Week-over-week performance:
- BTCUSD: 27,609 / +4.8%
- ETHUSD: 1,666 / 4.7%
- US02Y: 5.11% / +9bps
- DXY: 107.18 / +1.13%
- GOLD (USD/OZ): 1,819 / -4.96%
- NDX: 14,837 / +0.46%
- VIX: 17.6 / +4.2%
On the macro side:
While the week lacked major macro updates, the action was far from dormant.
The spotlight has been on FI, FX, and PM.
I have a strong bias towards these markets being leader indicators.
To me, it seems that the current shifts are not just simple “repositioning” manoeuvres. Instead, investors who were taken by surprise are struggling with a market that lacks liquidity, and they find themselves on the unfavourable side of their trades.
As the two-year yields level off in alignment with central bank policy rates, the five-year (and beyond) rates are skyrocketing (e.g., a staggering 15bps increase in US10Y yields within a week!).
This, I believe, aligns with the Fed’s goals. However, given the ongoing liquidity drain, brace for a substantial sell-off.
With back-end yields surging, DXY broke 107, reaching new year-to-date highs, while gold struggles to find a foothold.
Interestingly, this cycle has not yet impacted risk assets (equities and crypto), which is nice to see.
Yet, my hunch is that a disappointing NFP and CPI report might trigger a shift in equities.
In terms of crypto, I guess the non-correlation will stop if SPX breaches 4,200.
Chart 1: SPX 1d
Looking ahead:
Today, Swiss CPI (projected at 1.8% YoY and 0% MoM) and the released US JOLTS report on job openings.
Wednesday brings insights from ECB President, Lagarde, and US ISM.
Thursday features US jobless claims.
And finally, on Friday, we eagerly await the US NFP and employment figures.
On the FX side:
All our targets have been met: DXY reached 107, USDCHF hit 0.92, and EURUSD settled at 1.052. What’s next?
I expect a period of consolidation, but the trajectory could alter if the Swiss CPI comes in better than expected and Lagarde adopts a more accommodative tone.
In such a scenario, the ascent of the USD might not see a halt anytime soon and will head towards 108.
Chart 2: DXY 1d
On the crypto side:
We saw a bold move in BTC and in crypto in general, but once again with no volumes.
Conversely, it is nice to see uncorrelated moves with tech and gold, offering a nice edge in a multi-asset portfolio.
My bias is that the euphoria from spot and futures ETF will soon end, and markets will need to find some liquidity to hold up and not fade away.
Nonetheless, historically October has traditionally favoured crypto.
- BTC support: first at $27k and then $25k.
- BTC resistance at $28.7k.
Chart 3: BTCUSD 1d
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