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November 20 REX Wire Market Outlook
Inflation is coming down, a soft landing is in sight, and risk assets are storming ahead.
It's a new week, and that means a new REX Wire roundup, bringing you the headline trends and figures from the world of finance and the economy.
Rate Rises Off The Table
Last week, stocks and bonds reacted dramatically to the latest inflation figures, which gave traders a renewed shot of confidence that rates have peaked and the US economy is in for that most elusive of events, a soft landing.
Bond yields and the dollar dropped sharply with the news that US CPI had come in below expectations, at 3.2%. That's still higher than the Fed would like, but the trajectory is good. There was a similar picture across the pond in the UK.
Jay Powell hastened to remind the market that the Fed would raise rates if inflation remained a problem, but traders weren't buying it. They're now absolutely convinced that 525-550 bps is the peak. US Treasuries duly reflected that assumption.
The S&P pushed above 4,500, and is now close to the local July high of 4,600. If that gets taken out, as seems entirely possible, then December 2021 all-time high of 4,800 could be next.
The dollar weakened further over the weekend, and has now given up almost half its gains from the July low. We'd expect to see some support here, around 103, but the trend is clearly downwards for now.
Another beneficiary of the market's assumption that the tightening cycle is over has been crypto.
Bitcoin Holds $37k
Bitcoin has had an exceptional year, rallying from the $15,500 low last November to its current yearly high. There's a clear picture of higher highs, and higher lows. Structurally, the market looks good.
Towards the end of last week, it became clear that an ETF would not be approved in the current window. This, analysts said, was no surprise. The inevitable dip was swiftly bought back up and bitcoin held $37,000 as the week closed.
Behind the scenes, the SEC is clearly engaging in dialog with the multiple ETF applicants, ironing out details and confirming the "plumbing" of the products, as the analysts put it. At this point, it would seem very strange if several spot BTC ETFs were not approved on or before the January 10 deadline.
It would also very likely lead to a tsunami of litigation against the SEC by some of the most powerful organizations on the planet.
2024 is going to be an interesting year for crypto.
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