DAILY CONQUEST #103
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Good morning Fam,
To state things plainly, the US Federal Reserve is on a mission to break stuff. Their primary focus is the unemployment rate, US real estate, and the US bond market, but neither has been dramatically affected yet.
Unfortunately, there were some innocent global bystanders in the Fed’s pathway that we will cover today.
The victims of Quantitative Tightening thus far:
Yen
The Yen lost 43% of its value versus the USD since February 2021. In reaction, the central bank of Japan began selling USD a few weeks ago and has billions of foreign exchange reserves on deck to buy back the Yen. As a result, USD/JPY has reached levels not seen since 1998.
USD/JPY 1M
High-resolution chart
Gilts (UK Treasury bonds)
The 10Y Gilt collapsed as investors began losing confidence in the Bank of England and rushed into USD. The incoming energy crisis in the EU and UK is forcing markets to question the BoE’s ability to pay back bond rates. Sadly, the Gilts are closely tied to the UK’s pension plans. The Gilt chart below resembles some altcoin charts.
High-resolution chart
EURO
Similar to the UK, Europe is facing an incoming energy crisis this winter after EU sanctions on Russia led to a reduced supply of natural gas. Without cheap gas, significant questions are arising concerning the Eurozone economy. Add pressure from the Fed’s quantitative tightening, and the Euro is at the lowest rates since 2001 versus the USD.
EURO/USD 1M
High-resolution chart
AMD/Tech
While the Fed breaks demand across the markets, the tech sector is feeling the pain in revenue numbers. The once high-flying AMD stock held loads of promise in a world going evermore digital, reaching a market cap of $188 billion. Instead, the stock is now down -65% from highs. AMD is a small sample of a broader tech bubble that’s gone bust.
AMD 1M
High-resolution chart
BTC/USDT 1D
The quiet before the storm continues in BTC. The bulls continue to defend the $19k support level ahead of tomorrow’s Core Price Index (CPI) announcement. Traders should expect volatility to increase after the press release, especially if the number is below/above the 8.1% mark. BTC completed the daily candle up +0.50% to $19,155.
High-resolution chart
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BNB executes hard fork. The BNB network, closely tied with Binance, has executed a hard fork with security upgrades after the $100m cross-chain exploit last week. The team is expected to conduct a governance vote to decide the fate of the funds held in the hacker’s address.
Nothing left to save. FTX CEO Sam Bankman Fried (SBF) said he will look into Celsius but does not see much more in the “rescue market.”
“I’m sure there’s something we haven’t seen yet, but there isn’t a whole lot out there that we’re aware of. There aren’t big things,” Bankman-Fried said during his talk at DC Fintech on Oct 11.
News Tidbits:
- Blockchain.com secures preliminary approval for Digital Payment Token services in Singapore.
- 21Shares introduces Bitcoin ETP in the United Arab Emirates.
- Crypto.com invests $150m for new European headquarters.
- The Liquidity Wars: Empire of Frax.
NFT & metaverse update ????
- Damien Hurst burns $10m in art for NFT project “The Currency.”
- Japanese Telecom Giant launches $412m, metaverse division. Japan’s largest wireless telecom firm, NTT Docomo, has launched a metaverse division named Qonoq. The division will staff 200 employees and focus on expanding its “XR World” metaverse.
My Five cents…
The Core Price Index (CPI) will be released pre-market tomorrow at 08:30 am EST.
The CME’s FedWatch Tool increased the probability of a 75% basis point hike to 81% after a few hawkish comments on the FOMC minutes. Moreover, most banks are forecasting sticky inflation with little change.
