Yesterday (December 16), the U.S. announced a retail monthly rate of 0.3% for November, exceeding market expectations of -0.1% and marking a new high since September this year. Additionally, the number of initial jobless claims for the week was recorded at 202,000, lower than the expected 220,000. The yield on the two-year U.S. Treasury note, sensitive to interest rate policies, broke through 4.4%, currently at 4.430%, while the ten-year yield rebounded after falling below 3.9%, closing at 3.946%. On the other hand, the market is still digesting the potential long-term impact of the Federal Reserve’s dovish remarks yesterday. According to financial media ZeroHedge, U.S. money market funds saw their first outflow of $11.5 billion in seven weeks (including $14.5 billion from institutional funds and $3 billion inflow from retail) after recently soaring to a high point. BlackRock commented that the era of “cash is king” might have ended, and a significant turning point in the U.S. stock market is approaching: Funds are starting to move from money markets to higher-risk assets or to fixed-term products to lock in current interest rates. Additionally, the Atlanta Federal Reserve’s GDPNow has raised its estimate for U.S. GDP growth in the fourth quarter from 1.2% to 2.6%. Statistical data also showed that last week, the Fed’s balance sheet expanded by about $2.2 billion, marking the first expansion since August 9 and the largest increase since June 7.
In the European market, across the ocean, both the Bank of England and the European Central Bank countered market views of a rate cut by maintaining their benchmark interest rates unchanged, in stark contrast to the Federal Reserve. According to Jinshi Data, Bank of England Governor Bailey stated: It’s too early to say that interest rates have peaked, and it’s premature to start speculating about cuts. European Central Bank President Lagarde also made it clear: We should not let our guard down because inflation is falling, and there has been no discussion of rate cuts.
In the digital currency sector, BTC experienced a spike of about 5% around 9 PM yesterday, but gradually regained its ground in the following three hours, stabilizing near $43,000. Despite the quick price recovery, the market’s bullish sentiment took a hit, with BTC Vol Skew sliding downwards, aligning with a general downward trend in ETH Vol Skew. On retail platforms, there was a noticeable sell-off in near-term bullish options. Meanwhile, as the weekend approached, ETH’s Implied Volatility in the front-end also saw a slight decline, narrowing the gap with BTC.
In terms of large trades, BTC’s December to next January calendar spread strategies were actively traded. The 26 January 2024 Call options were often used as the selling leg to offset costs, while Calls near the $44,000 to $45,000 range were more frequently purchased.
