ethereum Insights
The world’s largest Bitcoin miner increased its BTC holdings by $124 million in July, highlighting the ongoing accumulation trend among major players in the market. The Bitcoin price chart suggests that BTC could match $49.5K lows within days, reflecting the volatile nature of the cryptocurrency market. Despite this volatility, Bitcoin trading volume has recorded a post-halving all-time high, even as the broader crypto market experienced a downturn.
Ethereum has also shown resilience, with a quick rebound positioning ETH for a potential 100% rally. Michael Saylor, a prominent advocate for Bitcoin, has likened BTC’s strategic reserve to the ‘Louisiana Purchase’ moment for the US, underscoring the transformative potential of cryptocurrency as a strategic asset.
Source: https://x.com/anndylian/status/1821340129669103786
