Current US stock market remains optimistic, with most central banks around the world still observing the pace of interest rate cuts, while a few have already entered an interest rate cut cycle. In the cryptocurrency market, there is a clear lack of liquidity, with significant decrease in BTC volatility and trading volume.
Last week’s important information:
– The US added Japan, Taiwan, and seven other countries to the watchlist for currency manipulation.
– The Japanese yen depreciated significantly, with CPI and core CPI lower than expected.
– Most central banks around the world are still observing the pace of interest rate cuts, while a few have already entered an interest rate cut cycle.
– Eurozone CPI data was released and met expectations.
– US retail sales were much lower than market expectations.
– BTC volatility reached a historical low, with decreased trading volume, and the market is closely watching interest rate expectations.
Highlights for this week:
– Conclusion: The US market sentiment remains optimistic, with a slight pullback on Friday but the current trend of capital parties continues.
– Non-US countries are gradually entering an interest rate cut cycle, with the Bank of Japan and the Ministry of Finance being weak and cautious in foreign exchange interventions and tightening funds to avoid disrupting the hard-earned economic growth and inflation after more than 20 years of delay. The Japanese yen weakened.
– This week is expected to be a quieter period with not much news. Possible significant fluctuations are still expected in the Japanese yen and other minor currencies, or the impact brought by the announcement of detailed PCE data on Friday night. The majority of mainstream cryptocurrencies and technology stocks continue to have a bullish trend.
– In the recent cryptocurrency market, there is a clear lack of liquidity, with significant decrease in BTC volatility and trading volume. Besides the approval expectation for ETH spot ETF, there are no other major catalysts, and interest rate expectations have become the main factor driving price trends in the short term.
– The US Treasury Department added Japan, Taiwan, and seven other countries to the watchlist for currency manipulation, although the actions of the Japanese Ministry of Finance and the Bank of Japan in foreign exchange market interventions are not as frequent as the market imagines.
– The significant depreciation of the Japanese yen has led to an increase in import prices, resulting in a year-on-year increase of 2.8% in Japan’s consumer price index (CPI) in May, lower than expected. The core inflation rate also rose to 2.5%, which has been higher than 2% for 26 consecutive months, but still lower than the market’s expected 2.6%.
– Several countries have also announced new rounds of interest rate decisions, with Australia, Brazil, and the UK keeping interest rates unchanged, and Switzerland reducing interest rates by one notch, all completely in line with market expectations. Most central banks around the world are still observing the pace of interest rate cuts, while a few have already entered an interest rate cut cycle.
– Eurozone CPI was announced, with CPI rising to an annual increase of 2.6% and the core CPI rising to an annual increase of 2.9%, both meeting expectations and not causing significant changes in the market.
– US retail sales decreased by 0.1% in the month, much lower than the market’s expected 0.2% increase, maintaining the optimistic sentiment in the stock and bond markets until Friday’s slight pullback. In the bond market, the yield on the US 10-year Treasury bonds remained at around 4.20% after the data was released on Tuesday, and gradually climbed back to around 4.30% in the following days. The US dollar index also rose from 104.80 to 105.50.
– BTC volatility has reached a historical low, and trading volume has decreased, reflecting a lack of liquidity. BTC and ETH prices continue to fluctuate widely, with smaller cryptocurrencies experiencing more significant declines and continuous fund withdrawals. At the same time, due to the strong performance of the US stock AI sector in recent times, short-term funds seem to prefer targets such as NVDA.
– In summary, the overall financial market has not seen additional liquidity. Combined with the lack of major and eye-catching catalysts in the cryptocurrency market, the concept of “US stock vampire altcoins” has emerged, which is not entirely unreasonable. In the current market conditions, the topic of interest rate expectations in the cryptocurrency market has gradually approached the overall market. This is why we need to constantly pay attention to the macroeconomy.
– On Monday and Tuesday, there will be various Eurozone data, official speeches, and meeting minutes. The market is expected to further push down the euro, with limited upward potential. The reasons include weak recent European data, more dovish attitudes of officials, and unstable political situations around the world, all putting pressure on the euro.
– The US will also have federal government bond auctions, official speeches, new home sales, and other information on Tuesday and Wednesday, but their impact on the market is limited.
– On Thursday, there will be durable goods orders and, as usual, the number of initial and continuing jobless claims. Together with Japan’s Tokyo core CPI and industrial production announced on Friday, there may be another impact on the Japanese yen and other risk assets.
– Finally, on Friday night (Taiwan time), the US will announce the PCE price index, University of Michigan consumer sentiment index, and inflation expectations, which will be the most important data release of the week. Financial markets may silently undergo major events during our sleep (or party) time.
– The current international situation is turbulent due to events such as the significant depreciation of the JPY, the rise of far-right forces in Europe, and the uncertainty of interest rate expectations, resulting in low visibility for the future market. There is a visible lack of liquidity in the cryptocurrency market, and the attitude towards interest rate speculation is further leaning towards the US stock market. In a situation with a lack of liquidity, any slight movement in the data can cause significant volatility, so caution is needed in trading.
Stay tuned.