SEC Delays Decision On NYSE Proposal For Spot Bitcoin ETF Options Trading

Cryptocurrency

Summary:

The SEC’s next deadline to either delay, approve, or deny the proposed rule change is May 29.

The United States Securities and Exchange Commission (SEC) has postponed its decision on the New York Stock Exchange’s proposal to introduce option trading on spot Bitcoin exchange-traded funds (ETFs).

Grayscale Bitcoin Trust and Bitwise Bitcoin ETF are directly affected since they hold BTC on the NYSE.

SEC Delays Decision on Spot BTC ETF Options Trading

The SEC cited in its April 8 filing that it will require a longer time to take action on the suggested rule change so that it has enough time to deliberate on it. Notably, the next deadline for the SEC to delay, approve, or deny the proposed rule change is May 29.

The rule change proposal was submitted to the SEC in February 2024, after which it was opened for public feedback. The proposal would allow trading options on certain Bitcoin ETFs by changing Rule 915.

Options are financial derivatives that allow investors to speculate on the movement of underlying assets, bringing about hedging and leverage.

The same delay decision for Grayscale and Bitwise was given for Nasdaq’s request for options trading on BlackRock’s iShares Bitcoin Trust (IBIT) last month.

In an earlier March 6 filing, the regulator also delayed responding to the CBOE exchange and the Miami International Securities Exchange requests to offer spot Bitcoin ETFs options.

Grayscale CEO Urges SEC for Spot Bitcoin ETF Options

Michael Sonnenshein, the Grayscale CEO, was one of the two people who approached the SEC with a request to have the rule changed on options trading.

In a letter on February 28, Sonnenshein said it only made sense for the SEC to approve options trading on the spot Bitcoin ETFs since the regulator already approved futures and spot ETFs on the NYSE.

In a February 5 post, Sonnenshein wrote that options for spot Bitcoin ETFs could lead to a “robust and healthy market.”

Meanwhile, the SEC is still deliberating on the seven spot Ethereum ETFs after postponing the decision until May 23, the same deadline set for the VanEck ETF application.

Spot Bitcoin ETFs have been on an upward trend this year, attracting attention beyond the United States. Recently, Chinese mainland-based equity funds filed applications to introduce spot Bitcoin ETFs through their Hong Kong subsidiaries. One of the funds, Harvest Fund Management’s Hong Kong branch, has been awaiting approval from the Securities & Futures Commission (SFC) of Hong Kong since January.

Source：CryptoPotato

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Samantha Luan

Economic

Central Bank

The inflation report, set for release at 8:30 a.m. ET, is expected to show headline inflation of 3.4%, an acceleration from February's 3.2% annual gain in prices, according to estimates from Bloomberg. Higher energy costs, fueled by a jump in gas prices, are expected to have driven the increase.

Over the prior month, consumer prices are expected to have risen 0.3%, down from February's 0.4% monthly increase.

On a "core" basis, which strips out the more volatile costs of food and gas, prices in March are expected to have risen 3.7% over last year — a modest slowdown from the 3.8% annual increase seen in February, according to Bloomberg data.

"After two firm reports to start the year, core CPI inflation should cool off in March," Bank of America economists Stephen Juneau and Michael Gapen wrote in a note to clients on Friday.

Core prices are expected to have climbed 0.3% on a monthly basis in March, compared with the 0.4% increase seen in the prior month.

Inflation Expected to Remain Elevated As Rate Cut Debate Takes Center Stage_1

Core inflation has remained stubbornly elevated due to higher costs of shelter and core services like insurance and medical care.

But Bank of America expects a slight decline in the prices of core goods, largely driven by a drop in new and used car prices. The bank also expects less price pressure from core services like airfare and lodging away from home.

"If our forecast proves correct, it should provide some confidence to the Fed," the economists said.

Other economists also see further improvements in core inflation throughout the year.

"Going forward, we expect monthly core CPI inflation to slow to 0.20-0.25%," Goldman Sachs lead economist Jan Hatzius wrote on Monday.

"We see further disinflation in the pipeline in 2024 from rebalancing in the auto, housing rental, and labor markets," the economist added.

To cut or not to cut?

Inflation has remained above the Federal Reserve's 2% target on an annual basis. Fed officials have categorized the path down to 2% as "bumpy."

Notably, the Fed's preferred inflation gauge, the so-called core PCE price index, has shown a slight cooling in recent months.

The year-over-year change in core PCE slowed to 2.8% for the month of February, down from 2.9% in January. Federal Reserve Chair Jerome Powell said the data is "along the lines of what we want to see."

But not all of the data has been supportive of a rate cut. Just last week, a strong labor report showed the US economy added more jobs than expected in March, as the unemployment rate decreased while wage growth held steady.

Investors now anticipate just two and a half 25-basis-point cuts this year, down from the six cuts expected at the start of the year, according to Bloomberg data. Atlanta Fed president Raphael Bostic sees one rate cut in in 2024, but isn't ruling out the possibility of two or zero, he told Yahoo Finance on Tuesday. Meanwhile, former St. Louis Fed president James Bullard said Tuesday a three-rate-cut scenario remains the "the base case."

"[The Fed] wants to cut rates, but the economy is standing in its way," Mizuho Securities USA chief economist Steven Ricchiuto told Yahoo Finance Live on Tuesday. "The Fed is fighting the economy. In particular, they’re fighting the American consumers, and that’s a fight that I would not want to get involved in."

As of Tuesday afternoon, markets were pricing in a 56% chance the Federal Reserve begins to cut rates at its June meeting, according to data from the CME Group. That's down from a 62% chance a week ago.

Source: Yahoo Finance

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Ukadike Micheal

Economic

Forex

Stocks

It's time for corporate earnings to take the spotlight as Wall Street anticipates another robust earnings season. Despite concerns about high valuations and potential bubbles in the market, optimism prevails as analysts predict a healthy 10% gain in earnings for S&P 500 companies in the first quarter.

The outlook for earnings is particularly positive for technology stocks, which are expected to continue driving profits after a strong performance in the previous quarter. This optimism is reflected in the reluctance of market experts to bet against further gains, even as the S&P 500 Index trades near its all-time high.

Wall Street strategists, including those at Societe Generale SA, have raised their year-end forecasts for the S&P 500, citing the momentum backed by strong earnings outlook. According to Deutsche Bank AG strategists, earnings upgrades have outnumbered downgrades in the first quarter, further supporting the positive sentiment surrounding corporate profits.

While concerns about market bubbles persist, rising profit forecasts alleviate some worries, signaling that the equities benchmark may not be overvalued. Despite a 9% rally in the S&P 500 this year, allocations to stocks have surged, driven by optimistic projections for economic growth. However, exposure is expected to plateau as companies enter a blackout period for stock buybacks ahead of the reporting season.

Although investor confidence is at near two-year highs, sentiment remains below euphoric levels typically associated with market peaks, according to Bank of America Corp. strategist Savita Subramanian. This sentiment is echoed by Citigroup strategist Scott Chronert, who emphasizes the importance of information circumstances in influencing sentiment direction.

Recent comments from Federal Reserve officials hinting at prolonged high interest rates have sparked volatility in the market, prompting some traders to reevaluate their positions. However, many remain optimistic, viewing any pullback as a buying opportunity. Forecasts for tech earnings remain strong, suggesting continued support for the market rally.

The broader outlook for the market hinges on the strength of corporate earnings. As Charlie Ashley, portfolio manager at Catalyst Capital Advisors LLC, notes, the sustainability of the rally depends on continued earnings growth. Any softness in earnings could signal trouble ahead, potentially signaling weakening consumer sentiment and economic conditions.

While concerns about market bubbles and interest rate hikes persist, optimism surrounding corporate earnings remains high. As investors await the upcoming earnings season, the focus shifts to the strength of corporate profits as a key driver of market performance. The ability of companies to deliver on earnings expectations will likely determine the trajectory of the stock market in the coming months.

Source: Bloomberg

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Alex

Economic

Stocks

Wall Street strategists are optimistic that Corporate America will deliver another bumper earnings season as global economic growth picks up. Even pricey technology stocks — the primary profit engine in the previous quarter — are again expected to be supported by solid results. So while the S&P 500 Index is coming off its best first quarter in five years and continues to trade near its all-time high, market experts are reluctant to bet against further gains.

“It’s way too early to apply the brakes on the US stock rally,” said Manish Kabra, head of US equity strategy at Societe Generale SA. “The momentum has been backed up by the earnings outlook, and I expect that to continue for at least one more quarter.”

Kabra is among a slate of Wall Street strategists who have boosted their year-end forecasts for the S&P 500 in recent weeks.

Earnings for S&P 500 companies are expected to post a “healthy” 10% gain in the first quarter in headline numbers from a year ago, according to Deutsche Bank AG strategists led by Parag Thatte. And earnings upgrades from analysts have outnumbered downgrades in the first quarter, according to a Citigroup Inc. index.

“There’s a likelihood that Q1 earnings season is still going to be pretty strong, especially given just how strong economic growth was in the first quarter,” said Cayla Seder, macro multi-asset strategist at State Street.

The rising profit forecasts lessen worries that that the broad equities benchmark is in a bubble. After a 9% rally this year, S&P valuations are well above their 20-year average and the index is already about 4% higher than the average target of strategists tracked by Bloomberg last month.

Meanwhile, investors are buying in, as allocations to stocks have surged since an October low on the back of upbeat projections for economic growth, according to Deutsche Bank. Exposure is now expected to flatline as companies go into a blackout period for stock buybacks ahead of the reporting season. But the levels are not high enough to warrant a selloff in the absence of a negative catalyst, a team at the firm led by Thatte wrote in a note.

Other strategists concur. Confidence among equity investors is at the highest in nearly two years, but sentiment is still far from the “euphoric” levels that typically signal a top, Bank of America Corp. strategist Savita Subramanian said earlier this month.

“When we talk about sentiment, my underlying view is that whether sentiment is really negative or whether sentiment is really positive, sentiment can stay in either direction so long as the information circumstance is as it is,” said Citigroup strategist Scott Chronert.

There is, of course, skepticism brewing among some market participants after Federal Reserve officials last week raised the possibility of keeping interest rates high for longer than expected. Those comments sparked the biggest one-day selloff in the S&P 500 in almost two months last Thursday. The volatile week also prompted long-complacent traders to look at the hedges they’ve ignored for months.

The stock market’s tepid start to April has led JPMorgan Chase & Co. clients to question whether the rally has peaked and if the recent price action portends something “much worse in the economy,” said Andrew Tyler, head of US market intelligence at the bank, in a note. However, he isn’t convinced.

“I think none of these,” Tyler wrote to clients. “It is possible that we could see a 2-3% pullback, but you need to see either deterioration in the macro story or an earnings season that shows negative sequential growth.”

The reversal in stocks on Friday following a hotter-than-expected US jobs report also shows how eager traders are to buy into any pullback.

Additionally, forecasts for tech earnings remain strong, with analysts expecting the sector to report that profits soared 20% in the first quarter. At the same time, the outlook for the more economically sensitive sectors is brightening, suggesting a broader, healthier rally as the laggards catch up.

For Charlie Ashley, portfolio manager at Catalyst Capital Advisors LLC, the stock market’s fate hinges on these projections.

“Multiples are extended right now, so earnings strength needs to continue,” Ashley said. “If there is softness in earnings, that’s going to be a warning signal because that’s likely followed by a weakening US consumer and a weakening economy.”

Source: Bloomberg

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ING

Commodity

Economic

Energy – Oil trades flat on rising inventory

Sentiment in the oil market remains soft, with prices for both ICE Brent and NYMEX WTI trading flat in the early trading session today. The recent numbers from API suggest a gain in US stockpiles. The ongoing Gaza ceasefire talks also weighed on crude oil prices.

Numbers released by the American Petroleum Institute (API) overnight were bearish for the oil market. The API reported that US crude oil inventories have increased by 3.03m barrels over the last week, higher than market expectations for a build of 0.69m barrels. If confirmed by the Energy Information Administration (EIA), this would be the third weekly expansion in a row. The API also reported that Cushing crude oil stocks increased by 0.12m barrels. On the products side, gasoline inventories fell by 0.61m barrels, while distillate stocks increased by 0.12m barrels over the week. The more widely followed EIA report will be released later today.

Yesterday, the EIA released its latest Short-Term Energy Outlook, in which it continues to foresee a small global oil supply deficit of 0.26m barrels/d in 2024. The EIA raised its global demand estimates by 0.48m barrels/d to 102.9m barrels/d for the year (largely in line with the International Energy Agency's forecast of 103.2m barrels/d) amid an improving outlook for the second half of the year. As for the US, the country could continue to produce record volumes, with total oil production reaching 13.21m barrels/d in 2024 compared to 13.91m barrels/d forecast earlier and 12.93m barrels/d in 2023. For 2025, US oil production could further grow to 13.72m barrels/d, compared to its previous forecast of 13.65m barrels/d.

As for the calendar this week, the market awaits the release of US inflation data scheduled later today. Meanwhile, OPEC and the IEA will also release their monthly reports later this week, giving a broader snapshot of the demand outlook for the oil market.

Metals – Global steel demand to recover

The latest forecasts from the World Steel Association (WSA) show that global steel demand could rise by 1.7% year-on-year to 1,793mt in 2024 and could see a further increase of 1.2% YoY to 1,815mt in 2025, after two years of declines and severe post-pandemic market volatility. The association expects India to lead the demand growth as Chinese steel demand continues to disappoint. The demand growth projections for India now stand at 8% YoY over 2024 and 2025, primarily driven by continued expansion in the infrastructure sector. In contrast, Chinese steel demand is expected to remain flat this year and to decline by 1% YoY in 2025 following persistent weakness in the real estate sector. The WSA further added that the steel demand in developed economies could grow by 1.3% YoY in 2024 and 2.7% YoY in 2025 amid the recovery in demand in the EU, US, Japan and Korea. As for developing economies (ex-China), steel demand is expected to rise by 3.5% YoY this year and next year.

In copper, recent LME data shows that on-warrant inventories for copper increased by 10,875 tonnes – the biggest intra-day addition since 7 September 2023 – to 111,825 tonnes yesterday, the highest since 14 February 2024. The majority of the inflows were reported from warehouses in South Korea and Singapore. Meanwhile, total inventories for copper rose by 9,950 tonnes (the biggest daily addition since 18 October 2023) to 124,225 tonnes, while cancelled warrants declined slightly by 925 tonnes for a second consecutive session to 12,400 tonnes as of yesterday.

Lastly, the latest COTR report released yesterday shows that investors boosted net bullish positions for aluminium by 7,682 lots for a fifth consecutive week to 132,169 lots for the week ending 5 April, the highest bullish bets since the end of December in 2020. Similarly, net bullish bets for zinc rose by 5,202 lots after two consecutive weeks of declines to 25,213 lots at the end of last week. In contrast, money managers decreased net bullish bets for copper by 1,655 lots for the first time in seven weeks to 86,771 lots as of last Friday.

Agriculture – Vietnam coffee shipments rise

The General Department of Vietnam Customs released trade volume estimates for March, which showed that coffee exports softened to 189kt for the month, down 10.2% compared to 210.4kt reported a year ago. However, the coffee export estimates for March are up 17.7% compared to the 160kt shipped in February. Over the first quarter of 2024, coffee exports increased 5.9% YoY to 585.7kt. Vietnam coffee exports continue to benefit from the rise in Robusta coffee prices, primarily due to the supply shortages.

Brazil’s total coffee exports rose 38% year-on-year to 4.3m bags (60 kg) in March, according to data released by Cecafe Group. The group said that the Arabica coffee exports rose 15.1% YoY to 3.1m bags, while Robusta coffee exports surged significantly to 846.7k bags from 107.3k bags a year earlier. The overall rise in coffee exports could be largely attributed to the rise in demand for robusta coffee beans across the globe, despite prices moving higher amid expectations for a supply deficit this year.

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Ukadike Micheal

Economic

Forex

In February 2024, the seasonally adjusted index saw a modest 0.1% month-on-month increase, mirroring gains in both value and volume. Over the preceding three months, the value of sales grew marginally by 0.1%, while the volume of sales experienced a slight decline of 0.3%.

Continuing its upward trend, the value of retail trade in February 2024 displayed a 2.4% year-on-year increase, maintaining a positive trajectory since February 2021. Moreover, after 18 months of negative results, the volume of sales also returned to growth, rising by 0.3%.

Year-on-year comparisons for February 2024 revealed a robust performance across different sectors of retail trade. Large-scale distribution witnessed a notable 4.0% increase, while small-scale distribution grew by 1.0%. However, non-store retail sales experienced a slight dip, declining by 1.6%.

In contrast to four consecutive months of growth, online sales exhibited a reversal, declining by 0.5% compared to February 2023.

Delving into the value of sales for non-food products, data revealed a mixed picture across various categories in the year-on-year series. The strongest growth was observed in Cosmetic and toilet articles, surging by 7.7%, while the largest decline was recorded for Computers and telecommunications equipment, dropping by 1.8%.

From a technical standpoint, these fluctuations in retail trade indicators can offer insights into consumer behavior and economic sentiment. The month-on-month increase in the seasonally adjusted index suggests modest growth in consumer spending, reflecting improving economic conditions. However, the slight decline in the volume of sales over the preceding three months may indicate cautious consumer sentiment or shifting consumption patterns.

The positive year-on-year growth in both the value and volume of retail trade signals overall resilience in the retail sector, despite ongoing challenges and uncertainties. The sustained uptrend since February 2021 indicates underlying strength in consumer demand, which bodes well for economic recovery and growth prospects.

Nevertheless, the mixed performance across different retail categories underscores the heterogeneous nature of consumer preferences and spending habits. While certain sectors, such as Cosmetic and toilet articles, continue to thrive, others, like Computers and telecommunications equipment, face challenges.

The latest retail trade data highlights the dynamic nature of consumer behavior and economic activity. While signs of recovery and growth are evident, challenges persist, requiring continued vigilance and adaptation from retailers and policymakers alike. As the retail sector navigates through uncertainties, a nuanced understanding of market trends and consumer preferences will be crucial for driving sustainable growth and resilience.

Source: Istituto Nazionale di Statistica

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Ukadike Micheal

Economic

Cryptocurrency

Sources reveal that Hong Kong could introduce spot bitcoin exchange-traded funds (ETFs) this month, potentially becoming Asia's inaugural city to offer such ETFs. This timeline significantly outpaces industry expectations, signaling a concerted effort by regulators to expedite the approval process.

The accelerated approval process comes amidst efforts by Hong Kong authorities to enhance the city's appeal as a global financial hub, which has been somewhat tarnished by pandemic-related restrictions, China's economic challenges, and escalating tensions between China and the United States.

Adrian Wang, CEO of Metalpha, a Hong Kong-based crypto wealth manager, highlights the far-reaching implications of Hong Kong's ETFs, suggesting they could attract fresh global investment and drive cryptocurrency adoption to new heights.

Meanwhile, mainland Chinese and Hong Kong asset managers, including China Asset Management, Harvest Fund Management, and Bosera Asset Management, have reportedly submitted applications to launch these ETFs. However, neither the Securities and Futures Commission (SFC) nor the aforementioned companies have provided comments on the matter.

Despite cryptocurrency trading being prohibited in mainland China, offshore Chinese financial institutions have expressed keen interest in participating in crypto asset development in Hong Kong. This trend underscores the growing significance of Hong Kong as a crypto-friendly jurisdiction within the region.

In late 2022, Hong Kong approved its first ETFs for cryptocurrency futures, with the CSOP Bitcoin Futures ETF witnessing a substantial increase in assets under management since its inception.

Looking ahead, the potential introduction of spot bitcoin ETFs in Hong Kong could have profound implications for the cryptocurrency market. It could attract institutional investors who prefer the convenience and regulatory oversight offered by ETFs, potentially driving further demand for bitcoin and other cryptocurrencies.

Moreover, the establishment of spot bitcoin ETFs in Hong Kong could bolster the city's position as a leading financial center in Asia, providing a gateway for global investors to access cryptocurrency markets.

However, challenges remain, particularly regarding regulatory compliance and investor protection. Regulators will need to ensure robust oversight and transparency to mitigate risks associated with cryptocurrency investments.

The impending launch of spot bitcoin ETFs in Hong Kong signals a significant milestone in the mainstream adoption of cryptocurrencies. It underscores the growing recognition of digital assets as legitimate investment instruments and highlights Hong Kong's evolving role in the global cryptocurrency ecosystem. As market participants await further developments, the introduction of spot bitcoin ETFs in Hong Kong could potentially reshape the landscape of cryptocurrency investing and contribute to the continued growth and maturation of the market.