💰 Core PCE Inflation: Bitcoin and Gold Ready To Erupt Higher?

Good Morning!

The Chinese leadership's finally woken up to the economic alarm bells, unleashing a policy tsunami that's got markets doing the happy dance. We're talking RRR cuts, rate slashes, stock market boosters, and fiscal fuel – the whole nine yards. Chinese shares are on a tear, eyeing their best week since 2008. It's not just the Middle Kingdom feeling the love; iron ore's back in the $100 club, copper's breaking records, and precious metals are shining bright. But before we pop the champagne, let's remember China's market has a knack for playing hard to get. With a week-long holiday looming, will this rally have staying power? Only time (and consumer wallets) will tell.

In today’s email:

• Central Banks: Money printers have been turned on globally

• Bitcoin: We’re back $65k+! Ready for next leg up?

• Gensler: At it again trying to redefine terms 😒

• Gold: Also benefiting from Chinese stimulus 🚀

👇Join: Our exciting community subreddit to join the conversation:

THE BIG IDEA

Global markets react to US inflation data, ECB policy shifts, and currency fluctuations across Europe and CEE regions

Today's economic data is setting up to take us on a wild ride through inflation data, central bank maneuvers, and currency twists that'll make your head spin faster than a day trader's ticker tape.

First stop: The Land of the Free, where all eyes are on the core PCE – the Fed's favorite inflation gauge. We're expecting a modest 0.2% monthly uptick, but don't hold your breath for market fireworks. The Fed's new obsession? Jobs, jobs, jobs. They've put inflation on the back burner, so unless we see some shocking numbers, the dollar's likely to keep cruising in its current lane until next week's employment report drops.

Hop across the pond, and Europe's got its own financial soap opera unfolding

The ECB's recent dovish turn is facing its first real test as inflation data starts rolling in. France and Spain are expected to show a cooldown, but if those numbers come in hot, we might see some rapid backpedaling on rate cut expectations. Keep an eye on that euro – it could be gearing up for another attempt to break the 1.12 barrier against the greenback.

Meanwhile, the UK's sterling is flexing its muscles, pushing the euro-pound pair to flirt with the 0.8300 level. The Bank of England's playing it cool on rate cuts, and that's giving the pound some serious swagger.

Last but not least, let's not forget our friends in Central and Eastern Europe. It's a mixed bag of currency movements, with the Hungarian forint feeling the heat, the Polish zloty showing some unexpected weakness, and the Czech koruna holding steady after its central bank's recent powwow. Each country's got its own unique flavor of monetary policy, and it's stirring up quite the currency cocktail!

MARKETS AT A GLANCE

TOP NEWS

Treasury yields rise despite Fed rate cut, puzzling market watchers

The Fed's playing Oprah with interest rates - "You get a cut! You get a cut!" - but the Treasury market's not RSVPing to this party. Despite the Fed's hefty half-point slash, long-term Treasury yields are climbing fast. What gives? Some say it's just market overcorrection, while others whisper about inflation tolerance. Either way, it's a financial plot twist worthy of a Hollywood thriller.

Oil prices plummet on potential supply boost from Saudi Arabia and Libya

Crude's doing a nosedive. Brent's flirting with $72, while WTI's playing limbo under $68. The culprits? Saudi Arabia's hinting at pumping more black gold, and Libya's political factions are playing nice, potentially unleashing a 500,000-barrel-a-day tsunami. Meanwhile, China's stimulus and Middle East tensions are keeping traders on their toes.

US economy shows resilience with 3% growth in Q2, despite interest rate hikes

Uncle Sam's economic engine is humming along at a crisp 3% clip! Consumer spending's driving the bus, while businesses are splurging on new toys. Inflation's cooling its jets, inching closer to the Fed's sweet spot. Despite the interest rate roller coaster, the job market's still hanging tough. With a hefty rate cut in the rearview mirror, economists are betting on smoother sailing ahead. It's not all rainbows, but the economic forecast is looking sunnier than a summer picnic!

CRYPTO

Bitcoin holds strong as China's stimulus boosts crypto market sentiment

Crypto's gone to the dogs, and the market's loving it! Shiba Inu and Bonk are wagging their tails with double-digit gains, while Conflux's CFX is riding the dragon of China's liquidity injection. Bitcoin's holding steady above $64K, with ETFs lapping up inflows like a thirsty pup. Even Ethereum's joining the party, despite some minor outflows. It's a veritable crypto carnival, – just don't forget your leash!

SEC Chair Gensler pushes for broader 'exchange' definition, raising concerns

Gary Gensler's at it again! He's pushing to redefine "exchange" and "alternative trading systems". While he claims it's all about Treasury bonds, crypto folks are sweating bullets. The proposed changes could rope in DeFi platforms. Gensler insists crypto's already well-regulated, but the industry's not buying it. It's a high-stakes game of regulatory chess, and crypto's feeling like a pawn.

Base, a Layer 2 Ethereum network backed by Coinbase, surpassed $2 billion in total value locked (TVL) for the first time, marking a 370% year-to-date increase

The decentralized exchange Aerodrome contributed significantly, with over $1 billion in deposits, followed by Uniswap with $220 million. While Arbitrum leads in TVL among optimistic rollups, Base has maintained high user activity, including active addresses and daily transactions. Base's optimistic rollup technology increases Ethereum's throughput by processing transactions off-chain and posting them periodically on-chain.

Hong Kong plans to align its over-the-counter (OTC) derivatives reporting, including crypto derivatives, with international standards by 2025

The Hong Kong Monetary Authority and Securities and Futures Commission will implement European-style reporting with the use of Unique Transaction Identifiers (UTI), Unique Product Identifiers (UPI), and Critical Data Elements (CDE). The move aims to boost regulatory harmony and maintain Hong Kong's status as a global financial hub. These changes will also adopt the ISO 20022 XML message standard for OTC reporting.

GOLD

The BRICS alliance is reportedly considering launching a new currency tied to 40% gold and 60% local currencies, such as the Chinese yuan, Russian ruble, and Indian rupee

This move could reduce dependence on the US dollar and strengthen the native currencies of emerging economies. With BRICS being a major buyer of gold, this development could raise gold prices while potentially challenging the global dominance of the US dollar in trade. If successful, the currency could influence global financial dynamics.

DAILY ECONOMIC CALENDAR (ET)

MEME OF THE DAY