The crypto market has risen by more than 3% on December 5 to reach $3.69 trillion, this time thanks to the euphoria surrounding Bitcoin.

The price of the first cryptocurrency surpassed $100,000, a psychologically important milestone. The price then stabilised at $102.4K. It took almost two weeks from approaching this level to crossing it, during which time altcoins became the market driver. Perhaps the pendulum of interest will swing back to bitcoin for a while.

Powell, the Fed chairman, once again referred to Bitcoin as the digital analogue of gold, which was seen as a bullish signal to overcome resistance. While we believe Powell was the reason for the recent momentum, we attribute it to his upbeat comments on the economy, which supported risk appetite. Next, automatic stop orders came into play, pulling the market higher in thin Asian trading.

Ethereum’s next important level for the cryptocurrency markets could be $4,000, which it failed to consolidate above earlier this year.

Grayscale Investments has filed with the SEC to convert the GSOL Trust into a Solana Spot ETF. Canary, VanEck, 21Shares, and Bitwise are also pending applications to launch Solana ETFs.

Paul Atkins, whom the media have touted as a leading candidate for the position of SEC chairman, has been interviewed by President-elect Donald Trump. However, according to CoinDesk, the position is not attractive to Atkins due to the amount of work involved.

BNB hit a new all-time high above $790 after DEX PancakeSwap unveiled Springboard, a platform for issuing meme coins on the BNB chain.

According to QCP Capital, the main driver of altcoin growth was the proposal to abolish the capital gains tax on cryptocurrencies, which representatives of US companies drafted. The market expects this will create a more favourable regulatory environment for the crypto industry.

President-elect Trump recently announced that when he begins his term on January 20, 2025 he will implement 25% tariffs on all imports from Mexico and Canada unless these countries control the flow of illegal drugs, especially fentanyl, and illegal immigrants. Trump also proposed an additional 10% tariff on imports from China due to concerns about fentanyl. Whether these proposed tariffs will address U.S. concerns around fentanyl and illegal immigration remains to be seen, but the costs of these tariffs for U.S. industry may be high enough that they will become economically and politically unsustainable. This will be even more so if Mexico retaliates, as Mexican President Claudia Sheinbaum has threatened to do. While tariffs seem justified, a tariff-first approach to addressing U.S. issues with Canada and Mexico undermines the key role of trade and investment across North America underpinned by the United States-Mexico-Canada Agreement (USMCA); the regional agreement can play an important role in reducing U.S. dependencies on Chinese-centered supply chains and in securing alternative sources of critical minerals.

First, it is important to be clear about the costs of a 25% across-the-board tariff on imports from Mexico and Canada. Various studies have confirmed that the 25% tariff on imports from China initiated by the Trump administration and then expanded by the Biden administration created costs and reduced investment. This is not to say that tariffs are never justified, but it is important to be clear about some of the costs associated with them.

Second, the proposed 25% tariffs on Mexico and Canada will be much more extensive than current tariffs on imports from China, and the impact will be more significant. Imports from Mexico and Canada are the United States’ first and third largest sources of imports respectively, worth over $900 billion in 2023, and over 17 million jobs rely on trade across North America, including over 4.5 million U.S. jobs. In addition, approximately 50% of U.S. trade with Canada and Mexico is driven by supply chains in sectors such as automobiles, medical equipment, energy, and agricultural products. This means that products cross borders multiple times as they are manufactured. The 25% tariff applied each time a product moves along supply chains will add up quickly and raise prices, rendering many of these supply chains economically unviable. This analysis does not take into account additional costs should Mexico or Canada retaliate.

The proposed tariffs are also likely inconsistent with the USMCA—the trade agreement between the U.S., Mexico, and Canada that the Trump administration successfully negotiated. USMCA is up for review in 2026, and it is possible that these tariffs are part of a broader strategy to extract concessions from Mexico and Canada in the lead-up to the review. Yet, Trump’s willingness to ignore U.S. commitments under USMCA will hamper his administration’s ability to make progress on other key challenges. Threatening 25% tariffs on Mexico and Canada has sent a signal globally that governments cannot rely on an agreement with Trump—even one that he negotiated. In response, governments will focus on one-off deals to address specific U.S. concerns, while avoiding getting drawn into agreements that are based on longer-term cooperation. This will make it more difficult to address U.S. economic and security concerns with China, which will require building more political, challenging, complex, and longer-term cooperation with other countries in areas such as export controls, investment screening, and industrial subsidies.

It is unclear whether these threatened tariffs on Mexico and China will ever materialize. However, given the threat, it is now up to Mexico and Canada to act on it. This may be a negotiating ploy, but given the potential costs the 25% tariff would pose to many U.S. industries, Trump has now placed himself in the position of relying on Mexico and Canada to act in order to avoid these harms. Addressing flows of fentanyl and illegal immigration are clearly issues that should be resolved. Whether Trump’s proposed 25% tariffs on all imports from Mexico and Canada could lead to further progress on these issues is uncertain. But it is clear that if implemented, these tariffs will harm U.S. industry.

Population ageing is accelerating rapidly. Across OECD countries, the share of people aged 65+ has doubled from less than 9% in 1960 to 18% as of 2021 (OECD 2023) and is expected to reach 27% by 2050, increasing demand for long-term care services (Kotschy and Bloom 2022). At the same time, there is growing public pressure to reduce the care burden on families and individuals in favour of government funding and the provision of long-term care (Ilinca and Simmons 2022). Combined with the rising costs of care (OECD 2023), these trends are adding pressure to the fiscal sustainability of public long-term care systems. Ensuring the cross-country comparability of the costs and benefits of public long-term care schemes in 32 OECD and EU countries, a new OECD report compares current long-term care costs across countries and presents evidence on the effectiveness of public expenditures in alleviating the financial burden on care recipients.

Without sufficient public support, long-term care services are unaffordable for most older people. The average long-term care cost for individuals with low care needs, already 42% of the median income of older people (without public support), could reach 259% for those with severe care needs. Even though all OECD countries included in the report cover at least part of the cost through benefit schemes, individuals’ out-of-pocket expenses remain substantial, particularly for older people with severe needs (see Figure 1). On average, these costs represent over 70% of the median income of older people across OECD countries, even after accounting for public social protection. However, there is significant variation among the analysed countries. In the Nordic countries such as Finland, Iceland, and Denmark, out-of-pocket costs remain below 5% of median income, while in Italy and Estonia, these costs exceed 150%, effectively pushing older adults into poverty or leaving them with unmet care needs.

High out-of-pocket expenses for long-term care significantly increase the poverty risk among older people (see Figure 2). On average, poverty rates for older adults with long-term care needs are 31 percentage points higher than for the general older population. The long-term care systems in Scandinavian countries, Luxembourg, and the Netherlands are among the most effective at reducing poverty risks linked to care expenses. In contrast, the poverty risk among long-term care recipients in Italy and Spain is much higher – more than 60 percentage points – in comparison to the total older population (aged 65+).

Rising costs, growing demand, and low productivity gains are placing substantial financial pressure on public long-term care systems. The OECD report analyses how this financial pressure could impact future long-term care spending under different scenarios (see Figure 3). In the first scenario (the ‘ageing scenario’) – whereby countries maintain the current level of support and the existing share of older adults with needs receiving long-term care – expenditures are projected to rise by an average of 91% by 2050. In the second scenario (the ‘high coverage scenario’), which assumes an increase to 60% of the share of older adults with care needs, expenditures would increase by 144%. Finally, in the ‘no copayment scenario’, out-of-pocket expenses are fully eliminated and long-term care expenditures grow by more than 300%.

While population ageing is unavoidable, countries can help older populations adopt healthier lifestyles and introduce preventive measures to reduce dependency and health issues for as long as possible. Programmes like home visits in Scandinavian countries have proven to be cost-effective by increasing the number of active, healthy years (Kronborg et al. 2006). Such policies could reduce future long-term care spending by 13% compared to the baseline high coverage scenario (see healthy ageing scenario, Figure 3).

Although labour productivity growth in the long-term care sector remains low or even negative (OECD 2023), emerging technologies could be put to better use to help reduce overall care costs. OECD simulations suggest that if productivity growth in long-term care reached even half the average productivity growth of the overall economy, long-term care spending by 2050 could be 13% lower than in the baseline high coverage scenario (see productivity growth scenario, Figure 3). New user-centred support tools, such as environmental and wearable sensors, can assist long-term care providers in monitoring, positioning, and recognising physical movements (Bibbò et al. 2022). Virtual carers also play an increasingly important role, supporting both care recipients and providers in managing conditions like diabetes, depression, and heart failure (Bin Sawad et al. 2022).

While taxes are the most common source of long-term care funding, some countries have introduced public long-term care insurance to achieve better risk-sharing and address transparency challenges. For example, Slovenia introduced a long-term care insurance scheme in 2023, aiming to create a more comprehensive system, improve funding transparency, and avoid increasing public-sector debt.

With limited public resources, countries may prioritise supporting individuals most in need: those with low incomes and those with severe long-term care needs. An example of such a policy would be capping out-of-pocket expenses at 60%, 40%, and 20% of care costs for older adults with low, moderate, and severe needs, respectively. Our simulation reveals that such a needs-testing approach could be an attractive option for countries like Latvia, Malta, and Hungary. In these cases, the simulation indicates that this strategy could reduce overall public long-term care spending without significantly increasing the poverty risk among recipients (OECD 2024).

Furthermore, more progressive cost-sharing across the income distribution can help manage long-term care budgets and limit poverty among care recipients. Almost 90% of OECD and EU countries analysed in the report apply some form of income-testing to define levels of support, but individuals with low incomes still face a significantly higher risk of poverty. Optimising income-testing to focus on vulnerable populations can further improve outcomes. In about one-third of the analysed OECD countries, this approach leads to lower long-term care spending and reduces poverty among care recipients, or at least contains spending without increasing poverty rates (OECD 2024).

Achieving fair access to long-term care and the fiscal sustainability of public systems amid population ageing is a challenge for policymakers. The OECD analysis reveals that existing systems are often unaffordable and badly targeted: there is substantial room for improvement and reforms. The promotion of healthy ageing, proactive use of new technologies to elevate the care sector’s productivity, revision of eligibility rules to enable more targeted and inclusive coverage, diversification of funding sources, and optimisation of income-testing are all viable policy options. Each is worth exploring in the search for resilient long-term care systems that can withstand demographic shifts and evolving societal needs.

Bitcoin’s $100k dream becomes reality

Bitcoin’s $100k dream became a reality on Thursday morning…

Prices jumped over 6%，smashing through this key milestone as investors cheered Trump’s pick to lead the Securities and Exchange Commission.

Sentiment towards the crypto space has also been boosted by recent comments from Fed Chair who compared Bitcoin to gold but “only its virtual, it’s digital”.

Hitting $100,000 is certainly a major milestone and something that could support gains for the remainder of 2024.The next key event that could rock Bitcoin may be Friday’s NFP report which is likely to influence Fed cut bets.

Looking at the charts, Bitcoin is firmly bullish – boasting a year-to-date gain of over 140%.

A strong weekly close above $100,000 may signal further upside.

However, should prices slip below this key level – bears may target $95,000.

Oil prices initially slipped on Thursday after OPEC+ decided to delay oil production hikes by three months. However, losses were clawed back as investors perused the details of the new output plan.

Nevertheless, OPEC+ is in a tricky position with production hikes down the road leading to potentially lower prices.

Even if they opt to delay production beyond April, this could spark internal disputes while raising the risk of a price war.

In addition, Trump’s return to the White House adds another element of uncertainty for the cartel ranging from tighter sanctions on OPEC members to tariffs impacting China’s demand.

Looking at the technical picture, Brent remains in a range on the weekly charts with support at $70.00 and resistance at $76.00. A breakout could be on the horizon.

Silver hasn’t been particularly correlated with any major asset class over the past month, not even gold, suggesting this could be an environment where price signals hold more weight than other factors. Currently wedged between downtrend resistance and uptrend support, and with the November non-farm payrolls release looming, a decisive move may soon provide medium-term directional clues.

Silver has rebounded strongly since bottoming at $29.66 in late November, climbing within an uptrend to retest downtrend resistance established earlier this month. With four failures so far – Thursday’s dragonfly doji not included – the window for a bullish breakout looks to be narrowing before the uptrend itself comes under threat.

From a momentum standpoint, RSI (14) is trending higher, while MACD has crossed over from below, reinforcing the bullish bias. This supports a preference for buying dips or topside breaks in the near term.

If the price were to break and hold above the downtrend, one setup would be to buy with a tight stop beneath targeting a push towards either $32.18 or $33.10, two horizontal levels that acted as both support and resistance in the recent past.

While the 50-day moving average is located just above the downtrend at $31.71, the price has a chequered track record for respecting the level, meaning it should be monitored but not an impediment for longs.

Alternatively, if the price were to reverse lower and break uptrend support, another option would be to sell with a tight stop above the uptrend for protection. $29.66 is one potential target with the 200-day moving average and $29.10 the next after that.

While silver hasn’t shown a meaningful relationship with the US dollar or Treasury yields recently, Friday’s payrolls report is a pivotal macro event that could shift expectations for both. Given silver is priced in USD and offers no yield, it remains relevant for traders.

With markets pricing a 70% chance of a 25bps Fed rate cut later this month, even a slight uptick in unemployment from 4.1% could create a supportive backdrop for risk assets like silver. However, a hot report, featuring stronger payroll growth and a surprise drop in unemployment, could bolster the US dollar and lift interest rate expectations, adding downside pressure to silver prices.

Source： FOREX

Yields remain elevated, adding to the appeal of bonds, while volatility and economic uncertainty create a prime environment for active asset management, in our view. Here, Dan Ivascyn, who manages the PIMCO Income Fund with Alfred Murata and Josh Anderson, responds to questions from Esteban Burbano, fixed income strategist. They discuss how the fund is positioned for current high yields and the potential path for central bank policy rates. We believe the U.S. is most likely headed for a soft landing, but we’re also mindful of rising economic and geopolitical uncertainty.

A: One major development was the U.S. Federal Reserve kicked off a rate-cutting cycle: It lowered its policy rate 50 basis points at its September meeting, and another 25 basis points in November. Although the Fed will likely continue to be data-dependent, we expect the central bank to continue easing over the next few quarters. Interestingly, after the September rate cut, yields on longer-maturity securities rose by a significant amount. We have not seen this dynamic in quite some time, and we’re monitoring it closely as we assess duration and yield curve positioning.

The U.S. election was another event investors watched closely. While the longer-term ramifications aren’t clear, post-election market movements suggest many investors anticipate a fiscal and regulatory policy environment that supports U.S. growth. And this means we should also be watching closely for signs of inflation reigniting.

On that point, U.S. inflation has generally continued to moderate, but the numbers have been bumpy. And after some signs of economic weakness, more recent data indicate a more resilient economy.

The upshot is that although we are very excited about yields, including inflation-adjusted yields, macro trends have us anticipating a volatile market environment ahead. Periods of volatility amid less synchronized global economic cycles are generally great times for active asset management.

Our base case, which seems to be generally shared by investors, is a soft landing for the U.S. economy, which has been expanding at about a 3% annual rate. Of course, this scenario has been priced into credit and equity markets, spreads have tightened, and we believe that optimism is leading to complacency in certain segments of lower-quality credit markets.

Risk awareness is crucial. If the economy continues to expand, and the trend is generally positive, it can be challenging to discern a resilient investment versus a more aggressive investment with more downside risk. We see a lot of uncertainties, and our job is to target higher-quality areas of the market where we believe we can generate yields similar to those typically found in more economically or geopolitically sensitive areas of the marketplace, but with appropriate risk mitigation.

A: It’s been a target-rich environment the last couple of years across our Income Fund and other PIMCO strategies. We have been much more active in tactical duration management than we had been over the previous decade or so, and we believe this has contributed to our performance versus passive approaches.

Today, we are right around neutral on duration, considering what the market is pricing in for Fed cuts as well as election implications. On the margin, we may even classify our exposure as a bit defensive on duration versus passive benchmarks.

I’ll add that we have a flexible, global opportunity set outside the U.S. We’re using that flexibility to target interest rate markets in Australia and the U.K., for example, along with select higher-quality emerging markets that have even higher inflation-adjusted yields than in the U.S.

A: We think the curve steepening will have implications for demand for fixed income assets in general. For several years, the cash rate offered such an attractive yield that a lot of money flowed into strategies that target front-end exposures.

Now front-end yields are coming down, and economic uncertainty is increasing. We’ve held a curve-steepening position for some time, and we currently tend to favor the five- to 10-year portion of the curve.

In addition, with recent volatility in macro data and shifts in views toward Fed policy, we’ve engaged in more precise trading around the trajectory and timing of Fed rate cuts. For example, just a few months ago, we noticed that there was a bit too much easing embedded in the front end of the curve, in our view, which provided the opportunity to exploit those views in relative curve positioning.

We don’t have a lot of exposure to longer maturities, given our baseline outlook. And if we get into a more challenging economic environment where central banks need to cut policy rates much more aggressively than what’s priced in, then the curve positioning that we hold should help provide additional resilience to the fund.

A: U.S. agency mortgage spreads are wider than investment grade corporate spreads, which almost never happens. We have a core holding in agency mortgages. We see a strong case for investing in these securities backed directly or indirectly by the federal government and for receiving a yield advantage over most investment grade corporate bonds.

Elsewhere in mortgage markets, we look to source seasoned non-government-guaranteed mortgage risk. Even if we experience a recession, while borrowers would feel the strain, current equity within the U.S. mortgage market is at all-time highs, providing a cushion. During the second and third quarters of this year, we creatively leveraged the size of the Income Fund to source billions of dollars of risk within this space. Over many years we have established a lot of relationships, we are one of the largest players, and we leverage the fund’s size to drive sourcing. We look to do so either in securitized form or by sourcing loans that we then securitize into integrated instruments.

One related area to mention is consumer lending, both in the U.S. and Europe. When a household has substantial equity in their home, we generally are comfortable investing in their automobile loans and student loans, etc.

A: Our corporate spread exposure is near the lower end of where we’ve been historically. It’s not because we expect a massive downgrade or default cycle anytime soon – fundamentals and technicals are both supportive of credit. Rather, we view the exposure as more economically sensitive risk that currently is priced very tight. We’ve been slightly reducing exposure to riskier credit positions and shifted higher into the investment grade segment of the capital structure.

Also, we have a more cautious view of the floating-rate segments of the market, such as senior secured bank loans and much of private credit. For years, the economic backdrop was great for these sectors: We haven’t had a major, lasting recession since 2009. However, we could be at a significant turning point. The Fed began cutting rates, and if we were to see some economic weakness, then investors in floating-rate instruments could face a situation of falling yields as macro risks are rising, unlike fixed-rate credit, where if market yields are declining, then the value of the instruments increases. We stand poised to take advantage of any dislocation in that space.

Within corporate credit, we’re also looking at special situations where we could leverage our size in markets to gain positions of significant control, taking advantage of unique idiosyncratic opportunities as they arise.

A: We don’t really focus on that in the Income Fund, beyond noting that much of the growth in private credit markets has been in the floating-rate segments of the opportunity set. With yields coming down as economic uncertainty or geopolitical uncertainty increases, there very well could be a shift in investors’ mindset over the next several quarters.

And again, we stand poised to take advantage of any opportunities arising from this shift in overall sentiment, at times looking to find and source less liquid opportunities and then package them in more liquid form. It’s not something that we focus on too significantly, but I will say this: In a world of considerable post-election, macro, and geopolitical uncertainty, it’s great to have liquidity.

A: We continue to take a targeted approach to emerging markets, with a lot of room to add if we see opportunities. Emerging markets tend to be the more volatile areas of the global opportunity set, and currently spreads are somewhat thin. We see reasonable valuations in certain areas; some of the local yields make sense as small diversifying positions. Brazil, Mexico, and South Africa are examples where we’ve been active on a small scale.

We’ve tended to have modest baskets of currency positions, and today we have more of a relative value orientation. Our currency activities year to date have generated some positive incremental returns, but overall directional exposures regarding the U.S. dollar are relatively small.

A: Cash yields have declined and are likely to continue to decline. But it’s not clear how quickly they will fall. Cash has done well lately, so it’s not surprising that many investors are lingering perhaps too long in cash right now.

It’s important to note that given starting yields along with the economic and market outlook, investors can seek an attractive inflation-adjusted return today in fixed income. Investors sitting in cash are not locking in that potentially very attractive return. My suggestion to investors is to assess your own situation, determine how much true cash liquidity you need, and strongly consider whether it makes sense to move up the yield curve to lock in some of these attractive nominal and real yields that we haven’t seen in almost two decades.