Friday, Nov 3, 2023

BTC and stocks, gold tokens, inflation expectations, triple-guessing the Fed

“Rebellions are built on hope.” – Jyn, Rogue One ||

Hello everyone, and happy Friday! What a week…

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IN THIS NEWSLETTER:

• Stocks and BTC: not great, but maybe not such a threat

• Tokenized gold – more than just another asset

• Inflation expectations

• Triple-guessing the Fed

WHAT I’M WATCHING:

Not great, but maybe not such a threat

Yesterday, I wrote about how the market reaction to Fed Chair Powell’s comments on Wednesday didn’t make much sense. Today I want to stress my bewilderment a bit more, and extend that to a change-of-mind about crypto.

My bewilderment stems mainly from the absence of new news in the statements. To me, the tone sounded very similar to official Fed statements over the past few weeks: no rate cuts any time soon, we can take our time on deciding whether to hike again, that sort of thing.

As for peak rates being in, the futures market was signalling that anyway, and has been for some time. The CME FedWatch indicator showed the market-priced probability of another hike in December dropping to 20% a week ago, before the FOMC press conference. Since the press conference, it has not moved.

(chart via CME FedWatch)

An argument that does make sense is that the stock and bond markets had fallen sharply, and that a rebound was due. The term “technical bounce” is being thrown around.