Weekly Market Update: Market Rebound

After last week’s wild oscillations, which we called the cluster fudge, it was pleasing to see markets rebound strongly. It wasn’t just a crypto event with the S&P basically even for the week ending on Friday. 

Last week I also said markets are weird. The catalyst for the recovery in the US seems to be better employment data (the sky isn’t falling) and probably the BoJ saying that more rate rises were off the table.

Can only guess what words were exchanged between finance ministers but I’m guessing it was along the lines of “stop doing stupid shit”. They probably used more words. 

In other crypto news Ripple settled with the SEC, which was a big deal for the XRP faithful. Crypto companies got invited to The White House, Blackrock and Coinbase are keeping the SEC busy for different reasons and the gifts that keep on giving – FTX and Celsius – keep giving us gifts…just the crazy kind. 

In macro market news, the flashpoints that are Ukraine and Israel remain very tense. This is affecting shipping and global trade costs. 

Turning to the US. Unemployment drifted lower for the week, consumer credit arrears are climbing and the Presidential race has flipped in favour of Harris. 

In Europe the excellent Olympics and a summer break means there’s not a lot of economic news other than Russian inflation continuing to rise. 

Regionally the BoJ has gone back to being conservative, China continues to cool with lower exports and really low CPI growth. India may be starting to cool off too. 

Turning to Australia, their cost of living indices are trending up, while in New Zealand unemployment was as forecast. This could have been helped by the record number of young New Zealanders leaving as net immigration continues to fall.

The RBNZ decision on Wednesday was a coin flip and in this case they decided to cut by 25 bps. This will come as some relieve to the economy and may be more of a mental boost for many. 

Market sentiment has improved slightly as we moved from extreme fear, to just fear. Weirdly, because markets are weird, BTC is only down $3k over the last 14 days. 

Highlights this week: 

• The 7 day charts look much healthier this week with most assets posting single digit gains. 
• After last week’s exercise in dip buying, our Buy-Sell ratio has pulled back to near normal. Buys still dominate. 
• BTC and Stablecoins remained popular, and for the second week in a row, SOL volume was higher than ETH. 
• At the time of writing BTC, ETH and BNB were all up ~8% for the week. XRP was up 12%, while SOL was flat. 
• SUI has had a belter of a week, up 58%. 
• SOL was our worst performer, coming in unchanged for the week. 

View all top gainers: Visit the top gainers page to find out more.

Highlights from the crypto space

Ripple got a win, agreeing to pay $125m in fines vs the SEC request of $2bn. The big news, XRP is not a security.

Following a similar pattern to Coinbase, Robinhood’s earnings are way up on the back of …crypto.

Empire is saying BTC is tracking ahead of the last bull market. Nobody mention ETH though. 

Cashed up Coinbase is playing the game hard with the SEC demanding millions of documents in its case. Well played. 

Blackrock and Nasdaq filed with the SEC to provide options to the ETH ETF which would allow for hedging type plays. 

Ronin Bridge has suffered another hack, this time a white hat hacker. 

The Trump themed $DJT token got rugged. Call me surprised. 

Someone analysed the performance of the last 30 tokens listed on Binance. TLDR; no bueno. 

Synthetic stablecoin Ethena has expanded to Solana. 

Crypto companies got invited to The White House to discuss policy. That’s a big switch. 

FTX and Alameda will pay nearly $13bn to the CFTC to settle. I’m sure the creditors are stoked.

Defunct exchange Celsius is suing Tether for billions because it liquidated its loans. Tether is calling it a shake down. Seems about right. 

🌎 Macro news TLDR: …All eyes on US CPI.

Global shipping rates have eased slightly, down ~4% from the ATH. Context is key though, they are 291% higher than pre pandemic levels. 

Middle East tensions haven’t gone away with the expected retaliation from the Iranian faction still incoming. The upshot? Brent Crude prices have drifted back above $80 per barrel. 

U.S. economic news

Credit card delinquencies are up in the US. Jobless claims came in lower than expected, which calmed the market somewhat and led to a rally in the S&P. Ahead of this week’s CPI print, it’s worth noting that both consumer inflation expectations are in decline and that PPI rose less than expected. 

In the Presidential race, both pollsters and the Polymarket predictions have Harris in the lead. Uncertainty isn’t great for markets. 

Over in Europe….

German industrial production increased 1.4% in June. While Russian inflation is running at 9.1% and increasing, especially in food. Ukraine went on the offensive and invaded (they’re calling it an incursion) Russia. 

And in Asia Pacific…

China’s exports for July were the lowest in the last 3 months. China’s CPI for July rose to 0.5% year on year. Worryingly, producer prices (wholesale inflation) is down 0.8% for the same period.

Deflation is nigh. India’s CPI fell sharply to 3.5% because of big year on year declines in food pricing. This is more of a base effect change so it’s unlikely they have tamed inflation.

Worth noting that industrial production also fell in June. India’s central bank held rates as expected. 

After last week’s own goal, the Bank of Japan walked back on its plans to do more rate rises saying it needed to consider market volatility in any future plans.

Australia’s cost of living indices were up 1.2-1.4% for Q2, or running at 6.4% annualised, way above CPI at 3.8%. Strangely, consumer sentiment rose but that could be because wages are growing faster than CPI at 4.1%. 

In New Zealand, RBNZ research into inflation expectations shows the critical 2 year figure at 2.03% which is below the average since 2002.

The details in last week’s employment figures are out. While unemployment was as expected, underutilisation rose a significant 0.6% in the quarter and is up to 11.8% from 9.9% in the last year. Net migration has cooled (it was 120k plus!).

Concerningly, a disproportionate (38%) number of young New Zealanders are leaving. Finally The RBNZ cut the OCR to 5.25% and signalled that we are now moving into the easing phase of monetary policy.

That’s a wrap for this week. 

Stay tuned for the next update.

Did you miss the last weekly update?

Catch-up on the previous market update.