Tag Archives: brace

43 per cent chance of a Fed rate cut isn’t enough: Markets brace for a volatile December

43 per cent chance of a Fed rate cut isn’t enough: Markets brace for a volatile December

We are caught between the surging optimism of the AI revolution and the sobering reality of a Federal Reserve that shows no immediate signs of pivoting toward monetary easing. The dominant narrative of the past six months, a powerful rally in US equities that saw the S&P 500 climb a robust 21 per cent from April through October, has now run into a wall of technical resistance and macroeconomic uncertainty. This creates a delicate and precarious balance for investors, who must navigate a market that is technically stretched, fundamentally challenged by a lack of broad-based participation, and now facing its first major test of conviction since the rally began.

The S&P 500’s impressive run, which brought its year-to-date return to over 30 per cent by mid-November, has been almost exclusively driven by the so-called Magnificent Seven technology giants. Their valuations, trading at more than 30 times earnings, are a clear signal that the market’s gains have been concentrated in a narrow cohort of AI beneficiaries. This dynamic echoes the excesses of the dotcom era.

This concentration creates a fragile foundation. The index now struggles at its 50-day moving average, a key technical level that often acts as a barometer of short-term sentiment. A failure to break through this resistance, especially after such a strong run, suggests that much of the easy money has been made and that further upside will be limited and hard-fought. Historical seasonal trends support this cautious view, as the final two months of the year typically offer only marginal gains following such a powerful rally.

The single most important event for the market’s immediate trajectory will be Nvidia’s earnings report on November 19. As the undisputed leader in AI chips, Nvidia has become the canary in the coal mine for the entire AI investment thesis. Its guidance on future demand, data center growth, and gross margins will be scrutinised for any sign of a slowdown in the frenzied spending by hyperscalers and tech firms. A strong beat and bullish outlook could provide a final burst of momentum to push the S&P 500 to new highs before year-end. Conversely, any hint of a demand deceleration or a more challenging competitive landscape would likely trigger a broad-based selloff, as it would call into question the core engine of the market’s gains over the past year.

Compounding this technical and earnings-driven anxiety is the shifting landscape of monetary policy. The Federal Reserve’s stance has become a primary source of near-term worry. Markets had been pricing in a high probability of a rate cut at the December meeting, but recent strong economic data, particularly in the labour market, have forced a dramatic reassessment. The odds of a December rate cut have now fallen to just 43 per cent, a coin flip at best. This sudden withdrawal of expected liquidity is a major headwind for risk assets. The implications are clear in the bond market, where the 10-year Treasury yield has climbed to 4.148 per cent, and in the foreign exchange market, where the US Dollar Index has strengthened to 99.299. A strong dollar and high yields are a toxic combination for global growth and for expensive, long-duration assets like technology stocks.

This environment of Fed uncertainty makes a barbell investment strategy particularly prudent. On one end, investors should retain exposure to high-quality, large-cap growth companies that are genuine AI leaders with strong balance sheets and clear paths to monetisation. On the other end, they should anchor their portfolios with resilient, high-quality dividend payers. These companies, often found in sectors like consumer staples and utilities, provide a steady income stream and act as a ballast during periods of market volatility and economic doubt. This dual approach allows investors to participate in the ongoing AI narrative while simultaneously protecting their capital from the potential fallout of a hawkish Fed.

The contrast between the US and emerging markets is also becoming more stark. While US valuations are stretched and corporate profit margins are at or near peak levels, many emerging markets offer a more compelling long-term risk-reward profile. Within this group, China remains a complex and challenging investment case, plagued by issues of capital misallocation and intense domestic competition. However, a selective approach is warranted. Chinese technology firms with a strong international footprint and a capacity for overseas expansion present a unique opportunity, as do high-quality dividend-paying stocks that can provide stability in an otherwise volatile market. The key is to avoid broad, passive exposure and instead focus on specific, well-managed companies that can navigate the domestic headwinds and capitalise on global opportunities.

The cryptocurrency market, deeply intertwined with the Nasdaq and broader risk sentiment, has been a stark reflection of this growing macro anxiety. Over the past 24 hours, the market has fallen 0.62 per cent, continuing a brutal 12 per cent monthly decline. The sentiment, as measured by the Fear & Greed Index, has plunged into the zone of “Extreme Fear,” registering a level of 17. A cascade of forced selling has amplified this fear.

In just four hours, over US$200 million in leveraged long positions were liquidated, creating a vicious feedback loop where falling prices triggered more margin calls, which in turn forced more selling. The unwinding of excessive leverage has left the market technically in a state of disrepair. The total crypto market cap has now fallen below its 200-day exponential moving average of US$3.63 trillion, confirming a bearish market structure.

The primary catalyst for this crypto selloff has been the same macro uncertainty plaguing traditional markets: the fading hope for imminent Fed rate cuts. As the odds for a December cut dropped to 44 per cent, the correlation between Bitcoin and the Nasdaq surged to 0.86, confirming that crypto is once again being traded as a high-beta risk asset. This has been compounded by a significant outflow of institutional capital, with Bitcoin ETFs experiencing US$1.1 billion in weekly outflows and a sharp 33 per cent monthly decline in stablecoin reserves, indicating a severe contraction in available trading liquidity. The market’s fragility was further exposed by a piece of news from Japan, where a proposal to slash the punitive crypto tax rate from 55 per cent to a more reasonable 20 per cent actually triggered short-term profit-taking. Investors, wary of any regulatory change, used the news as an excuse to exit positions, demonstrating how any event can become a catalyst for selling in such a risk-averse environment.

The key question now for the cryptocurrency market is whether a major technical support zone can hold. Analysts are closely watching the US$88,000 to US$90,000 range for Bitcoin. A decisive break below this level could unleash a wave of further liquidations, potentially totaling US$5.5 billion in short-term positions.

The market’s fate, much like that of the S&P 500, is now hostage to the same macro forces. Until there is greater clarity on the Fed’s path or a major, definitive catalyst, both traditional and digital asset markets are likely to remain range-bound and volatile, caught in a tense stalemate between the powerful promise of a new technological era and the immediate, sobering reality of a central bank determined to keep a tight grip on its monetary policy.

 

Source: https://e27.co/43-per-cent-chance-of-a-fed-rate-cut-isnt-enough-markets-brace-for-a-volatile-december-20251117/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Gold hits US$3,339 as markets brace for Fed moves and Bitcoin’s next big drop

Gold hits US$3,339 as markets brace for Fed moves and Bitcoin’s next big drop

I find myself drawn to the complexity of this moment, a trading session marked by mixed signals, yet brimming with implications for investors worldwide.

Let’s dive into the details, explore what’s driving these shifts, and offer my perspective on where things might be headed, all grounded in the facts and data at hand.

Global risks sentiment and economic backdrop

The global risks sentiment during this recent trading session was undeniably mixed, a reflection of the myriad forces tugging at investor confidence.

On one hand, there’s optimism stemming from stronger-than-expected US economic data: May’s US JOLTS job openings surged to 4.6 per cent, signalling robust labour market demand, while the ISM Manufacturing index ticked up to 49.0, hinting at a stabilisation in industrial activity despite remaining below the expansion threshold of 50.

These figures paint a picture of an economy that’s holding its own, defying some of the gloomier forecasts that have lingered in recent months. This resilience is a reminder that the US economy often finds ways to surprise on the upside, even amid uncertainty.

Yet, this positivity is tempered by caution. Fed Chair Jerome Powell’s latest remarks reinforce a “wait-and-see” approach, a stance that keeps markets guessing about the Federal Reserve’s next move. His acknowledgment that a rate cut in July isn’t off the table adds a layer of intrigue, suggesting flexibility but no firm commitment.

I see this as the Fed walking a tightrope: balancing the need to support growth against the risk of overheating an economy that’s already showing strength. It’s a prudent strategy, but one that leaves investors hungry for clearer signals.

Adding to the mix is a significant legislative development: the US Senate’s razor-thin approval of the One Big Beautiful Bill Act (OBBBA), passing 51-50 with Vice President Vance casting the decisive vote. This bill now heads to the House of Representatives for a final showdown, and its outcome could ripple through fiscal policy, government spending, and market sentiment.

While the specifics of OBBBA remain broad in public discourse, its passage in the Senate signals potential shifts in economic priorities, perhaps more stimulus or infrastructure investment, that could bolster growth or stoke inflationary pressures. The House’s decision will be a litmus test for how aggressively the US leans into fiscal expansion, and I’ll be watching closely.

US markets: A tale of divergence

Against this backdrop, US stock markets closed the session with a split personality. The S&P 500 dipped by 0.11 per cent, while the NASDAQ took a sharper hit, falling 0.82 per cent, which may reflect a cooling in tech-heavy growth stocks. Meanwhile, the Dow Jones Industrial Average shone brightly, climbing 0.91 per cent to claim the title of best performer among the trio.

It suggests that investors are rotating into value stocks or sectors less sensitive to interest rate speculation, such as industrials or financials, while taking profits in high-flying tech names. It’s a classic flight to stability in uncertain times, and I suspect the Dow’s strength is tied to solid economic data lifting confidence in traditional industries.

US Treasury yields, however, tell a different story, one of rising expectations. The 10-year UST yield edged up by 1.4 basis points, while the two-year yield jumped 5.3 basis points to 3.772 per cent. Higher yields across the curve signal that bond investors are pricing in either stronger growth, creeping inflation, or the possibility of tighter Fed policy down the road.

I lean toward a mix of the first two: the economic data supports growth, but persistent supply chain pressures and energy costs (more on that later) could be nudging inflation concerns. For bondholders, it’s a demand for better returns in a world where cash might not stay cheap forever.

Currency, commodities, and global cues

The US Dollar Index slipped by a modest 0.06 per cent, a subtle retreat that doesn’t scream panic but hints at a pause in the greenback’s dominance. In contrast, gold rallied 1.1 per cent to US$3,339 per ounce, a clear sign of its enduring allure as a safe-haven asset when sentiment wavers.

I’ve always viewed gold as the market’s emotional barometer, and its climb here feels like a hedge against the unknowns: Fed policy, legislative outcomes, and geopolitical risks.

Speaking of which, Brent crude oil rose 0.6 per cent to US$67 per barrel, a modest gain overshadowed by the looming OPEC+ meeting on July 6. Word is, the cartel might agree to pump an additional 411,000 barrels per day starting in August—a move that could ease tight supply but also cap oil’s upside.

I’m cautious here; energy markets are a wild card, and any surprises from OPEC+ could sway inflation expectations and, by extension, Fed thinking. For now, the market seems to be holding its breath.

Globally, Asian equity indices reflected the mixed mood in early trading, while US equity futures indicated a higher open. That flicker of optimism could stem from the US data or hopes of Fed accommodation; either way, it’s a tentative sign that sentiment isn’t all doom and gloom.

Bitcoin: Institutional moves and technical tensions

Now, let’s pivot to the cryptocurrency realm, where Bitcoin is stealing headlines once again. Hong Kong-based DDC Enterprise, a publicly traded food company, has secured US$528 million in fresh funding and plans to acquire 5,000 BTC over the next three years. This isn’t pocket change, it’s a bold bet on Bitcoin as a treasury asset, signalling that institutional adoption is gaining steam.

It’s a vote of confidence in crypto’s staying power, even as traditional markets grapple with their own dramas. Companies like DDC are betting that Bitcoin can hedge against inflation or currency weakening, a narrative I think holds water in today’s climate.

But the price action tells a more cautious tale. Bitcoin pulled back to US$105,250 on Tuesday after failing to breach US$109,000 over the weekend, and selling picked up pace, raising the spectre of a drop to US$104,000. We might be at a local top or entering consolidation, given the choppy trading. Let’s break down the charts to see what’s cooking.

On the daily BTC/USDT chart, Bitcoin’s caught between a downtrend line and its moving averages. The upsloping averages tilt slightly bullish, suggesting that buyers aren’t out of the game, but the RSI, hovering near neutral, shows that momentum has stalled.

If the price cracks below those averages and holds there, we’re looking at a slide to US$104,500, maybe even US$100,000, keeping it trapped in a bearish descending triangle.

But if it bounces off the averages and punches above the downtrend line, that bearish setup collapses, and we could see a run toward the inverse head-and-shoulders neckline, potentially a bullish breakout. I’m torn here; the technicals are poised for either outcome, and it’s a coin toss until momentum picks a side.

The four-hour chart sharpens the focus: Bitcoin has slipped below the moving averages, a sign that short-term traders are cashing out. The US$104,500 level is the line in the sand; buyers will fight tooth and nail to hold it, because a break could send it tumbling to US$100,000. Psychologically, that round number looms large, and I’d wager it’s where dip-buyers might step in.

Bitcoin’s at a crossroads. The institutional interest from DDC is a long-term tailwind, but near-term selling pressure could test those lower supports. If it holds US$104,500, I’d see it as a base for another push; if it folds, US$100,000 feels like a natural floor before sentiment shifts.

We’re in a volatile stew, but with sharp eyes and steady hands, there’s profit to be made. That’s my lens on this whirlwind- Complex, thrilling, and ripe for the astute.

 

Source: https://e27.co/gold-hits-us3339-as-markets-brace-for-fed-moves-and-bitcoins-next-big-drop-20250702/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

US-China trade deadline: Markets brace for impact

US-China trade deadline: Markets brace for impact

The Trump administration has issued a directive for countries to submit their best offers on trade negotiations by June 4, 2025, signalling an intent to expedite discussions with multiple trade partners. This deadline introduces a pivotal moment that could either pave the way for resolution or escalate existing frictions, further influencing market behaviour.

At the heart of this economic narrative lies the ongoing US-China trade dispute, a saga that has seen periodic escalations and temporary reprieves over recent years. The latest chapter involves heightened rhetoric and the looming deadline set by US officials, which has rekindled fears of tariff impositions or retaliatory measures.

The Trump administration’s push to accelerate trade talks is a strategic move aimed at securing favourable terms swiftly, but it also amplifies the stakes. Investors are left to ponder whether this pressure will yield constructive agreements or deepen the divide, particularly with China, whose economic policies and responses remain critical variables in the global equation.

The uncertainty is palpable, as markets historically react sharply to any whiff of trade war escalation, given the interconnectedness of global supply chains and trade flows.

Simultaneously, the US factory sector has delivered a sobering reality check. Recent data revealed weaker-than-expected performance, with manufacturing activity faltering amid softening demand and supply chain pressures. This downturn is significant because the manufacturing sector serves as a bellwether for broader economic health in the United States, the world’s largest economy.

The disappointing figures have fuelled concerns that the US might be losing momentum at a time when global growth is already under scrutiny. This development not only contributes to the subdued risk sentiment but also raises questions about the Federal Reserve’s next moves, as policymakers weigh the balance between supporting growth and managing inflationary pressures.

Speaking of the Federal Reserve, Chicago Fed President Austan Goolsbee, a voting member of the 2025 Federal Open Market Committee, has offered a measured perspective on the situation. He suggested that the Fed could proceed with interest rate cuts if the uncertainty surrounding trade policy dissipates, a statement that hints at a readiness to ease monetary conditions under the right circumstances.

Goolsbee also remarked that recent economic data has shown “surprisingly little impact so far” from the trade tensions, implying that the US economy has, to some extent, weathered the storm thus far. This cautiously optimistic tone contrasts with the market’s unease, highlighting a disconnect between official assessments and investor sentiment that often characterises periods of transition.

Despite the overarching caution, US stock markets managed to defy gravity on Monday, closing the session in positive territory. The Dow Jones Industrial Average edged up by 0.08 per cent, the S&P 500 climbed 0.41 per cent, and the Nasdaq Composite advanced 0.67 per cent. This resilience is noteworthy, especially as the CBOE Volatility Index, commonly known as the “fear index,” eased to 18.36 from 18.57.

While still above its long-term average, the VIX’s decline suggests a slight tempering of immediate market anxiety. However, this uptick in equities stands in contrast to broader global trends, as Asian equity indices closed mostly lower and continued to slide into the next day, while US equity futures signalled a weaker opening ahead. This divergence underscores the uneven impact of risk sentiment across regions and asset classes.

The bond market, meanwhile, painted a different picture. US Treasury yields rose across the maturity spectrum, with the 30-year yield briefly touching the psychologically significant five per cent mark. The 10-year yield increased by 4.0 basis points to settle at 4.440 per cent, and the two year yield rose by 3.9 basis points to 3.937 per cent.

This upward movement in yields reflects a shift in investor expectations, potentially driven by concerns over inflation or anticipation of tighter monetary policy down the road. Higher yields typically indicate that bond investors are demanding greater compensation for holding government debt, a sign that confidence in the economic outlook might be wavering or that inflationary pressures are creeping into the calculus.

In the currency markets, the US Dollar Index experienced a notable decline, dropping 0.63 per cent to its lowest close since April 21, 2025. This weakening of the dollar is a critical development, as it influences everything from trade competitiveness to commodity pricing. The dollar’s slide could be attributed to the confluence of trade uncertainties and shifting monetary policy expectations, which have diminished its appeal as a safe-haven currency in this instance.

Conversely, gold seized the opportunity to shine, rebounding by a robust 2.8 per cent. This surge aligns with gold’s traditional role as a refuge during times of geopolitical tension and currency depreciation, reinforcing its status as a barometer of investor unease.

Commodities offered additional insights into the market’s mood. Brent crude oil prices climbed 2.9 per cent to US$65 per barrel, a move that defies the OPEC+ decision to unwind an additional 411,000 barrels per day of output cuts in July.

This rise suggests that factors beyond supply adjustments—such as demand expectations, geopolitical risks, or currency effects—are driving oil prices higher. The resilience of oil in the face of increased production highlights the complexity of the current environment, where traditional supply-demand dynamics are overlaid with broader macroeconomic currents.

The cryptocurrency market, often a wild card in financial narratives, also made headlines. Bitcoin, after a meteoric 50 per cent surge over the past 45 days that propelled it to a record peak of US$111,880, shed nearly eight per cent in a sharp correction. This pullback, the first significant retreat since its April lows of US$74,501, follows a period of remarkably steady gains, as noted in the latest Bitfinex Alpha report.

Analysts have flagged potential turbulence in Bitcoin derivatives markets, where options open interest recently hit a staggering US$49.4 billion before retreating to US$39 billion post-May expiry. This peak, coupled with a spike in perpetual futures open interest near all-time highs, points to heightened speculative activity and a subsequent flushing out of leverage. Such dynamics suggest that Bitcoin traders are girding for volatility, a not-uncommon scenario for an asset known for its dramatic price swings.

Amid this turbulence, Strategy (MSTR), a firm with a well-documented Bitcoin strategy, doubled down on its commitment. The company acquired an additional 705 BTC for US$75 million, boosting its total holdings to 580,955 BTC at an average purchase price of US$70,023 per Bitcoin.

This latest purchase, executed at US$106,495 per BTC, was financed through at-the-market equity offerings via its perpetual preferred share classes STRK and STRF. Strategy’s unwavering accumulation reflects a belief in Bitcoin’s long-term value, even as short-term price fluctuations test the market’s resolve.

In a contrasting corporate narrative, Meta shareholders overwhelmingly rejected a proposal to consider Bitcoin as a treasury asset, with 95 per cent voting against it and less than one per cent in favour, per a Securities and Exchange Commission filing. This decisive rebuff underscores a preference for traditional financial strategies over speculative ventures into cryptocurrency.

Yet, Meta’s stock surged 3.6 per cent on news of its plan to deploy a fully AI-driven advertising engine by 2026, signaling that investors are far more enthusiastic about the company’s technological ambitions than its potential dalliance with Bitcoin.

In my view, the subdued global risk sentiment is a rational response to the twin pressures of US-China trade tensions and faltering US factory performance. The Trump administration’s June 4 deadline injects urgency into an already fraught situation, creating a high-stakes environment where outcomes remain uncertain.

A successful resolution could bolster confidence, but any misstep risks deepening economic fissures, particularly given China’s pivotal role in global trade. The manufacturing data, meanwhile, serves as a warning sign that the US economy may not be as robust as hoped, amplifying calls for policy intervention.

The Federal Reserve’s stance, as articulated by Goolsbee, strikes me as pragmatic yet cautious. The prospect of rate cuts contingent on trade clarity is a sensible approach, but the uptick in Treasury yields suggests that markets are already factoring in inflationary risks or a potential hawkish pivot. This tension between Fed rhetoric and market pricing could foreshadow challenges ahead, especially if economic indicators continue to soften.

Market reactions are a mixed bag. The resilience of US stocks is encouraging, but the broader global picture—evident in weaker Asian markets and US futures—hints at pervasive caution. The dollar’s decline and gold’s rally signal a flight to safety, while oil’s strength amid OPEC+ adjustments points to underlying demand or risk premiums at play.

In the crypto realm, Bitcoin’s correction feels like a natural pause after an extraordinary run, though Strategy’s steadfast accumulation contrasts sharply with Meta’s shareholder conservatism, illustrating divergent views on digital assets.

Ultimately, we’re in a period of flux where vigilance is paramount. Trade talks, economic data, and Fed decisions will steer the course, and while opportunities exist, the risks are equally pronounced. Investors would do well to stay informed and agile as this story unfolds.

 

Source: https://e27.co/us-china-trade-deadline-markets-brace-for-impact-20250603/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j