💰 PPI Shock: Markets Brace for Impact

Good Morning!

The Nikkei's back with a vengeance, erasing last week's losses faster than you can say "yen stability." As we gear up for a data-packed week, all eyes are on the U.S. economic indicators. Will it be a 50 or 25 basis point cut from the Fed? Traders are split, and the suspense is killing us. Meanwhile, the yen's taking a breather, and Japanese shares are partying like it's pre-August 2nd. Who said summer was supposed to be quiet?

In today’s email:

• Fed Watch: All eyes on PPI today and CPI numbers tomorrow

• Bitcoin: Bitcoin still sitting here under $60k

• Oil: Investors slashing their bets

• Gold: Demand outpacing supply

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THE BIG IDEA

Bitcoin faces volatility amid macro data releases and technical indicators, while market sentiment swings wildly

Bitcoin's rollercoaster ride continues. After a jaw-dropping plunge to six-month lows, BTC's clawing its way back up, but the battle between bulls and bears is far from over. This week's main event? The U.S. economic data dump, with CPI and PPI reports taking center stage. Traders are on edge, wondering if these numbers will push the Fed towards a rate cut in September.

Meanwhile, Bitcoin's chart is flashing some ominous signals. Two "death crosses" have formed, with short-term moving averages dipping below longer-term ones. While not a death sentence for bulls, it's certainly keeping them on their toes. Some traders are eyeing the $62,000 level as a crucial threshold to negate these bearish signals.

Sentiment

On the network front, Bitcoin's mining difficulty is set for a modest 3.5% decrease - its first drop in six weeks. But don't fret; the hashrate's still flexing near all-time highs, showing miners' resilience even as we approach the next halving. Interestingly, U.S. mining companies are still mining at a profit, with an average cost of around $43,000 per BTC.

Perhaps the most intriguing aspect is the market sentiment. The Crypto Fear & Greed Index has been more volatile than a cat in a roomful of rocking chairs. It recently hit levels of "extreme fear" not seen since before the FTX collapse, only to swing back to neutral and then plummet again. All this, mind you, without a corresponding price nosedive.

As we navigate this whirlwind, one thing's clear: the crypto market's giving us more twists and turns than a pretzel factory. Whether you're a bull or a bear, buckle up - this week promises to be one wild ride in the world of Bitcoin and beyond!

MARKETS AT A GLANCE

TOP NEWS

Volatility in US stocks has eased, but history suggests markets may remain jumpy for months

While the VIX - Wall Street's fear gauge - has come down from its four-year high, history tells us we're not out of the woods. Typically, it takes about 170 trading sessions for markets to truly calm down after a panic. With looming economic data, political uncertainty, and the S&P 500's flirtation with correction territory, investors might want to keep their antacids handy.

Yuan carry trades, distinct from yen trades, are unlikely to unwind soon despite recent market volatility

While the yen's wild ride has everyone buzzing, the yuan's been quietly carving its own niche in the carry trade world. Unlike its fully convertible Japanese cousin, the yuan's got a unique flavor – think Chinese exporters stashing cash in dollars and foreigners playing in mainland markets. With an estimated $500 billion in play, it's no small potatoes.

Oil investors drastically cut positions amid recession fears, creating potential for a market rebound

In a plot twist worthy of a Hollywood thriller, oil investors have slashed their bets to a decade low. We're talking a 372 million barrel selloff since July – ouch! But here's the kicker: this extreme bearishness might just be setting the stage for a comeback. With Brent bouncing back above $80, it looks like some traders are sniffing an opportunity. Meanwhile, natural gas is playing it cool, with inventories slowly depleting despite rock-bottom prices.

The Swiss National Bank faces challenges in unwinding its massive balance sheet after years of currency interventions

The Swiss National Bank's been playing a high-stakes game of monetary Jenga, and now they're in a pickle. Their balance sheet's ballooned to 140% of GDP from years of currency interventions to fight deflation. But unwinding it? That's like trying to remove blocks without toppling the tower. Selling off foreign assets could send the franc soaring and plunge Switzerland back into deflation. New SNB chair Martin Schlegel's got a tough choice: let the market decide the franc's fate or keep playing currency whack-a-mole.

CRYPTO

Despite high expectations, Trump's interview with Musk on X Space didn't mention crypto, surprising prediction market bettors

The much-hyped Trump-Musk tête-à-tête on X Space came and went without a peep about crypto. Despite bettors giving it a 65% chance of a mention, digital assets were left on the sidelines. The interview, which drew over a million listeners, covered everything from immigration to AI, but bitcoin was nowhere to be found. One savvy bettor, 'bama1234', cashed in big time on this crypto silence, pocketing over $336K!

Uniswap Labs' front-end fees have surpassed $50 million, solidifying its position as the leading DEX

Uniswap's cooking with gas! The DEX heavyweight has just hit a sweet milestone, raking in over $50 million in cumulative front-end fees. That's a thirteenfold jump since January – talk about a growth spurt! With nearly a third of all DEX volume flowing through its pipes in July, Uniswap's clearly the big fish in the DeFi pond. But savvy users can still dodge the fee by using aggregators like 1inch. It's a delicate balance between convenience and cost, and Uniswap's betting its interface is worth the premium.

Bitcoin miners' fee revenue is becoming increasingly crucial as block rewards decrease with each halving

Bitcoin's mining game is evolving fast! As we approach another halving, transaction fees are becoming the MVP for miners' bottom lines. Historical data shows these fees spike during bull runs and network upgrades, sometimes rivaling block rewards. Remember the 2017 and 2021 crypto frenzies? Fee revenues went through the roof! With block subsidies shrinking every four years, these transaction fees aren't just icing on the cake – they're becoming the whole darn bakery. Miners are eyeing these trends like hawks, knowing their future profits might depend more on network congestion than coin minting.

GOLD

Gold demand outpacing supply, with central banks and OTC transactions driving record Q2 demand

Gold's shining brighter than ever! Q2 saw record-breaking demand, hitting 1,258 tonnes - that's a 4% year-on-year jump. Central banks are gobbling up gold like it's going out of style, snagging 183 tonnes. Why? They're playing it safe, diversifying away from the dollar after Russia's reserves got frozen. But here's the kicker - we're in "peak gold" territory. Miners churned out 929 tonnes in Q2, but it wasn't enough to meet demand, instead, 335 tonnes of jewelry had to be recycled to bridge the gap!

DAILY ECONOMIC CALENDAR (ET)

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