Good Friday AM,
Bonds are starting the day in moderately weaker territory. Maybe it’s more Fed speak about the fed taper (if and when) In so doing, 10-yr yields are rejecting the opportunity to break below the 1.30% technical level (today). Notably, they rose above 1.30% just before the 3pm close yesterday (the time of day that holds the most weight for technical analysts in day-over-day terms). It remains to be seen how much 1.30% matters. It’s been more of a “center of gravity” for a sideways range recently as opposed to a true pivot point (unlike July). Coincidentally, 1.30% currently lines up with the bottom of the consolidation pattern, and in that regard, the bounce is much more relevant. PPI was the only news piece today which was strong but not much stronger than expected.
Interesting commentary on the market (wider lens on how we are evolving) from The WSJ below:
Michael Anderson mined bitcoin in his dorm room and left a corporate job to invest in cryptocurrency projects. When he bought his first home in San Francisco this year, he didn’t turn to a bank. Instead, he borrowed against his cryptocurrency. Crypto enthusiasts such as Mr. Anderson are tapping their holdings to buy homes, cars and, often, more crypto. They are getting these loans from upstart nonbank lenders and automated, blockchain-based platforms. Like banks, these lenders typically take deposits. Unlike banks, their deposits take the form of crypto. The crypto deposits—which earn higher-than-average interest rates—are used to fund loans to borrowers who pledge crypto as collateral. These loans take many forms. Borrowers can get dollars or other traditional currencies, or stablecoins pegged to them, depending on the lender they are working with. The business is growing rapidly. One group of crypto lenders has $25 billion in loans outstanding to individual and institutional clients, up from $1.4 billion a year ago, according to the crypto research firm Messari. People use crypto-backed loans for the same reason they borrow against their stock portfolios: to reap the benefits of rising prices without diminishing the size of their bets. Ether, for example, has risen nearly 10-fold in the past year, eclipsing the interest on the average ether-backed loan. Borrowers can also use this strategy to avoid capital-gains taxes.
Please remain safe and healthy, enjoy the weekend and make today great!