Macro Mondays Macro Mondays #72 - Are markets prepared for a liquidity tsunami?
Oct 28, 2024
A liquidity wave from the US Fed is on the horizon, raising questions about market readiness. Insights on the recent oil sell-off linked to geopolitical tensions, particularly in the Middle East, highlight Saudi Arabia's crucial role. Political dynamics in the U.S. and Japan could significantly impact market strategies. Additionally, there's a focus on gold and silver as inflation hedges, with innovative platforms allowing investors to earn interest on these assets. Expectations around non-farm payrolls amid storm recovery could present unique investment opportunities.
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Market Anticipates Liquidity Improvement
- The market's positive reaction suggests it anticipates improving liquidity, low inflation, and steady growth.
- MicroStrategy's high valuation relative to Bitcoin holdings further indicates this benign environment.
Election and Debt Ceiling's Impact on Liquidity
- The upcoming U.S. election adds complexity to the liquidity picture, especially regarding the debt ceiling.
- A divided government could hinder progress on raising the debt ceiling, influencing liquidity.
Bond Yields and Potential Rate Cuts
- Bond yields are rising due to a "supply scare," but this could prompt the Fed to cut interest rates.
- This potential rate cut creates opportunities in various asset classes, including crypto and risk assets.