Thursday, July 13, 2023

The surprising CPI reaction, Russia's CBDC significance, developer activity, deep space and more...

“This must be Thursday,' said Arthur to himself, sinking low over his beer. 'I never could get the hang of Thursdays. '” – Douglas Adams   ||  

Hello, everyone! Today’s email ended up being a bit long, but mainly because of charts - you might have to open it in browser to see the jiving bird at the end.

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WHAT I’M WATCHING

CPI beat. Yesterday’s US inflation data surpassed expectations to the downside, which is very good news for the outlook for US interest rates from here. Stocks didn’t react as much as I expected, though, and the dollar got hammered. More on this below.

BTC’s lack of reaction. To be honest, I’m perplexed as to why BTC didn’t react more positively to yesterday’s CPI read and the subsequent drop in the DXY dollar index. More on this below.

Geopolitical CBDCs. Russia has passed a law enabling the creation of a “third form of money”, removing the only remaining obstacle to the digital ruble. The pilot is expected to launch next month, and could have a meaningful impact on the evolving shape of geopolitical currency blocs and financial flows. More on this below.

Developer exodus. Electric Capital’s latest update on its annual Developer Report shows that the number of developers working on blockchain projects is down 22% vs a year ago, but that those who left were newbies, in the industry for less than a year. More on why this matters below.

A broader proposal. Senators Lummis (R-Wyo) and Gillibrand (D-NY) re-launched their crypto oversight bill yesterday. This is a big deal, in that represents the widest-reaching initiative on the topic to ever emerge from the Senate, and could compliment bills recently presented in the House of Representatives. It has, unfortunately, scant chance of approval before the government is thrown into election fever, but is worth keeping an eye on as the resulting dialogues could sketch a hint as to what eventual US legislation might look like.

MARKETS