Bitcoin’s $100k dream becomes reality

Bitcoin’s $100k dream became a reality on Thursday morning…

Prices jumped over 6%，smashing through this key milestone as investors cheered Trump’s pick to lead the Securities and Exchange Commission.

Sentiment towards the crypto space has also been boosted by recent comments from Fed Chair who compared Bitcoin to gold but “only its virtual, it’s digital”.

Hitting $100,000 is certainly a major milestone and something that could support gains for the remainder of 2024.The next key event that could rock Bitcoin may be Friday’s NFP report which is likely to influence Fed cut bets. 

Looking at the charts, Bitcoin is firmly bullish – boasting a year-to-date gain of over 140%.

A strong weekly close above $100,000 may signal further upside. 

However, should prices slip below this key level – bears may target $95,000.

Oil prices initially slipped on Thursday after OPEC+ decided to delay oil production hikes by three months. However, losses were clawed back as investors perused the details of the new output plan. 

Nevertheless, OPEC+ is in a tricky position with production hikes down the road leading to potentially lower prices.

Even if they opt to delay production beyond April, this could spark internal disputes while raising the risk of a price war.

In addition, Trump’s return to the White House adds another element of uncertainty for the cartel ranging from tighter sanctions on OPEC members to tariffs impacting China’s demand. 

Looking at the technical picture, Brent remains in a range on the weekly charts with support at $70.00 and resistance at $76.00. A breakout could be on the horizon.

Silver hasn’t been particularly correlated with any major asset class over the past month, not even gold, suggesting this could be an environment where price signals hold more weight than other factors. Currently wedged between downtrend resistance and uptrend support, and with the November non-farm payrolls release looming, a decisive move may soon provide medium-term directional clues.

Silver has rebounded strongly since bottoming at $29.66 in late November, climbing within an uptrend to retest downtrend resistance established earlier this month. With four failures so far – Thursday’s dragonfly doji not included – the window for a bullish breakout looks to be narrowing before the uptrend itself comes under threat.

From a momentum standpoint, RSI (14) is trending higher, while MACD has crossed over from below, reinforcing the bullish bias. This supports a preference for buying dips or topside breaks in the near term.

If the price were to break and hold above the downtrend, one setup would be to buy with a tight stop beneath targeting a push towards either $32.18 or $33.10, two horizontal levels that acted as both support and resistance in the recent past.

While the 50-day moving average is located just above the downtrend at $31.71, the price has a chequered track record for respecting the level, meaning it should be monitored but not an impediment for longs.

Alternatively, if the price were to reverse lower and break uptrend support, another option would be to sell with a tight stop above the uptrend for protection. $29.66 is one potential target with the 200-day moving average and $29.10 the next after that. 

While silver hasn’t shown a meaningful relationship with the US dollar or Treasury yields recently, Friday’s payrolls report is a pivotal macro event that could shift expectations for both. Given silver is priced in USD and offers no yield, it remains relevant for traders.

With markets pricing a 70% chance of a 25bps Fed rate cut later this month, even a slight uptick in unemployment from 4.1% could create a supportive backdrop for risk assets like silver. However, a hot report, featuring stronger payroll growth and a surprise drop in unemployment, could bolster the US dollar and lift interest rate expectations, adding downside pressure to silver prices.

Source： FOREX

Yields remain elevated, adding to the appeal of bonds, while volatility and economic uncertainty create a prime environment for active asset management, in our view. Here, Dan Ivascyn, who manages the PIMCO Income Fund with Alfred Murata and Josh Anderson, responds to questions from Esteban Burbano, fixed income strategist. They discuss how the fund is positioned for current high yields and the potential path for central bank policy rates. We believe the U.S. is most likely headed for a soft landing, but we’re also mindful of rising economic and geopolitical uncertainty.

A: One major development was the U.S. Federal Reserve kicked off a rate-cutting cycle: It lowered its policy rate 50 basis points at its September meeting, and another 25 basis points in November. Although the Fed will likely continue to be data-dependent, we expect the central bank to continue easing over the next few quarters. Interestingly, after the September rate cut, yields on longer-maturity securities rose by a significant amount. We have not seen this dynamic in quite some time, and we’re monitoring it closely as we assess duration and yield curve positioning.

The U.S. election was another event investors watched closely. While the longer-term ramifications aren’t clear, post-election market movements suggest many investors anticipate a fiscal and regulatory policy environment that supports U.S. growth. And this means we should also be watching closely for signs of inflation reigniting.

On that point, U.S. inflation has generally continued to moderate, but the numbers have been bumpy. And after some signs of economic weakness, more recent data indicate a more resilient economy.

The upshot is that although we are very excited about yields, including inflation-adjusted yields, macro trends have us anticipating a volatile market environment ahead. Periods of volatility amid less synchronized global economic cycles are generally great times for active asset management.

Our base case, which seems to be generally shared by investors, is a soft landing for the U.S. economy, which has been expanding at about a 3% annual rate. Of course, this scenario has been priced into credit and equity markets, spreads have tightened, and we believe that optimism is leading to complacency in certain segments of lower-quality credit markets.

Risk awareness is crucial. If the economy continues to expand, and the trend is generally positive, it can be challenging to discern a resilient investment versus a more aggressive investment with more downside risk. We see a lot of uncertainties, and our job is to target higher-quality areas of the market where we believe we can generate yields similar to those typically found in more economically or geopolitically sensitive areas of the marketplace, but with appropriate risk mitigation.

A: It’s been a target-rich environment the last couple of years across our Income Fund and other PIMCO strategies. We have been much more active in tactical duration management than we had been over the previous decade or so, and we believe this has contributed to our performance versus passive approaches.

Today, we are right around neutral on duration, considering what the market is pricing in for Fed cuts as well as election implications. On the margin, we may even classify our exposure as a bit defensive on duration versus passive benchmarks.

I’ll add that we have a flexible, global opportunity set outside the U.S. We’re using that flexibility to target interest rate markets in Australia and the U.K., for example, along with select higher-quality emerging markets that have even higher inflation-adjusted yields than in the U.S.

A: We think the curve steepening will have implications for demand for fixed income assets in general. For several years, the cash rate offered such an attractive yield that a lot of money flowed into strategies that target front-end exposures.

Now front-end yields are coming down, and economic uncertainty is increasing. We’ve held a curve-steepening position for some time, and we currently tend to favor the five- to 10-year portion of the curve.

In addition, with recent volatility in macro data and shifts in views toward Fed policy, we’ve engaged in more precise trading around the trajectory and timing of Fed rate cuts. For example, just a few months ago, we noticed that there was a bit too much easing embedded in the front end of the curve, in our view, which provided the opportunity to exploit those views in relative curve positioning.

We don’t have a lot of exposure to longer maturities, given our baseline outlook. And if we get into a more challenging economic environment where central banks need to cut policy rates much more aggressively than what’s priced in, then the curve positioning that we hold should help provide additional resilience to the fund.

A: U.S. agency mortgage spreads are wider than investment grade corporate spreads, which almost never happens. We have a core holding in agency mortgages. We see a strong case for investing in these securities backed directly or indirectly by the federal government and for receiving a yield advantage over most investment grade corporate bonds.

Elsewhere in mortgage markets, we look to source seasoned non-government-guaranteed mortgage risk. Even if we experience a recession, while borrowers would feel the strain, current equity within the U.S. mortgage market is at all-time highs, providing a cushion. During the second and third quarters of this year, we creatively leveraged the size of the Income Fund to source billions of dollars of risk within this space. Over many years we have established a lot of relationships, we are one of the largest players, and we leverage the fund’s size to drive sourcing. We look to do so either in securitized form or by sourcing loans that we then securitize into integrated instruments.

One related area to mention is consumer lending, both in the U.S. and Europe. When a household has substantial equity in their home, we generally are comfortable investing in their automobile loans and student loans, etc.

A: Our corporate spread exposure is near the lower end of where we’ve been historically. It’s not because we expect a massive downgrade or default cycle anytime soon – fundamentals and technicals are both supportive of credit. Rather, we view the exposure as more economically sensitive risk that currently is priced very tight. We’ve been slightly reducing exposure to riskier credit positions and shifted higher into the investment grade segment of the capital structure.

Also, we have a more cautious view of the floating-rate segments of the market, such as senior secured bank loans and much of private credit. For years, the economic backdrop was great for these sectors: We haven’t had a major, lasting recession since 2009. However, we could be at a significant turning point. The Fed began cutting rates, and if we were to see some economic weakness, then investors in floating-rate instruments could face a situation of falling yields as macro risks are rising, unlike fixed-rate credit, where if market yields are declining, then the value of the instruments increases. We stand poised to take advantage of any dislocation in that space.

Within corporate credit, we’re also looking at special situations where we could leverage our size in markets to gain positions of significant control, taking advantage of unique idiosyncratic opportunities as they arise.

A: We don’t really focus on that in the Income Fund, beyond noting that much of the growth in private credit markets has been in the floating-rate segments of the opportunity set. With yields coming down as economic uncertainty or geopolitical uncertainty increases, there very well could be a shift in investors’ mindset over the next several quarters.

And again, we stand poised to take advantage of any opportunities arising from this shift in overall sentiment, at times looking to find and source less liquid opportunities and then package them in more liquid form. It’s not something that we focus on too significantly, but I will say this: In a world of considerable post-election, macro, and geopolitical uncertainty, it’s great to have liquidity.

A: We continue to take a targeted approach to emerging markets, with a lot of room to add if we see opportunities. Emerging markets tend to be the more volatile areas of the global opportunity set, and currently spreads are somewhat thin. We see reasonable valuations in certain areas; some of the local yields make sense as small diversifying positions. Brazil, Mexico, and South Africa are examples where we’ve been active on a small scale.

We’ve tended to have modest baskets of currency positions, and today we have more of a relative value orientation. Our currency activities year to date have generated some positive incremental returns, but overall directional exposures regarding the U.S. dollar are relatively small.

A: Cash yields have declined and are likely to continue to decline. But it’s not clear how quickly they will fall. Cash has done well lately, so it’s not surprising that many investors are lingering perhaps too long in cash right now.

It’s important to note that given starting yields along with the economic and market outlook, investors can seek an attractive inflation-adjusted return today in fixed income. Investors sitting in cash are not locking in that potentially very attractive return. My suggestion to investors is to assess your own situation, determine how much true cash liquidity you need, and strongly consider whether it makes sense to move up the yield curve to lock in some of these attractive nominal and real yields that we haven’t seen in almost two decades.

1. Japan's base salary growth surged to a 32-year high.

2. Global gold ETFs record the first monthly outflow since April.

3. U.S. initial jobless claims rise, but the labor market remains stable.

4. OPEC+ extends oil production cuts until the end of March 2025.

5. Emmanuel Macron will name a new prime minister in the coming days.

6. Elon Musk works Congress as he eyes $2 trillion budget chop.

Japanese workers' base salaries rose by 2.7% in October, marking the fastest growth since November 1992, according to a report from Japan's Ministry of Health, Labor, and Welfare on Friday. This helped reverse two consecutive months of declines in real wages and provided statistical support for the prospects of a central bank interest rate hike this month. More companies set higher salaries after major firms agreed to an average 5.1% rise at the spring wage talks. Overtime pay, a barometer of business strength, rebounded to 1.4% growth from a revised 0.9% decrease in the previous month.

The Bank of Japan (BOJ) must scrutinize various data at its Dec. 18-19 rate review, Bank of Japan board member Toyoaki Nakamura said on Thursday, as the market remains split about the timing of Japan's next rate hike. Meanwhile, Jiji news agency reported on Wednesday that a cautious view toward an early hike was growing among BOJ policymakers, adding to uncertainty around the chance of a December hike.

global gold ETFs experienced a monthly outflow of $2.1 billion in November, the first outflow since April, according to the World Gold Council. Europe saw the largest outflows (-$1.9 billion), while North America (+$79 million) was the only region with inflows. Total assets under management declined by 4% in November to $274 billion. However, year-to-date flows for global gold ETFs remain positive at $2.6 billion. Collective holdings decreased by 29 tons in November to 3,215 tons. Year-to-date demand turned negative, with an 11-ton reduction.

The U.S. Department of Labor reported an increase in initial jobless claims last week. Claims rose to 224,000 for the week ending November 30 from 215,000 in the previous week. Economists surveyed by The Wall Street Journal had expected claims to remain at 215,000. Continuing claims fell to 1.87 million from 1.90 million in the prior week. The data indicates a slight increase in jobless claims but overall stability in the labor market. November's job report, to be released on Friday, is expected to show a significant rebound in job growth following disruptions in October due to hurricanes and the Boeing strike.

OPEC announced on December 5 that eight OPEC and non-OPEC oil-producing countries had decided to extend the voluntary production cuts of 2.2 million barrels per day, which were originally set to expire at the end of December, until March 2025. The eight countries—Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman—first announced these cuts in November 2023 and have since extended the timeline multiple times.

French President Emmanuel Macron delivered a televised address on the evening of December 5, announcing that he had accepted the resignation of Prime Minister Barnier earlier that day. The new Prime Minister will be announced in the coming days. Macron stated that the impeachment of Barnier's government resulted from a coalition between the far-right and far-left. He accused the far-right National Rally party of creating chaos. Macron reaffirmed his commitment to fully carrying out his presidential duties until the end of his term. Regarding France's 2025 budget law, Macron mentioned that a "special law" draft will be submitted to the National Assembly in mid-December for review.

Elon Musk met with U.S. lawmakers on Thursday to drum up support for his ambitious plan to cut the federal budget by at least $2 trillion, the most significant fiscal tightening in the U.S. since World War II. Republican Representative Marjorie Taylor Greene said that Musk, along with his partner in the efficiency initiative, former Republican presidential candidate Vivek Ramaswamy, met with several groups of lawmakers before attending an event open to all Republican House members. After a morning meeting with incoming Senate Republican leader John Thune, Musk told reporters that his focus was on "spending the public's money well."

UTC+8 21:30 U.S. Non-Farm Payrolls (Nov)

UTC+8 22:15 Federal Reserve Governor Bowman Speaks

UTC+8 23:30 Fed's Goolsbee Participates in a Fireside Chat

Climate change is driving an intensification of the earth’s water cycle. As the atmosphere warms, it can hold more moisture, and rainfall intensity has been rising sharply in recent years. This past year has seen wild weather events around the world, from a deluge that created temporary lakes in some of the driest areas of the Sahara, to deadly flooding in Slovakia and Poland as rivers burst their banks and in Connecticut and New York after a “once in a thousand year” rainfall event. Climate scientists have charted that rainfall amounts that fall in heavier rains around the world are marching ever higher. This means the risk that what was formerly considered a 100-year or even 1000-year rain and flooding event could happen on the order of once a decade, or even more frequently.  

In 2025, a catastrophic storm and rainfall event in the US catches the insurance industry unprepared, inflicting damage stretching into many multiples of the USD 40 billion in claims linked to Hurricane Katrina in 2005. One of the largest US insurers significantly underestimated the insurance risks from climate change, leading to underpriced policies in the affected region. With insufficient reserves to cover claims and inadequate reinsurance to mitigate the costs of this extreme event, panic spreads across the entire industry. A crisis unfolds, prompting government-level discussions on whether to bail out the failing company and the other walking wounded in the industry to prevent widespread risk contagion. The disaster forces a reset in natural disaster pricing, profoundly marking down real estate values in many housing markets. Consumer confidence takes a hit on the insecurity of the value of many homeowners’ largest asset, their house. 

Berkshire Hathaway shares rise as Buffett’s company has enough capital to weather the panic and the company gains market share.

On 5 November, Donald Trump secured a second term as president of the United States. His victory was driven by a policy agenda focused on accelerating economic growth via tax cuts, increasing tariffs and trade protectionism, enforcing stricter immigration controls, reducing government intervention, and decreasing regulation.

As Trump’s victory became evident – reflected in betting markets that rapidly incorporate election-relevant news in an information-efficient manner (Karau and Fischer 2024) – financial assets likely to be influenced by Trump’s agenda began reacting significantly (Figure 1). US 10-year Treasury yields rose sharply, increasing from 4.28% at 7:00 PM Eastern Time to 4.46% by 10:30 PM, driven by expectations of fiscal stimulus and inflationary pressures. Bitcoin prices surged as the cryptocurrency industry anticipated benefits from deregulation. The dollar index surged in response to higher expected yields and anticipated trade barriers, with larger depreciations against the dollar observed for currencies of countries likely to be significantly affected by heightened trade protectionism and stricter migration policies, such as the Mexican peso.

The equity market’s response was equally dramatic. On 6 November, the S&P 500 posted a gain of around 2.5%, marking its strongest one-day performance following election results in over a century. Market volatility, as measured by the VIX index, plummeted by more than four points, reflecting the resolution of pre-election uncertainty and optimism about corporate earnings growth under Trump’s pro-market administration (Albori et al. 2024). Sectoral performance, however, was heterogeneous: banks, energy, and industrials – sectors expected to benefit from corporate tax cuts and deregulation – experienced the largest gains (Figure 2).

To assess the relationship between firm-level returns and political proximity to Trump’s 2.0 agenda (commonly referred to as Agenda 47), we construct a textual based firm-level sentiment indicator following the methodology of Hassan et al. (2019). This indicator measures the share of the conversation between analysts and firm management that centres on terms linked to Agenda 47 and, by conditioning on positive and negative tone words, provides a proxy of firms’ attitudes toward Trump’s programme. Higher sentiment scores indicate stronger alignment with Trump’s policy priorities. 

On average, firms in the energy, financial technology, and industrial sectors exhibit higher sentiment values, while those in the renewable energy and pharmaceutical sectors show lower values, reflecting their lower likelihood of benefiting from the Trump administration’s policies (left column of Figure 3). A firm-level event study shows that firms with higher sentiment scores experienced significantly higher abnormal returns in the days following the election. We first estimate a capital asset pricing model (CAPM) for each firm over the period  from 15 November 2022, when Trump announced his candidacy for a second term, to 4 October 2024, one month before the election. We then compute abnormal returns around the election date, as differences between actual returns and those predicted by the CAPM model. A one-standard-deviation increase in political proximity was associated with a 7% higher abnormal return on 6 November, with the effect persisting over the subsequent two days and peaking at around 10% (see Figure 3, right column).

While equity markets celebrated Trump’s re-election, other indicators suggest a more nuanced picture. The Economic Policy Uncertainty (EPU) index (Baker et al. 2016), derived from media coverage of policy-related terms, rose significantly in the immediate aftermath of the election, contrasting with the decline in the VIX equity volatility index (Figure 4). This divergence likely reflects differing time horizons. The decline in the VIX likely captures the resolution of pre-electoral uncertainty and anticipation of near-term policies, such as the renewal of the Tax Cuts and Jobs Act (TCJA), which is expected to face fewer obstacles in a Republican-majority Congress and boost corporate profits. On the other hand, the increase in the EPU index may reflect analysts’ uncertainty about Trump’s policies that may matter more in the medium to long term. In particular, uncertainty surrounding more controversial measures in Agenda 47, such as new tariffs and stricter immigration policies, looms large. Analysts fear that these measures could dampen long-term economic growth and exacerbate inflationary pressures (e.g. McKibbin et al. 2024, IMF 2024), even as fiscal stimulus and tax cuts provide short-term support.

We also uncover a potential disconnect between the equity market responses and those implied at the macroeconomic level due to sectoral composition. In this context, assessing the effects of Trump’s election based solely on equity returns could be partially biased, as certain sectors (e.g. information technology and financials) that reacted positively to the news are overrepresented in the stock market relative to their weights in the real economy. When returns are reweighted by GDP shares, 2 the contribution of these sectors diminishes, underscoring potential disparities between financial market reactions and real economic prospects (Figure 5).

We argue that the favourable response of US equity markets to Trump’s victory should be interpreted with caution, particularly when attempting to extract meaningful signals about the real economy outlook. First, firm-level equity returns were partially influenced by firms' political proximity to Trump’s agenda. Second, index-level returns may not accurately reflect real-economy prospects, as economic sectors’ weights in equity indices differ significantly from their contributions to GDP. Third, while equity volatility declined, measures of economic policy uncertainty increased following the election, highlighting that, especially in the longer term, there remain numerous unknowns about the implementation of Trump’s agenda.