Friday, Apr 14, 2023

Oil, the dollar, the inflation outlook and what all this means for crypto...

“The future ain't what it used to be.” – Yogi Berra   

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WHAT I’M WATCHING

• PPI signals. On the surface, the below-expectations readings are really good news, but were largely due to energy prices whose help on inflation is likely to be fleeting. More on this below.

• ECB expectations and the dollar. The outlook for the dollar is a key factor in the outlook for crypto prices. More on this below.

• ETH withdrawals. So, more than a day after the Shapella upgrade, we can breathe a sigh of relief and say that wasn’t so bad – as in, no wall of selling. More on this below.

• Global CBDCs? On Wednesday, Bo Li – the IMF’s Deputy Managing Director – said in a speech at the annual Spring Meeting that 40 countries have approached the institution for help with designing CBDCs, and that it is already working with 30. This is sobering, as linking the IMF to international currencies implies a certain amount of mission creep, as well as potentially conflicting incentives when it comes to economic independence vs economic harmonization. I don’t have more to say about this at the moment, but this is worth keeping an eye on, and I will be brooding about it.

MARKETS

Slippery oil signals

Yesterday delivered good news on the likely direction of goods prices, with an unexpected month-on-month decline in the US PPI index – it came in with a drop of -0.5% vs 0.0% in February, the steepest drop since the start of the pandemic, while the consensus forecast was for a bump to 0.1%.