The Transformative Impact of GenAI on Financial Services

Economic

Summary:

Generative AI is a powerful technology opening up myriad possibilities for businesses while also raising challenges. How will it impact financial services?

The world is on a speed highway for new technologies. The design, creation, testing and adoption of new technologies has accelerated exponentially since the Industrial Revolution. It no longer takes decades, but days, for the masses to adopt new technologies. The Generative Artificial Intelligence (GenAI) and Large Language Model (LLM) revolution is further propelling the world to yet another brand new reality.

What are the implications of this powerful new technology? How is it reimagining the future of financial services? And how can we balance innovation with human responsibility for an ethical usage of AI? Speakers on a recent panel discussion at the BNP Paribas Global Official Institutions Conference (GOIC) shared their insights.

The Transformative Impact of GenAI on Financial Services_1

What are the implications of GenAI on financial services? Speakers on a recent panel discussion at the BNP Paribas Global Official Institutions Conference (GOIC) shared their insights.

Generating content with AI

Opening the discussion, Alexei Grinbaum, Senior Research Scientist at CEA-Saclay, explained: “The way AI systems generate content is asemantic. Generative AI systems don’t understand anything as human do and do not work with the dimension of human meaning. Computation just serves to select the next token in a sequence. Token selection is the result of probabilistic computation, and that’s all GenAI does. What is interesting is that, although GenAI only computes missing tokens, it actually produces content that makes sense to us and appears to be full of meaning to the user.”

He added: “AI generation doesn’t evaluate whether some content is true or false, because human meaning is not part of the computation process. We need to add a system of filters, called alignment, to filter out what is wrong, discriminatory, or toxic.”

GenAI remains a machine. The quality of what it delivers depends on the prompts we give it: “In order to speak to this non-human agent, you need to learn specific ways of speaking.” We cannot just use human ways of using language and assume that this would give the best result with the AI systems.

The adoption of GenAI

After Carl Benz created the very first gas powered vehicle in 1886 during the Industrial Revolution, it took 27 years before its adoption became more widespread when Henry Ford brought it to the masses in 1913.

In comparison, when ChatGPT was launched in November 2022, it took five days to get 1 million users. The previous record was held by Instagram for which it took two months to reach that number of users, said Guillaume Bour, Head of Enterprise at Mistral AI, speaking at GOIC.

Adoption of GenAI has been lightspeed, applications seem endless and the race to the next frontier has started. Making the technology free for use on open source will further accelerate the transformational nature of GenAI.

Among sectors, financial services are one of the industries at the forefront of AI adoption, with a growing number of explorations in the past 18 months as well as a shift from employee centric and on non-core business applications which were mostly off-the-shelf solutions to business use cases with much more significant gains in competitive edge, Bour noted. A majority of use cases he has seen have been tools that improve more administrative, behind-the-scenes, tasks, such as credit decisioning, know-your-customer (KYC), ESG and risk management improvements.

Client-facing applications are the next level competition as companies increase the AI capabilities of their client-facing contact centre chatbots. Swedish e-commerce startup Klarna, for example,claims to havea chatbot that can manage over 2 million customer conversations in a month without negatively impacting its Net Promoter Score (NPS) which measures customer satisfaction.

The provider’s view

Being a good provider requires two key ingredients: expertise and capital. Bour estimates that there are currently a few thousand people in the world who master this technology. On the capital side, developing GenAI models is very capital intensive because it needs to run a lot of GPUs non-stop for days or even weeks.

Big, powerful models are important for research, but not always financially viable when going into production and scaling. “Return on investment is not obvious for many use cases,” Bour noted. “In order to support the scale of large enterprises and institutions around the world with the most efficient cost-to-performance ratio, you will need big, very powerful models, which are more expensive, but also mid-sized models that you will be able to fine tune and specialise to specific tasks.”

Bigger models have more reasoning capacity and ability to perform more advanced tasks, and are also slower. The industry needs to find a balance in the trade-off between speed and reasoning capacity.

Taking the example of legacy code refactoring, Bour explained: “If you want to translate millions of lines of COBOL to Java, which is a challenge that many financial institutions face, it needs a lot of accuracy and performance for a model. This can take days or even weeks, which doesn’t really matter. On the other hand, if you are building a chatbot for your customers, then latency is extremely important. So you would rather choose smaller models that do have a very good level of performance as well.”

Another differentiating factor for Mistral is the company’s flexibility to deploy its models within their clients’ data centres instead of putting the data in the cloud, which is definitely a selling point for financial institutions. “We believe that our customers should have the choice of bringing the model to the data and not the other way around,” Bour noted.

Multilinguality is another key feature: It is the ability for a model to understand and to communicate natively in a specific language instead of using translation. This ensures the model understands cultural sensitivities and nuances. “It’s not only about vocabulary or grammar, but also about the cultural aspects, and distilling the specificities of a language and a culture,” said Bour.

The users' view

French financial markets regulator, Autorité des Marchés Financiers (AMF), considers itself as “AI consumers,” said Iris Lucas, AMF Head of Data Intelligence. “Indeed, at the AMF we are asking ourselves the question of use for our own purposes and several projects are underway, for example investors’ protection, promotion of sustainable finance, market abuse detection, and operational efficiency.”

AMF deployed its first AI tools in 2019, with a scam detection called FISH, Financial Investment Scam Hunter. In 2021, AMF launched of a big transversal data programme called ICData, with the ambition to extend the use of data in order to make the AMF more data driven.

On sustainable finance, AMF is using AI to extract the sustainability objectives in fund management policies. AI is also a valuable tool AMF is using for clustering in market abuse detection while supervised learning techniques are being explored to identify specific types of market manipulation. In operational efficiency, AMF is exploring the use of AI for automatic generation of meeting Minutes, support for experts, and increased supervision assistance, to reduce manual tasks without added value. “Our point of view is that LLM will not replace our coworkers or experts, but it can extend their capabilities,” Lucas noted.

Looking at the use of AI at financial institutions, Léa Deleris, Head of Risk Artificial Intelligence Research at BNP Paribas, explained: “My team develops AI use cases to help the efficiency and efficacy of risk management. We also work on the strategy of the function and contribute at the Group level to all the community around AI, especially around responsible AI, that is ethical, secure, robust, bias free, mindful of the carbon footprint, and explainable.”

She added: “We have over 50 use cases in production that address risk and compliance use cases, mainly in identification and detection.”

Deleris sees most of the impact of GenAI on documentation and controls. Large global institutions like BNP Paribas have controls in very diverse geographies and jurisdictions. “At the level of BNP Paribas Group, we want to make sure that we cater to the local specificities while ensuring we keep a global coherence. Having a tool that can read, summarise and find challenges will help us be even more efficient,” she noted.

Head of Risk Artificial Intelligence Research, BNP Paribas

Other areas where AI can provide significant efficiency is in modelling, stress testing, speed up documentation and alignment to procedures and regulations.

Responsible AI

“Beyond the benefits and challenges in implementing AI, an essential topic for all of us is how to do it in a responsible way,” said Hugues Even, BNP Paribas Chief Data Officer, who moderated the discussion.

This is the purpose of the EU AI Act which is “aimed at creating a unified legal framework for AI systems and applications across the European Union (EU),” explained Deleris, adding: “The intent of the AI Act is to ensure that AI systems are developed and deployed in a safe, ethical, and trustworthy manner.”

The AI Act categorizes AI systems based on their level of risk and introduces specific obligations and requirements for each category. High-risk AI systems will be subject to strict compliance obligations, including conformity assessments, data governance, and transparency requirements.

Deleris cautioned that the AI Act only focused on protecting a category of risks affecting the fundamental rights of citizens. Institutions face additional risks such as cyber but also operational or reputational loss from improper use of AI. “Model risk management is not new in financial institutions and is exactly about ensuring that a model (AI or not) is fit for purpose and used in the correct purpose. So we already have frameworks and mostly need to nurture a culture of managing those risks,” she added.

“While the AMF does not currently supervise AI models developed by market participants under the AI Act, this may evolve in the future as regulations progress. In the meantime, we are actively engaging with market players to understand how AI is being used and whether it impacts their compliance processes or risk management,” noted Lucas. She added that “The key challenge remains to strike a balance between leveraging the opportunities AI offers and managing its risks. This is central to the AMF’s ambition: to support innovation while ensuring the proper functioning of the markets.”

Grinbaum at CEA-Saclay agreed: “The AI Act is not just more bureaucratic procedures and more mandatory certificates. There are also very interesting provisions – even a new ethical principle – and important calls for more research.”

“The rapidly evolving technology of Generative AI offers opportunities for early adopters in their markets, and the potential of and use cases already being implemented in areas such as modelling, detection, investigation and reporting. This also call for controls and ethics considerations, and the potential for regulation including the EU’s landmark AI Act,” concluded Even.

Source:Bank of America

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Justin

Economic

Forex

Several interesting changes have taken place in the European cross-border trade landscape in recent years. Although the majority (59.9%) of EU trade – imports and exports combined – still occurs within the single market, there has been a notable transition in the focus of bilateral trade towards emerging economies, especially China.1 Whereas trade interactions with long-standing partners have seen less fluctuation in the same period.

Trade statistics tell the story

The shift in trading partners is especially noticeable on the imports side. China was the EU’s principal partner for imported goods in 2022 with 20.9% of the total share, up from 7.8 % in 2002, according to the most recent full-year data from Eurostat.2 The US came in significantly behind China at 11.9%, followed by the UK, Russia and Norway.

Meanwhile, the main destinations for goods exported from the EU included the US, the UK, China, Switzerland and Türkiye, among others. Again, China saw a huge leap in the two decades from 2002, with the value of the country’s share of EU exports growing by a staggering 603% in that time.3 Nevertheless, the EU posted a record trade deficit with China of €390bn in 2022 pointing to a significant imbalance between imports and exports.4

Europe’s New Trading Partners: Managing FX Risks and Shifts_1

Trading places

Europe’s traditional trade relationships have experienced heavy disruption since 2020 due to Covid, the increase in geopolitical tensions, including the ongoing impact of Brexit, rising interest rates, terrorist attacks disrupting cargo routes, and international sanctions.

This uncertainty is leading to greater interest in trade solutions, with a marked uptick in the need for inventory finance, as well as ESG-compliant solutions. Corporates are looking to reinforce their supply chains against further possible disruptions, which means having sufficient raw materials on hand to produce their goods and enough inventory to fulfil demand in a timely manner. But higher inventory can weigh heavily on working capital, so inventory finance is experiencing a resurgence among European traders.

Corporates are also making their supply chains more resilient by sourcing from new or additional locations. Alongside China, raw materials from countries such as Mexico and Türkiye are increasingly common in European supply chains. As a result, the currencies in which Europe’s trade transactions are carried out are also evolving at speed.

Europe’s New Trading Partners: Managing FX Risks and Shifts_2

FX risk and hedging

As European trade with China, India, Brazil and many other smaller emerging market countries grows, treasurers are suddenly being exposed to a whole new basket of currencies, which have financial risk implications in terms of exchange rates on international payments and hedging strategies.

Most treasury teams will be managing and monitoring these additional risks with the same resources. This has led many to adopt a systematic approach to hedging secondary exposures in order to focus efforts on managing their primary exposures.

But achieving this is not always easy. Hedging emerging market currencies can be much more complex than hedging the pound sterling, for example. It often requires understanding of local regulation, the factors affecting the value of the currency and liquidity conditions. It can also come at a higher cost.

Treasury teams can adapt to different environments by thinking smart about hedging: they can optimise the maturity of their hedges to keep hedging cost to a minimum, or selectively use options.

Source:Barclays

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UBS

Central Bank

When the top policymakers in the world’s two largest economies are determined to support economic growth, it pays to listen. On September 18, the Fed kicked off its easing cycle with a 50 basis point cut, delivering a strong message that the central bank will not hesitate to act aggressively to ensure a soft landing. A week later, China’s Politburo delivered a forceful message that fiscal policy will be engaged to reduce downside risks to growth, notably by directly supporting the Chinese consumer in earnest for the first time under President Xi. While there remain lingering concerns on US labor market momentum and policy implementation in China, we would not underestimate renewed policymaker resolve to cut off the left tail on domestic and effectively global growth. We believe that there is further room for markets to price out recession risk across asset classes.

A proactive Fed

After the Fed kicked off its easing cycle with an uncharacteristically large 50 basis point cut, Fed Chair Powell said: “the labor market is actually in solid condition. And our intention with our policy move today is to keep it there.” Powell clearly wanted to signal a Fed reaction function that will be proactive, and was able to convince the rest of the FOMC to back it up with a powerful action. This suggests that the bar is low for the Fed to continue easing at an aggressive pace should the labor market disappoint even somewhat in the near term.

At the same time, we are not convinced the Fed will need to ultimately deliver on all the rate cuts that are priced into the market over the coming year. Hard economic data have been surprising to the upside for weeks, with consumption looking robust and initial jobless claims remaining low. Even though the Fed has only just cut rates, there are nascent signs that the easing of financial conditions earlier this year are having a positive effect on the housing market, with new home sales, housing starts and building permits all surprising to the upside of late. Finally, the US Bureau of Economic Analysis just meaningfully revised its measurements of Gross Domestic Income, leading to a sharp upward revision in the estimated US savings rate from 3.3% to 5.2% for Q2. This had been a key argument used by US economy bears that the US consumer was spending beyond its means and due for a sharp retrenchment. In short, the Fed does not look like it is behind the curve.

Exhibit 1: The personal Savings Rate was revised significantly upwards

Personal savings as a % of disposable personal income

Source: Source: BEA, UBS Asset Management. As of September 2024

An inflection point for China

Until last week, China’s stimulus measures have been woefully inadequate to cushion the economy against ongoing deleveraging in the property market and deflationary pressures. The underlying economy has suffered from low private sector confidence, which policymakers had been reluctant to support in full, amid a preference to direct resources at the supply side (infrastructure investment) over demand side (consumption) of the economy.

That said, the coordinated set of monetary and fiscal policy announcements last week designed to support the housing market, capital markets and the consumer do signal a shift in strategy from the government to revive sentiment and dynamism in the private sector. In the spirit of listening carefully when policymakers speak, we note that the September Politburo, which was the first unscheduled meeting of China’s top economic policymakers since the depths of COVID in March 2020, used forceful and focused language on steps to revive the economy.

Leaving out prior Politburo references to structural issues, moral hazard and national security, the readout showed determination to achieve its ‘around 5%’ real GDP target, stop the real estate market from falling, and acting with urgency to ensure necessary fiscal support for the economy. Most notably, language and news since the statement suggest the first genuine direct support for consumers themselves, something that had seemed ideologically off limits in prior communications. Also notable, was the stated need to ‘respond to the concerns of the people;’ this may suggest the Politburo’s growing concerns over social stability, which could have motivated a shift to demand-supportive policies where there was previous reluctance.

While there are many details to be ironed out, including questions on the size and scope of fiscal support, we think the shift in language signals a genuine turn in China’s policymaking reaction function. There is a clear message to address downside risks, and potential for additional stimulus measures announced in coming weeks.

Defensives at risk

Policy shifts from the Fed and Politburo come just as investors had started to send a wave of money towards more defensive assets. According to the popular Bank of America fund manager survey, investors in September reported their biggest overweight to defensives vs. cyclicals since May of 2020. Indeed, the UBS cyclicals vs. defensives equity basket had fallen sharply over recent months; we think it has further room to rebound from here. Separately, asset managers have built up a large overweight position in US government bonds, according to the CFTC and J.P. Morgan’s client survey. Regionally, we have downgraded US Treasuries from overweight to neutral as the US economy looks resilient. The more proactive the Fed is today, the less they will need to ultimately deliver further out in time.

Exhibit 2: Still room for cyclicals to outperform defensives

Source: Bloomberg, UBS Asset Management. As of September 2024

In equities, we have upgraded China and emerging markets, which remain attractively valued even after China’s stimulus announcements. According to fund flows specialists EPFR, China allocations in active equity funds were close to 10-year lows at the end of August. While European equities should also receive some boost from China’s stimulus, particularly exporters of luxury goods, Germany’s economic weakening and ongoing manufacturing headwinds keep us underweight. US equities remain overvalued, but as mentioned above, we see further upside for more cyclical sectors versus defensives.

More broadly, we favor overweights to Asia and European credit, where there is more attractive carry than in US credit. We also are long the Brazilian Real and South African Rand, which offer carry and further potential upside as China reduces global growth risks. Our overall position in duration is neutral, but we remain short JGBs as the market continues to underprice the further tightening we expect from the Bank of Japan.

We acknowledge that after the recent surge, there is risk of disappointment with policy delivery in China, not to mention geopolitical risks including the potential for a US election victory for President Trump who has threatened a surge in tariffs on China. The MSCI China Index is much more heavily weighted towards the domestic services economy and therefore would be less directly impacted by tariffs on Chinese exports. Still, there are risks that a shock to confidence could be a headwind for the current global reallocation back into China. As always we will be monitoring the risks to our position into upcoming risk events.

Source:UBS

Risk Warnings and Disclaimers

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Cohen

Economic

Malaysia has put forward a strong case for the Global South’s greater inclusion in global governance, development financing and climate action, stressing that the voices of developing nations must no longer be sidelined.

Addressing the 79th United Nations General Assembly (Unga79) general debate on last Saturday, Foreign Minister Datuk Seri Mohamad Hasan outlined Malaysia’s vision for a more just and equitable world order.

“The countries of the Global South continue to face marginalisation and remain under-represented in crucial areas, such as socioeconomic development, climate mitigation, education, health and infrastructure,” said Mohamad.

He also noted that many international mechanisms are outdated and often burden developing nations while neglecting their critical needs.

Mohamad further highlighted the major challenges faced by these nations, particularly the lack of infrastructure and technology that limits their ability to participate fully in global initiatives.

“A significant challenge we face is achieving equitable access to development financing,” he said, calling for innovative financing models that support sustainability, conservation, and climate action, as well as the achievement of the Sustainable Development Goals (SDGs).

Turning to the climate crisis, Mohamad described it as “the most urgent challenge of our time”, noting that its impacts were already being felt across borders, disrupting economies and displacing communities.

“This crisis is no longer a distant threat, as it has arrived at our doorsteps,” he added, referencing scientific data showing unprecedented warming, extreme weather events, and rising sea levels.

He stressed that national efforts alone were insufficient and that the global response must include climate financing, technology transfer, and capacity building to assist developing countries.

Malaysia also reaffirmed its commitment to strengthening unity among the nations of the Global South, stressing that solidarity is key to addressing shared challenges.

“Malaysia believes in the power of Global South unity. Our vision is to promote peace, development, and a multipolar world order, where the voices of the South are empowered.

“The Global South holds immense potential to advance the cause of peace and justice. Through mutual support and cooperation, we can ensure equitable progress for all.

“The needs and aspirations of the Global South must be given due attention. It is imperative that we leave no one behind,” said Mohamad.

This year’s theme for the general debate is “Leaving No One Behind: Acting Together for the Advancement of Peace, Sustainable Development and Human Dignity for Present and Future Generations”.

Source: Theedgemarkets

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Owen Li

Economic

Thailand's $53 billion automobile industry is facing a grim future as highly indebted domestic consumers struggle to finance purchases and overseas buyers of its mainstay traditional vehicles increasingly switch to electric alternatives.

The crisis in Southeast Asia's largest car production hub has forced cuts to output and jobs, and sparked measures from the government to try and reverse its fortunes.

It is already rippling through companies such as Techno-Metal which has been manufacturing cast iron undercarriage parts for Japanese car makers including Toyota Motor and Mitsubishi Motors for more than three decades.

Production at the company's two factories in Thailand's Chon Buri province is currently only 40% of peak capacity, and its workforce has steadily declined as orders have eroded, said Deputy General Manager Nattaporn Chewapornpimon. "At the end of last year, there were about 1,200 workers. Now, there are 900 left," she said. "We've also reduced working hours to 75% and cut overtime."

Production in Thailand's automobile industry has been on a downward trend for the last year, sliding 20.6% in August on a yearly basis. And domestic sales fell to their lowest in 14 years on a 12-month moving average basis, industry data showed.

The auto industry is forecasting Thailand to produce 1.7 million vehicles this year, down from 1.9 million in 2023. Of that, 550,000 vehicles are expected to be sold domestically and 1.15 million exported.

"It's a crisis, quite a serious one, with no easy way out," said Hajime Yamamoto, a principal at Nomura Research Institute's consulting division in Thailand, adding that the stagnant home market, combined with increased competition in exports is squeezing the auto sector.

The fast-growing electric vehicles (EV) sector, which has drawn investments of over $1.44 billion from Chinese EV makers such as BYD, is unable to pick up the slack in output for the local auto parts industry which has about 2,000 companies and employs about 700,000 workers. "The Thai cost structure is 30% higher than the Chinese," said Sompol Tanadumrongsak, President of the Thai Auto-Parts Manufacturers Association.

"Thai businesses can't really do it."

TROUBLE WITH TRUCKS

At the heart of the troubles for the Thai auto sector is the pick-up truck segment, which contributed nearly half of all Thailand's vehicle sales last year, and is a fixture on its roads, from the jam-packed Bangkok streets to rural trails.

In 2023, more than 820,000 pick-ups were exported, or 67% of total produced, according to official data.

This year so far, pick-up truck exports have dropped 8.76% annually, with production down 20.51% annually to 616,549 units, data shows.

This has hit Thai firms because more than 90% of parts of pick-up trucks are manufactured locally, and the segment alone makes up 70% of the domestic parts market, according to the auto parts association.

Sales of auto parts are seen down nearly 12% this year at 519 billion baht ($15.68 billion), the research unit of Kasikornbank said in a September report.

"If auto parts SMEs close today, they are not coming back," said Sompol of the auto parts association, adding the situation was worse than it was during the Asian financial crisis of the late 1990s and the pandemic at the turn of this decade. "If it's left this way - we'll all die."

The main culprit is household debt of $484 billion, or 90.8% of Thailand's gross domestic product as of March 2024, among the highest ratios in Asia, which has put the brakes on car sales.

In the first six months of 2024, financial institutions approved about 203,000 pick-up loans, compared to 722,000 for all of 2019, credit bureau data showed.

The credit situation is so tight across multiple consumer segments that Thailand's main EV manufacturers' association has halved its sales forecast for 2024.

Existing car owners are also struggling to pay back their loans.

"Pickup truck NPLs started to show in the first quarter of 2022," said Surapol Opastien, head of the National Credit Bureau, referring to non-performing loans that have since surged 40% year-on-year to 148 billion baht ($4.46 billion).

INCENTIVES PLANNED

Industry groups are now scrambling to find solutions, with the auto parts sector pushing the government for more incentives to foreign manufacturers of traditional internal combustion engine (ICE) and hybrid cars.

"We want to be the last man standing in ICE, especially in pick-up trucks, and hybrid production ... draw auto makers to move that production here," said Sompol of the parts group.

The government plans to offer investment incentives and subsidies for hybrid manufacturing.

"The Japanese have also adapted to hybrid technology to compete and still need parts," said Surapong Paisitpattanapong, of the Federation of Thai Industry's automotive division.

Thailand's Board of Investment is also trying to entice foreign investors to form joint ventures with local auto part companies.

"This will change Chinese EVs into Thai EVs, which can then be exported," said EV association head Suroj Sangsnit, pointing to tariffs on China-made cars from the United States, EU, and India.

"There is nothing other than this that can improve the situation."

But for some Thai firms, working with Chinese EV makers has been a challenge, including because of pricing differences.

"Even if we can (supply Chinese EVs), the profits are low," said Techno-Metal's Nattaporn.

"We still have to focus on OEM (original equipment manufacturing) for Japanese brands. If they have EV plans, that would be a blessing for us."

Source: Theedgemarkets

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ING

Economic

The Conference Board measure of consumer confidence looks disappointingly soft with the headline index dropping to 98.7 in September from 105.6 in August (initially reported as 103.3). The consensus forecast was 104.0 with the outcome being lower than anyone was predicting in the Bloomberg survey – the lowest individual submission was 101.0 from 46 different groups. Expectations dropped from 86.3 to 81.7 while the current conditions index dropped 10.3 points to 124.3. This is quite an alarming decline and is the weakest outcome since March 2021 for current conditions.

The labour differential – jobs plentiful less jobs hard to get looks especially worrying (see chart below). This suggests people are now noticing a clear cooling in the jobs market and this measure has a tendency to lead changes in the unemployment rate. We are currently at levels historically consistent with the unemployment rate rising above 5% in the next few months. If that happens the market is right to expect another 50bp cut at either the November or December FOMC meetings – remember last week the Federal Reserve said it was only expecting the unemployment rate to rise to 4.4% by year-end.

This data is also consistent with the fall in the quit rate – the proportion of workers quitting their jobs to move to a new employers. That has been indicating that either the jobs on offer were not particularly attractive or that workers were starting to value tenure in case they were to be laid off. This really puts the onus on next week's US jobs report. Anything around the 50,000 mark on non-farm payrolls or if the unemployment rate resumes its upward grind would lift talk of the Fed needing to loosen monetary policy more swiftly.

Consumers are feeling a cooler jobs market, which points to further rises in the unemployment rate

Source: Macrobond, ING

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Warren Takunda

Cryptocurrency

Bitcoin still has a “bullish market structure” after another retest of $60,000 support, analysis says.

In one of his latest updates on X, popular trader and analyst Rekt Capital dismissed “fearful” market sentiment over current BTC price action.

BTC price support faces “different narrative”

Bitcoin is no stranger to $60,000 as a key psychological level, and returning to test it from above is no reason for cold feet, Rekt Capital suggests.

BTC/USD has dropped by around 6% over the past three days, previously hitting two-month highs above $66,000, per data from Cointelegraph Markets Pro and TradingView. Bitcoin Traders Stress 'Bullish' Market While BTC Price Threatens $60K_1

Bitcoin Traders Stress 'Bullish' Market While BTC Price Threatens $60K_1

BTC/USD 1-hour chart. Source: TradingView

“BTC has revisited the low $60,000s countless times over the past several months,” the X post explained.

“And yet people become equally fearful on a pullback and for a different reason every time. Same price. Different narrative. Never a loss in bullish market structure.”

Rekt Capital is far from alone in his confident sentiment. Fellow trader Jelle argues that BTC/USD is still in the process of a more substantial resistance/support (R/S) flip.

“A bit of red to start the quarter, and everyone is in full-on PTSD mode,” he told X followers.

“Meanwhile, Bitcoin's market structure is bullish again, and we're turning key S/R back into support. Don't get shaken out.” Bitcoin Traders Stress 'Bullish' Market While BTC Price Threatens $60K_2

Bitcoin Traders Stress 'Bullish' Market While BTC Price Threatens $60K_2

BTC/USD chart. Source: Jelle/X

Previously, Cointelegraph reported on various bearish BTC price predictions calling for a drop of up to 10% — or more — below $60,000 should it give way.

Entrepreneur and crypto enthusiast Mark Cullen joined that camp on Oct. 3, advising traders to prepare for a potential dip to around $57,000.

“Its taking time, but Bitcoin still appears to be heading lower,” part of an X post concluded. Bitcoin Traders Stress 'Bullish' Market While BTC Price Threatens $60K_3

Bitcoin Traders Stress 'Bullish' Market While BTC Price Threatens $60K_3

BTC/USD chart. Source: Mark Cullen/X

Bitcoin short-term holder metric hits “stack” zone

Analyzing onchain data, meanwhile, Checkmate, the pseudonymous creator of data resource Checkonchain, viewed recent price performance through the lens of profit-taking by Bitcoin speculators.

This was conducted using the short-term holder spent output profit ratio (STH-SOPR) metric, which analyzes the proportion of funds in profit when moved onchain by speculators. Such entities are those hodling the funds involved for up to 155 days.

STH-SOPR has now dipped below its center 1.0 value, arguably setting up a viable “buy the dip” opportunity.

“If Bitcoin STH-SOPR is high...don't buy, it means folks are taking profit and applying sell-side,” Checkmate summarized.

“Conversely, in a bull market, dips back to 1.0, or preferably short sharp undercuts of it are opportunities to stack the cheapest sats.” Bitcoin Traders Stress 'Bullish' Market While BTC Price Threatens $60K_4