1/

This week the focus will be mainly on the FOMC rate decision on Wednesday 2pm EST, followed by Apple earnings report on Thursday after the market closes.
— CTF Capital (@CTFCapital)
May 1, 2023

2/

On the Fed decision, we expect a 25bp hike combined with explicit willingness to pause the hiking cycle for the time being.

The Fed is currently trapped in the middle of a trilemma between inflation, economic activity and financial stability.
— CTF Capital (@CTFCapital)
May 1, 2023

3/

With inflation still running at uncomfortably high levels, it continues to be the top priority. However, the lagging effects of rates that whent from zero to 5.00% in a few months are already impacting on recession expectations.
— CTF Capital (@CTFCapital)
May 1, 2023

4/

In connection to that, the financial stability was tested again this weekend with a final resolution that seems far from optimal. JP Morgan acquiring First Republic Bank's assets and some liabilities leaves the financial system more vulnerable, in our view.
— CTF Capital (@CTFCapital)
May 1, 2023

5/

With too big to fail banks becoming even bigger, the idea of diversifying the financial risk in more banks, especially after the 2008 crisis, is reversing. Current bail out policies are insuring virtually every deposit, creating the wrong set of incentives for the industry.
— CTF Capital (@CTFCapital)
May 1, 2023

6/

Bottom line, we see the weakness of the banking system as supportive for digital assets' adoption in the medium term.
— CTF Capital (@CTFCapital)
May 1, 2023

1/ Last week the Federal Reserve increased the Fed Fund rate by 25bp as expected, with a clear signal of a pause ahead. The hiking cycle, as it stands now, involved 500bp in less than a year.

Two factors are key to expect a pause at this point...
— CTF Capital (@CTFCapital)
May 8, 2023

2/ First, the lagging effect between 6-9 months for rates to impact the real economy. Second, the likelihood that the cycle may have started late to curb inflation and therefore the Fed fell behind the curve and had to overreact with higher than needed rate increases.
— CTF Capital (@CTFCapital)
May 8, 2023

3/ The Fed is facing a three-fold dilemma of inflation - economic activity - financial stability. The third one is bringing most of the uncertainty as a result of the banking turmoil that started in mid-March with the SVB and Signature Bank failures.
— CTF Capital (@CTFCapital)
May 8, 2023

4/ The loss of deposits, mainly from regional banks, has continued. Too-big-to-fail banks are getting bigger and smaller banks are dealing with liquidity and solvency issues mainly due to higher rates.
The market is already pricing in rate cuts for the second half of the year.
— CTF Capital (@CTFCapital)
May 8, 2023

5/ This week the focus will be on the CPI figure to be released on Wednesday 8.30am EST. Jobless claims and consumer sentiment will follow on Thursday and Friday respectively.
Expectations point to a slight decrease in inflation, consistent with a Fed pause in it's hiking cycle.
— CTF Capital (@CTFCapital)
May 8, 2023

6/ We see a positive implication for digital assets as the hiking cycle reaches its peak and the narrative turns to the easing cycle to provide financial stability and therefore a risk on appetite comeback.
— CTF Capital (@CTFCapital)
May 8, 2023

The Empire State Manufacturing Index was released this morning. It came out at -31.8 comparing to -3.7 expected. The Index shows business conditions in the state of NY out of 200 surveyed manufacturers. The May release represents a significant negative surprise.
— CTF Capital (@CTFCapital)
May 15, 2023

It has a bearish bias for the USD. The DXY index is slightly down in the open while crypto markets are in green territory, as expected.

Several Fed officials are already expressing views on the macroeconomic picture this morning.
— CTF Capital (@CTFCapital)
May 15, 2023

We see mixed signals as far as a pause in the coming meeting is concerned. Some officials continue to consider further hikes down the road. We will hear several more ages officials provisión forward guidance during the week.
— CTF Capital (@CTFCapital)
May 15, 2023

Along this week, retail sales, housing starts and industrial production will contact to provide valuavyclues on the pace of the economy.

Present financial conditions favor a pause in rate hikes. Once digested by market participants, it will be positive for volatile assets.
— CTF Capital (@CTFCapital)
May 15, 2023

Debt ceiling talks will take center stage this week as the June 1st deadline approaches fast and market's anxiety increases.
Even though the chances of a default are nil, the partisanship exploitation of this situation for political purposes is damaging for credibility.
— CTF Capital (@CTFCapital)
May 22, 2023

On Wednesday, the Fed will release its latest meeting minutes, providing more details on what we believe could have been it's last hike if the cycle.
Several Fed officials will be in the tape this week in addition to Treasury Secretary, providing forward guidance on Fed actions.
— CTF Capital (@CTFCapital)
May 22, 2023

On Thursday, jobs data and GDP Q1 figures will be relevant to assess the pace of economic growth and possible implications on future Fed decisions.

Finally, the most important data release this week will be PCE inflation in Friday 8.30am EST.
— CTF Capital (@CTFCapital)
May 22, 2023

Consensus expectations point to a similar reading than the previous month. A release in line with expectations or lower should strongly support a pause in rate hikes for June.
The uncertain macro backdrop should affect digital assets as a risky and volatile asset class.
— CTF Capital (@CTFCapital)
May 22, 2023