Friday, May 31, 2024

market moves, econ data, institutional investor sentiment, fake friends

“The ships hung in the sky in much the same way that bricks don't.” – Douglas Adams ||

Hi all! Seriously, how did it get to be Friday so fast? Never mind that, how did it get to be the end of May so fast?  

In today’s email, I look at market sentiment around economic data – it still doesn’t make sense. I also extract some key points from the Fidelity Digital Asset institutional survey, and I touch on the evolution of tradfi-crypto products vs the legacy mindset.

Oh, I’m on Bloomberg’s tech show later, if you’re around.  

If you find this newsletter useful, would you mind sharing it with your friends and colleagues? ❤

IN THIS NEWSLETTER:

• Markets between the lines

• Institutional investor sentiment

• Fake friends?

If you’re not a subscriber to the premium daily, I hope you’ll consider becoming one! You’ll get ~daily insight into the growing overlap between the crypto and macro landscapes, as well as some useful links. And there’s a free trial!

WHAT I’M WATCHING:

Markets between the lines

Today we get yet another key data point on the US central bank’s fight against inflation: the Personal Consumption Expenditures for April. The Federal Reserve prefers to focus on this metric rather than CPI, as it covers a broader swathe of the population, better reflects shifting consumption preferences and incorporates a wider range of price factors.

Consensus forecasts point to no change in the rate of growth, with the headline year-on-year figure holding steady at 2.7% (0.3% month-on-month), with core holding at 2.8% (0.3% month-on-month). However, the Cleveland Fed’s inflation nowcast (not a forecast, more a model that projects results based on data inputs) is pointing to a year-on-year increase of 2.7% (0.2% month-on-month) for the core index, in line with Bloomberg’s expectation.

And yesterday’s US Q1 GDP revisions hint at a slight deceleration: the Q1 core PCE index growth was revised down from 3.7% to 3.6%.

This is the perplexing part. Q1 PCE growth undershooting the average expectation triggered a drop in US bond yields, as traders seemed to decide that rate cuts might be more likely after all.