1 Minute Market Rundowns - brought to you by the BCB Trading Team

Today we’ll cover:

• Israel situation dominates
• Bond rout stabilises
• USD strong but not making new highs yet
• BTC leaps overnight as SEC hide

Events in Israel have caused havoc in the markets over the last week, but frankly that pales into significance when considered against the human loss of life and atrocities faced out there. It feels churlish to write about the effects on markets at times like this, but write I must. Please do not take the economic views as in any way a lack of acknowledgment of the situation.

The situation in Israel saw bond markets gather momentum before reversing and caused stock markets in the U.S and Europe to tumble on Friday. The move gathered pace as inflation in the U.S just beat expectations last week but, in my opinion, not by enough to prompt the FOMC into action next month. From here it is a difficult call and all eyes will be watching for further escalation, which sadly seems likely. The world’s favourite safe haven currency the CHF was a big winner as EUR/CHF made new lows for the year.

There is a large part of me that wants to fade these moves as my game plan for Q4 is stocks higher and USD lower. Everyone has a plan until they get punched in the face and for now I have been forced to reduce my risk. Any sign of de-escalation will be met with a huge relief rally and the optimist in me remains hopeful.

Crypto has been quietly drifting lower as the headwinds, for ETH especially, come to the fore. This changed last night as the SEC missed the deadline to appeal the Grayscale decision. This seems another indicator that ETF approval is coming sooner rather than later. The question now becomes how positioned is the market for the news? Are we all relying on this to ignite a rally that won’t follow? I remain hopeful but nervous. We need to see BTC above 29,000 on a closing basis to banish doubts from my mind.

Good luck as always

Rich

Richard Usher
Head of OTC Trading

The information contained in this document should not be relied upon by investors or any other persons to make financial decisions. It is gathered from various sources and should not be construed as guidance. The information contained herein is for informational purposes only and should not be construed as an offer, solicitation of an offer, or an inducement to buy or sell digital assets or any equivalents or any security or investment product of any kind either generally or in any jurisdiction where the offer or sale is not permitted. The views expressed in this document about the markets, market participants and/or digital assets accurately reflect the views of BCB Group. While opinions stated are honestly held, they are not guarantees, should not be relied on and are subject to change. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Past performance of the digital asset markets or markets in their derivative instruments is not a viable indication of future performance with actual results possibly differing materially from those stated herein. We will not be responsible for any losses incurred by a client as a result of decisions made based on any information provided.

Today we’ll cover:

• Quarter and Month end flows dominate
• US yields break higher again
• Stocks crumble
• Seasonality in play or something more serious?

I am going to disappear down a bit of a USD rabbit hole today so be warned, but I think it holds relevance to Crypto and broader macro markets as well.

Yesterday saw a Crypto rally snubbed out in its prime yet again as the broader macro theme took over. We were skewed to sellers into the rally in the majors as month and quarter end flows dominated ours, and others books.

The rally in US yields is quite staggering to me as the 10 year trades above 4.6 amid some generic higher for longer comments from FED officials. US stock markets continue to lead the move lower in risk and in this environment no risk asset is proving safe. That said, for BTC to be above 26,000 and ETH above 1600 is seriously impressive and should be respected in the medium term.

The USD is reigning supreme as Eur/Usd makes new lows on the year, GBP is close to 1.2000 again having been above 1.3000 a few weeks ago and USD/JPY is within a whisper of 150 causing sleepless nights for the MOF.

This brings me to seasonal trends which have played out very well this year in the markets. This period of the year is often the worst performing time of the year for stock markets, as it is proving again, and the link between stocks and the USD is strong due to rebalancing flows. So it is worth noting that October is often a very strong month for stocks and with long positions cleared out and speculative shorts rife the set up is there once again for seasonal inflows to dominate. The danger to this view is with interest rates being so high it could reduce the money poured into risk when you can get 6% in the bank but I still believe the flows will materialise.

The USD often shows a similar seasonal path and this is highlighted by the USD index charts below. You can see that last year the USD was rampant at this time of year but peaked at the end of September as seasonal flows started a rout which continued for some time. The peak on the chart was September The 29th 2022 and what followed was an 8% move lower into the year end.

The set up this year is not dissimilar to then and is shown below as we zoom in on the recent move.

Is it too perfect? Perhaps.
Is it worth respecting? For me 100% with potential for good news next month in Crypto and other asset classes.

Good luck as always

Rich

Richard Usher
Head of OTC Trading

The information contained in this document should not be relied upon by investors or any other persons to make financial decisions. It is gathered from various sources and should not be construed as guidance. The information contained herein is for informational purposes only and should not be construed as an offer, solicitation of an offer, or an inducement to buy or sell digital assets or any equivalents or any security or investment product of any kind either generally or in any jurisdiction where the offer or sale is not permitted. The views expressed in this document about the markets, market participants and/or digital assets accurately reflect the views of BCB Group. While opinions stated are honestly held, they are not guarantees, should not be relied on and are subject to change. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Past performance of the digital asset markets or markets in their derivative instruments is not a viable indication of future performance with actual results possibly differing materially from those stated herein. We will not be responsible for any losses incurred by a client as a result of decisions made based on any information provided.

Today we’ll cover:

• Central banks policy divergence laid bare
• USD reigns supreme for now as FOMC hold a hawkish tone
• Higher for longer the theme but peak in rates seems close
• Recession fears dominate

Well I suggested volatility and, crypto markets aside, I have not been disappointed. In a week dominated by central bank decisions the market expectation/hope from all the major decisions proved wrong.

The BOE and SNB were expected to hike and both refrained hinting at a top in place for rates but holding higher for longer. The BOJ yet again did nothing whilst moaning about the yen like a child who has dropped its dummy. Either pick it up or keep crying is the point we are at, and I suspect if/when usd/jpy trades at 150 the BOJ will intervene and pick its dummy up off the floor.

The FOMC held unchanged as expected but the dot plot (frankly an utter work of fiction) indicated the door is wide open to one more hike and very few, if any, cuts next year. Powell showed no signs of softening his stance and recession fears have come to the surface once again.

Stock markets have broadly had a terrible week(FTSE aside as the UK breathed a sigh of relief) and there will be few traders and investors sad to see the back of September. The USD has broadly gained as rate differentials dominate, but progress has been lacklustre thus far as we approach the years high for the USD index.

It has been a tough week for my “ease into usd shorts” trading mode but I still like it overall. Momentum higher will be hard fought from here and I remain in the camp that the USD finishes the year 5% lower than here and stocks 7% higher.

Crypto has held up remarkably well in this environment all things considered. Watching the mad rush in traditional markets one can’t help wondering how different things will be in 20 years time when the genuine alternative to money dominates ( we can only hope). Not much more to say here as specific news has been thin on the ground but with my views on the USD and stocks laid out above you do not need to be Einstein to figure out I am in dip buying mode for crypto still.

Good luck as always

Rich

Richard Usher
Head of OTC Trading