SignalPlus Macro Analysis: US Economic Slowdown, Decreasing Upward Pressure on BTC

2024-06-04 16:49

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Next Wednesday will see the occurrence of both the FOMC meeting and CPI data release on the same day, making it the most anticipated day leading into the summer.

Original title: "SignalPlus Macro Analysis (20240604): Inflation rebounds, US economy slows down"

Original source: SignalPlus

Last week's economic data triggered quite a bit of rethinking, with US economic data finally returning to the state of the early first quarter (GDP revised down, consumption down), while global inflation momentum began to unexpectedly pick up, with Eurozone HICP re-accelerating to 2.9% year-on-year (previously 2.7%).

The slowdown in US economic data is now too widespread to ignore, with the Atlanta Fed's GDP forecast now down to below 2%, and real disposable income growth slowing to below 1%. In addition, rising credit card delinquencies, rising rental costs, and a weak job market all point to a weakening US economy before the election, while the Fed is still dealing with the thorny issue of high inflation and there are few meetings left before November.

Macro assets have rallied sharply over the past few sessions on the back of a continued deceleration in PCE last Friday, a 10% drop in oil futures, and hopes for an ideally slowing economy. This week will see a slew of important data releases, including today's JOLTS, Wednesday's ADP and ISM services indexes, and Friday's non-farm payrolls.

Non-farm payrolls may be the most important event of the week, but next Wednesday will also see the FOMC meeting and CPI release on the same day, making this the most anticipated day before summer, so be sure to buckle up!

On the election front, former President Trump has benefited greatly from his recent guilty verdict, with his odds of winning the November election jumping to over 50% (compared to Biden's 35%), and it seems that a significant portion of voters see this as a "political witch hunt" against Trump, which is in Trump's favor. If the former president is re-elected, the main impact will be on fixed income, as the market generally expects him to exert new political influence on the Federal Reserve, promote loose monetary policy, free-spending fiscal policy, and further tax cuts, which will definitely make the fourth quarter very interesting, at least for the market.

On the crypto front, market sentiment has been boosted since last Friday as the US stock market rebounded and overall risk sentiment recovered, with BTC challenging $70,000 again and ETH hovering around $3,800. However, trading activity remains sluggish, funding rates are low, actual volatility is not high, and prices remain within the recent range. We expect this situation to continue at least until Friday's non-farm payrolls data, and the next major fluctuation will have to wait until next Wednesday's CPI and the Fed meeting. At present, there seems to be less resistance to the upward trend. I wish you all good luck!