Following Bitcoin’s recent halving event, the cryptocurrency has experienced a modest increase in value. During the halving, the mining reward was reduced from 6.25 Bitcoin to 3.125, triggering a rise in transaction fees to an all-time high of $127. Analysts note that Bitcoin is currently sitting on a key support level, with 1.66 million addresses having purchased it at an average price of $64,800.
As the US Treasury prepares to auction 2-year Treasury notes, concerns arise over potential yields of 5%. Market sentiment has been lukewarm towards recent auctions due to large issuance sizes. Inflationary pressures remain a concern, but experts believe it is largely US-specific rather than global, driven by fiscal deficits, high mortgages, and business excellence. Rent inflation, particularly the calculation method for owners’ equivalent rent, is a significant contributor. However, recent data suggests a flattening in rents, which could lead to divergence in the PCE inflation measure and potentially trigger a market shift towards rate cuts, weakening the US dollar and boosting risk assets.
As the price of gas continues to rise nationwide, drivers in Menlo Park, California, are facing exorbitant prices, with regular unleaded reaching a staggering $7.29 per gallon. This price, which would equate to over $100 to fill up a 15-gallon tank, has left many X users and residents alike appalled. The high gas prices in California, which average $5.44 per gallon, are contributing to stubbornly high inflation, as data from the Bureau of Labor Statistics shows that more than half of the increase in the Consumer Price Index for March can be attributed to gasoline and shelter. While some social media users argue that the Menlo Park gas station prices are not as outrageous as they seem, given the $16-plus-per-hour minimum wage in the area, others maintain that the prices are unacceptable.
BofA Securities analysts advise buying into geopolitical shocks, citing historical data suggesting that markets recover quickly from such events. They caution, however, that escalation in the Middle East could pose a risk and note the potential for stagflation due to oil shocks, which have historically accompanied geopolitical turmoil.
Economist Peter Schiff highlights the importance of investing in gold during economic uncertainty. He warns against selling gold and investing in risk assets, like tech stocks and Bitcoin, despite the threat of inflation. Schiff argues that gold is a safer investment and recommends buying mining stocks as they tend to over-react to gold price drops.
Bank of America predicts the Bank of Japan (BoJ) will maintain its current interest rate target range at 0-0.1% at its upcoming monetary policy meeting on April 26, 2024. The BoJ recently exited its negative interest rate policy and overhauled its monetary framework, and is now assessing the impact of these changes. Governor Ueda has indicated that the bank’s focus is on evaluating the effects of the recent policy modifications on the economy and inflation. The quarterly Outlook Report, Governor Ueda’s post-meeting press conference, and the Summary of Opinions are expected to provide clues about future rate hikes and adjustments to JGB purchases.
US stock indices closed lower last week, with the Nasdaq Composite falling for its sixth consecutive session, marking its longest losing streak in over a year. The S&P 500 also experienced a downturn, while the Dow Jones Industrial Average rose slightly. The decline was driven by a drop in Nvidia, geopolitical tensions, and persistent inflation.
Canadian industrial producer prices saw a 0.8% monthly increase in March, continuing a two-month trend of growth. However, on a yearly basis, producer prices fell by 0.5%, following a revised 1.4% decrease in February.
