Global Macro Update: Bitcoin Bounces 10%, Economy Falters
May 3, 2024
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The podcast discusses Bitcoin's correlation with the stock market, US government's stance on inflation, and recent weak economic data. It covers the FOMC meeting, Jerome Powell's press conference, and US Treasury deficit funding. Also, delves into the impact of Japanese yen devaluation, Chinese currency, Bitcoin price action, and global macroeconomic factors.
Bitcoin experienced a 10% drop post breach at $62,000 with resistance at the green trend line, signaling consolidation.
US Treasury's refunding announcements indicate steady debt supply levels amidst economic data pointing towards a potential recession.
Deep dives
Currency Intervention in Japan
Japan's currency, the yen, has experienced a significant devaluation against the dollar, prompting the government to intervene in the market to prevent further decline. The Ministry of Finance and the Bank of Japan collaborated to weaken the yen, indicating Japan's readiness to support its currency. This intervention included selling dollars and buying yen, impacting the USD/JPY pair and possibly halting a potential Chinese devaluation.
Bitcoin Price Action and Market Analysis
An analysis of Bitcoin's price action reveals a 10% drop following a significant breach at the $62,000 level. Despite a subsequent recovery to above $61,000, Bitcoin faces resistance at the green trend line, indicating a period of consolidation between $60,000 and $70,000. The correlation between Bitcoin and the stock market, influenced by Federal Reserve actions and economic data, highlights the current macro-driven nature of Bitcoin's price fluctuations.
Treasury Department's Debt Issuance and Economic Indicators
The Treasury Department's quarterly refunding announcements provide insights into how debt will be issued across the yield curve, particularly focusing on 10, 20, and 30-year maturities. While maintaining steady supply levels, the potential pressure on the Treasury market may impact private investors. Economic data, including ISM surveys showing a shift to contraction in employment, raises concerns about a possible recession, emphasizing the importance of monitoring factors affecting the government debt-to-GDP ratio and inflation dynamics.
In this episode, Nik brings us a global macro update, focusing on bitcoin's correlation with the stock market, the US government's intentions on inflation, and recent weak economic data. He presents 18 charts to recap an eventful week in currency markets, what was said at the FOMC meeting and Jerome Powell press conference, and the latest US Treasury deficit funding needs.
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