A CBDC alternative to SWIFT?

Plus: a market overreaction?, CBDC avoidance and US CDS

“One thing that’s missing but will soon be developed is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A” – Milton Friedman, 1999 ||

Hello everyone, and a belated welcome to November! Terrifying to think that there are only two months left in 2023.

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IN THIS NEWSLETTER:

• Refreshing over-reactions

• A CBDC alternative to SWIFT?

• US debt confidence

• Little retail interest in CBDCs

WHAT I’M WATCHING:

Well, that was refreshing

Risk sentiment seems to be back, which is perplexing. The FOMC statement and press conference yesterday seems to have gone down well with markets around the world, even though the economic outlook is not much different today than yesterday or the day before.

True, there was some relief in the release of the Treasury’s auction calendar, with less issuance in the long end than expected. But there’s still a hefty amount of issuance at the long end, which will keep the interest rate bill and therefore the deficit high.

And, true, the ADP employment data for the US came in lower than expected, which suggests that the rate hikes might finally start to have an impact on consumption and thus bring inflation down further. But yesterday’s ISM manufacturing data was much worse than expected, which signals a slowdown. That does not bode well for earnings.

So, I’m struggling to see the risk-on message in yesterday’s news and comments.

My takeaways: