News
Dollar Jumps as Fed Starts to Look More Hawkish Than Some Peers
The dollar jumped the most in over a month after the Swiss National Bank surprised investors by cutting interest rates, while traders boosted bets that the Bank of England will ease policy as well. The Bloomberg Dollar Spot Index rose as much as 0.5% on Thursday, the most intraday since Feb. 13, recapturing ground it lost the previous day after the Federal Reserve affirmed projections for three rate reductions this year. Some investors had been bracing for the central bank to signal fewer cuts, with the US economy proving resilient and inflation remaining sticky. Chair Jerome Powell said it would be appropriate to lower rates “at some point this year.”
Bitcoin Set for One of Worst Weeks in 2024 as ETF Demand Falters
Bitcoin has peeled back more than 10% from its all-time high as the appetite for fledgling spot Bitcoin exchange-traded funds moderates. JPMorgan Chase and Co. strategists warned the retreat has room to run. The group of 10 spot Bitcoin ETFs just notched its biggest three-day outflow since the products debuted on Jan. 11. Meanwhile, the world’s largest cryptocurrency is set for one of its worst weeks of the year after a 4% retreat. The token changed hands at $65,415 as of 6:57 a.m. Friday in Singapore.
US Treasury key yield curve inversion becomes the longest on record
A key bond market signal of an upcoming recession has flashed red continuously for the longest time ever, even if the U.S. economy is far from showing signs of a growth contraction. The part of the Treasury yield curve that plots two-year and 10-year yields has been continuously inverted - meaning that short-term bonds yield more than longer ones - since early July 2022. That exceeds a record 624 day inversion in 1978, Deutsche Bank said in a note on Thursday. A 2/10 curve inversion is a time-honored signal of an upcoming recession. Short-term bonds yield more than longer maturities because investors expect interest rates to remain high in the short term as the Federal Reserve battles inflation, while long yields are lower on expectations the central bank will cut interest rates to stimulate a weakening economy.
Gold prices have been hitting new highs — and the rally is far from over
The rally in gold continues with prices hitting an all-time high on Thursday — and there’s room for it to rise more as central banks continue to purchase bullion in record amounts. Prices could rise to $2,300 per ounce in the second half of 2024, especially against the backdrop of expectations that the U.S. Federal Reserve could cut rates in the second half of 2024, Aakash Doshi, Citi’s North America head of commodities research, told CNBC. Gold is currently trading at $2,203. Gold prices tend to share an inverse relationship with interest rates. As interest rates dip, gold becomes more appealing compared to fixed-income assets such as bonds, which would yield weaker returns in a low-interest-rate environment.
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