All articles tagged with #risk assets
Investors may be underestimating the potential for stronger global economic growth in 2026, driven by pent-up demand and increased policy support, which could lead to higher inflation and pose risks to bond markets. Strategists suggest a shift towards cyclical stocks and caution against bonds unless yields are attractive, as higher growth may reignite inflation concerns and impact monetary policy.
Wall Street experienced a broad rally with the S&P 500, Dow, and Nasdaq all rising, driven by increased risk appetite and nearing year-end highs, amid geopolitical tensions and rising yields, with the Santa Claus rally beginning midweek.
Japan's recent rate hike to 0.75% marks the end of the 'free money' era, impacting global risk assets like Bitcoin by altering the yen carry trade and liquidity dynamics, with potential long-term effects on Bitcoin prices and market stability.
Bitcoin and ether surged past key levels following the Bank of Japan's rate hike to 2%, the highest since 2006, which, along with softer US inflation data, boosted risk appetite and supported broader market gains. Despite volatile trading and high leverage, the macroeconomic environment has improved sentiment, with Bitcoin's price targeting $143,000 according to Citigroup, though caution remains due to market fragility.
Bitcoin is experiencing its worst week since March, with a $300 billion market value loss, falling below key support levels and showing signs of a steep correction amid reduced investor confidence and declining futures open interest, contrasting with resilience in traditional risk assets.
DoubleLine Capital's Bill Campbell predicts that aggressive interest rate cuts by the Federal Reserve will steepen the US yield curve, boost risk-taking in credit markets, and lead to wider yield differentials, especially as the US faces large maturing debt and potential policy easing amid weak labor data.
JPMorgan's Ilan Benhamou argues that the independence of the Federal Reserve is a myth, citing historical and recent political pressures, and predicts US stocks will continue to rise amid expectations of interest rate cuts and increased investment in risky assets, despite ongoing debates about the Fed's autonomy and leadership changes.
Wall Street investors are showing remarkable resilience and bullishness despite escalating trade tensions and geopolitical risks, with markets reaching near-record highs and traders remaining confident that the current rally will continue, driven by a belief that trade conflicts will be resolved or won't significantly impact the expanding US economy.
Despite the U.S. inflation report denting hopes for a Fed rate cut, risk assets like bitcoin have shown resilience, with prices briefly dipping before stabilizing around $49,500. Analysts believe that the market is still acting as if a rate cut is possible, despite low expectations, and predict that bitcoin may hit an all-time high this year. The prevailing sentiment suggests that higher interest rates may be here to stay, and the market has adjusted to this new reality.
Asian markets are expected to continue with a positive risk sentiment this week, driven by growing confidence in the U.S. economic 'soft landing' and easing financial conditions. China's upcoming 'data dump' including import and export figures, bank lending and credit, money supply, and inflation data will provide insights into the country's economic performance in the fourth quarter. Other key economic indicators to watch in Asia include consumer inflation readings from Thailand, the Philippines, and Taiwan, as well as third-quarter GDP figures from the Philippines, Hong Kong, and Indonesia. The Reserve Bank of Australia's rate decision, Bank of Korea's policy meeting minutes, and Bank of Japan's summary of board members' opinions will also be closely monitored. Emerging and Asian markets may have room to catch up and potentially outperform after underperforming their U.S. and global peers last week.
Asian markets are expected to continue with a positive risk sentiment this week, driven by confidence in the US economic 'soft landing' and easing financial conditions. China's upcoming 'data dump' including import and export figures, bank lending, credit, money supply, and inflation data will provide insights into the country's economic performance in the fourth quarter. Other key indicators to watch include consumer inflation readings from Thailand, the Philippines, and Taiwan, as well as GDP figures from the Philippines, Hong Kong, and Indonesia. The Reserve Bank of Australia's rate decision, Bank of Korea's policy meeting minutes, and Bank of Japan's summary of board members' opinions will also be closely monitored. Emerging and Asian markets may have room to catch up and potentially outperform after underperforming their US and global peers last week.
Bitcoin slipped to just over $27,000 as worsening scenarios in the Hamas-Israel conflict dampened investor confidence in riskier assets. Crypto markets slumped over 1.6% in the past 24 hours, with Ether falling 2.2% and XRP leading a decline in alternative currencies with a 3% drop. Profit taking suggests investors are not keeping their money held up in risky bets just yet.
Billionaire hedge fund manager Paul Tudor Jones expressed caution towards investing in risk assets, particularly U.S. stocks, due to escalating geopolitical tensions and the weak fiscal position of the United States. Jones highlighted the Israel-Hamas conflict as the most threatening geopolitical event, which could lead to a risk-off market environment. He also pointed out that rising interest rates are worsening the U.S. fiscal health, creating an unsustainable debt situation. Jones stated that he would wait for a resolution to the Israel-Hamas conflict before considering investing in risk assets again, as he hasn't ruled out the possibility of a nuclear war.
Bloomberg Intelligence senior macro strategist Mike McGlone believes that the era of significant Bitcoin pumps is over, citing the cryptocurrency's declining volatility and maturation process. He warns that Bitcoin may face an extended retracement period and highlights the potential headwinds facing most risk assets. Bitcoin is currently trading at $26,109, down 0.11% in the past 24 hours and over 11% in the past seven days.
The decline of the US dollar, accelerated by cooling US inflation, is benefiting risk assets worldwide. A weaker dollar makes exports more competitive for US companies, while also making it cheaper for multinationals to convert foreign profits back into dollars. Raw materials become more affordable to foreign buyers, boosting the S&P/Goldman Sachs Commodity Index. Emerging markets benefit as well, as a falling US currency makes it easier to service debt denominated in dollars. The decline in the dollar could also boost profits for foreign exchange strategies like the dollar-funded carry trade. However, a potential rebound in US inflation could unwind anti-dollar trades.