Wall Street asks SEC to Extend Timeline for US Treasury Market Overhaul

Bond

Economic

Summary:

"We believe final implementation of the Clearing Rule will provide improvements for this market," SIFMA and the other signatories of the letter said.

Wall Street is asking regulators for more time to implement a rule requiring centralized Treasury clearing as banks and funds trading U.S. government bonds face a 2026 deadline.

The Securities Industry and Financial Markets Association (SIFMA) together with other trade associations sent a letter to the SEC on Friday requesting that the implementation timeline be extended by at least one year for the cash and repo clearing deadlines. The repo market is where banks and funds exchange short-term loans backed by Treasuries.

"We believe final implementation of the Clearing Rule will provide improvements for this market," SIFMA and the other signatories of the letter said.

"However, the importance of the Treasury market to the financial system and the economy, along with the expected significant issuance of Treasury securities in the coming years, argues for an implementation timeline for the Clearing Rule that allows for a smooth transition so as not to disrupt this market," the letter said.

The SEC declined to comment.

Other signatories include MFA, which represents hedge funds and other private funds, the Alternative Investment Management Association

"Association members are concerned that, without an extension, the success of the transition to central clearing will be seriously compromised and will inevitably lead to disruptions in the cash and repo markets in Treasury securities to the detriment of the financial system," said the letter.

Reuters reported last year that a request for a timeline extension was being considered, as crucial details on how mandatory central clearing would work had not been yet defined and market participants feared the remaining two years might not be sufficient to transition.

The rule originally said clearing houses would have until March 2025 to comply with provisions on risk management, protection of customer assets and access to clearance and settlement services.

Their members would have until December 2025 to begin central clearing of cash market Treasury transactions and until June 30, 2026, for repo transactions.

The central clearing rule is the key reform of a broader government effort to fix structural issues that regulators believe have caused market volatility and liquidity problems in the Treasury market.

U.S. President Donald Trump last week tapped Mark Uyeda, a Republican member of the SEC, to be acting chair of the agency. Trump has said he will nominate former SEC Commissioner Paul Atkins to run the agency on a permanent basis.

Uyeda replaces Gary Gensler, former President Joe Biden's hard-charging SEC chair whose ambitious agenda led him to clash with Wall Street and the crypto industry.

Source: Reuters

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Manuel

Cryptocurrency

Deepseek, an artificial intelligence (AI) startup founded in 2023, has quickly gained attention in global markets with its innovative and affordable AI models. Its rapid rise has made an impact on U.S. equities and crypto.

The $5.58M AI Model That Left Silicon Valley Scrambling

Operating within the High-Flyer hedge fund, Deepseek specializes in open-source large language models (LLMs) and algorithmic refinement. The company’s latest innovation, Deepseek V3, boasts an astonishing 671 billion parameters yet was developed for a mere $5.58 million—a fraction of the expenditures by rivals such as Openai and Anthropic, who have invested billions in similar projects.

This accomplishment has elevated Deepseek as a formidable contender against industry heavyweights like Openai, Meta, and Nvidia. The unveiling of its models has reverberated across various sectors. In the U.S. tech industry, companies including Nvidia, Microsoft, and Meta have experienced sharp declines in stock value as investors reassess the viability of high-cost AI ventures. Deepseek's AI Revolution Sparks Chaos in Crypto and US and European Stock Markets_1

Deepseek's AI Revolution Sparks Chaos in Crypto and US and European Stock Markets_1

Similarly, European corporations such as ASML and Siemens Energy have witnessed notable downturns. Analysts attribute this disruption to Deepseek’s innovative software-driven optimizations and its strategic stockpiling of hardware before U.S. export restrictions came into effect, enabling it to achieve performance parity with Western AI models at a significantly reduced cost.

Bitcoin.com News conducted a brief trial of Deepseek’s latest models and found their reasoning capabilities to be particularly impressive. When compared to Openai’s o1 reasoning model, Deepseek’s product demonstrates superior speed and intuitive reasoning, offering an experience that hints at the potential of artificial general intelligence (AGI).

While the models provide a sense of AGI-level sophistication by explaining their thought processes, they remain limited in their ability to fully replicate human intellectual versatility. Beyond traditional markets, Deepseek’s influence has also extended into the cryptocurrency market. Speculation surrounding AI-driven crypto tokens has intensified, with investors predicting a surge in adoption powered by Deepseek’s efficient models.

However, this enthusiasm has not spared AI tokens, including the prominent AI agent coin spectrum, from steep declines. Bitcoin has also been subject to pronounced volatility, with analysts linking these fluctuations to broader market uncertainties sparked by Deepseek’s entry into the fray. Bitcoin, which often mirrors trends in the U.S. tech sector, slipped below the $100K mark on Monday, Jan. 27. Deepseek's AI Revolution Sparks Chaos in Crypto and US and European Stock Markets_2

Deepseek's AI Revolution Sparks Chaos in Crypto and US and European Stock Markets_2

Deepseek’s rapid rise signals a pivotal shift in the global AI sphere, challenging U.S. dominance and redefining assumptions about the resources required for cutting-edge AI innovation. Its trajectory highlights China’s expanding role in the AI arena and provokes critical discussions about the future competitiveness of Western technology giants. As of 2 p.m. ET on Jan. 27, the Deepseek app has claimed the top spot among free apps on Apple’s App Store, outpacing both Openai’s Chatgpt and Meta’s Threads.

Source: Bitcoin.com

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Manuel

Forex

Economic

The dollar began the week with modest gains after a brief threat of US tariffs on Colombia made clear the trade risk that still hangs over the currency market.

President Donald Trump threatened to place new tariffs on the Latin American nation for refusing to allow deported migrants to land in the country, fueling demand for haven assets on concern protectionist US trade policies will hurt global growth.

The Bloomberg Dollar Spot Index rose as much as 0.3%, before paring gains after the White House said Colombia had agreed to all its terms. The 10-year Treasury yield fell three basis points to 4.59%. The Australian and New Zealand dollars retreated with the yuan, with an unexpected slowdown in Chinese manufacturing activity also weighing.

The US president gave investors fresh reason to fret over trade by ordering an emergency 25% tariff on all Colombian goods coming into the US for refusing to allow deported migrants to land in the South American country. That was a reversal from last week when Trump refrained from slapping tariffs immediately on US trade partners.

“The situation with Colombia just shows how little it takes for Trump to use tariffs as a negotiation tool,” said Dane Cekov, a senior macro and foreign-exchange strategist at Sparebank 1 Markets AS in Oslo. “More will come on the tariff front and the US dollar rally is far from over.”

The Mexican peso slid more than 1% as Trump’s action against Colombia rekindled his threat of hitting Mexico with tariffs by Feb. 1. Eastern European and Latin American currencies paced gains in the best week for emerging markets since July 2023 last week.

The dollar’s advance came amid some signs that investors were weighing widely-favored bullish wagers on the greenback. Speculators pulled back from their most bullish positions since 2017 during the week to Jan. 21, according to Bloomberg analysis of data from the Commodity Futures Trading Commission.

Goldman Sachs Group Inc. strategists estimated that traders had unwound some two-thirds of the tariff risk premium they had priced into the euro-dollar pair, even as the analysts continue to expect US economic outperformance and trade measures to support the greenback in the months ahead.

“The dollar was hurt last week by stories of delayed tariffs,” Win Thin, global head of markets strategy at Brown Brothers Harriman & Co., wrote in a note. “But that should reverse this week now that the tariff wars are upon us.”

Source: Bloomberg

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Warren Takunda

Economic

Bank of Japan policymakers have taken another step forward with their third rate hike this cycle, but they are still only hallway through their mission of hauling the economy from the lukewarm super-low borrowing costs toward the brave new world of paying normal levels of interest on loans.

At its two-day meeting that ended on Friday, the BOJ’s nine-member board, as widely expected, voted 8 to 1 to raise the policy interest rate by another 25 basis points (0.25 percentage point) to 0.5%.

In its latest risk analysis, the bank didn’t mention U.S. President Donald Trump’s threat to impose stiff tariffs on Canada, Mexico and China and its possible impact on Japan’s growth or inflation. The BOJ already has a long list of geopolitical risks to watch out for, and so far Washington hasn’t targeted Tokyo for what it sees as manipulating the currency market to keep a trade surplus with the United States.

Global geopolitical and domestic political risks (a potentially fragile minority government) aside, the BOJ is comfortably in position to raise interest rates every six months, a gradual move by Group of Seven major economies’ standards. The bank has been cautious because raising overnight rates from near to sub-zero even at a snail’s pace could be like feeding patients accustomed to a bland rice gruel diet a double cheeseburger with French fries.

Citing “significantly low” real interest rates, the board repeated its latest conviction that it should be able to continue raising the target for overnight interest rates and “adjust the degree of monetary accommodation” without hurting economic activity.

Judging from some views expressed by board members last year, the bank is staying the course of lifting the rate to at least 1%, which could still barely provide a minimum safety margin for lowering rates when a global crisis hits.

Governor Kazuo Ueda told a news conference on Friday that bank officials cannot pinpoint where their conceptual interest rate that is considered neutral to economic activity stands in a wide range of about 1% to 2.5%.

Ueda said the bank’s view on the neutral interest rate has not changed since he took office in April 2023. “Looking at the range as a whole, we believe that there is a suitable (‘considerable’ in this context) distance from the neutral rate.”

Bank officials are trying to avoid a repeat of 2007-2008, when a brewing sub-prime loan crisis surfaced in BNP Paribas’ poor financial health and eventually derailed the BOJ’s policy normalization effort when it triggered the collapse of Lehman Brothers in September 2008 and caused a global credit crunch.

In March 2006, the BOJ terminated its quantitative easing policy and returned to an interest rate policy, loosely targeting long-run price stability at around zero to 2%. The central bank under the then governor Toshihiko Fukui followed up with another rate hike, taking the overnight rate target to 0.5% from 0.25% in February 2007, even though Kazumasa Iwata, one of the two deputies to Fukui, voted against the proposal by the chair of the board, accurately predicting that Japan’s low inflation was about to slip back into deflation.

Nearly two decades later, Governor Ueda, who had sat in the BOJ’s rate-setting panel from 1998 to 2005, told reporters on Friday that the bank is unlikely to fall behind the curve in its efforts to raise interest rates, noting that above-target inflation, which has been pushed up by high import costs, has not been boosted by domestic demand, and thus is set to ease to 2.0% in fiscal 2026 ending in March 2027 from around 3.0% now.

In their quarterly Outlook Report issued on Friday, BOJ policymakers basically maintained their medium-term moderate growth projections in the face of various headwinds while raising their inflation forecasts for the next 14 months as lingering domestic rice shortages continue pushing up processed food prices and import costs remain elevated amid the weak yen.

The board’s median forecasts: GDP +0.5% (vs. +0.6% in October) in fiscal 2024 ending in March 2025, +1.1% (vs. +1.1%) in fiscal 2025 and +1.0% (vs. +1.0%) in fiscal 2026: core CPI (excluding fresh food) +2.7% (vs. +2.5%) in fiscal 2024, +2.4% (+1.9) in fiscal 2025 and +2.0% (+1.9%) in fiscal 2026.

The bank noted that risks to growth are “generally balanced” while those to inflation are “skewed to the upside” for fiscal 2024 and 2025.This means inflation is expected to be anchored at around the bank’s 2% target in about two years but it could still face a downside risk if firms fail to keep raising wages at an annual rate above 3%, and thus failing to support consumer spending. CPI data for December released earlier Friday showed services costs rose 2.3% on year, far behind the 4.3% rise in goods prices.

Real wages are falling from year-earlier levels, keeping many households wary of spending beyond necessities.The BOJ is in the process of normalizing its policy by gradually lifting the rates from zero and slightly negative at every third or fourth meeting.

The BOJ under Governor Ueda shifted gear in March 2024 with its first rate hike in 17 years and an end to the seven-year-old controversial yield curve control framework, following a decade of large monetary easing aimed at reflating the economy. The board stood pat in December, October and September after voting 7 to 2 in July to hike the rate to 0.25% from a range of 0% to 0.1%.

Source: Macenews

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Warren Takunda

Cryptocurrency

The cryptocurrency market took a hit today, with the total market capitalization dropping by over 6.4% to about $3.38 trillion on Monday, Jan. 27.

This sudden plunge has left many investors scratching their heads, trying to understand the core catalysts behind this downturn and whether more losses are on the horizon. Why Is the Crypto Market Down Today?_1

24-hour performance of large-cap cryptocurrencies. Source: Coin360

Investors spooked by release of DeepSeek R1

Today’s downturn in the crypto market comes after the release of DeepSeek R1 by the Chinese AI lab DeepSeek, which has had a notable impact on the prices of AI-related tokens.

Dubbed by Marc Andreessen as “AI’s Sputnik moment,” DeepSeek R1 is an open-source artificial intelligence, large-language model that has shattered long-held assumptions about AI development.

DeepSeek matches or surpasses the performance of leading models like those from OpenAI, all while being built on a budget of $6 million and a fraction of the Graphics Processing Units (GPUs) that OpenAI uses, as per data from machine learning resource Hugging Face.

Moreover, it is open-source and requires much less computing power, allowing it to run on a smartphone. This has triggered a risk-off mode among AI-related stocks and crypto AI tokens.

Notably, Render led the losses with a drop of 14.6%. Near Protocol , The Graph and Artificial Superintelligence are also flashing red, down 11.4%, 11.41% and 10.41%, respectively.

Performance of top-cap AI-related cryptocurrencies. Source: CoinMarketCap

Tokens with the most exposure to GPUs were some of the worst-performing AI cryptocurrencies. For example, Node. AI (GPU), which facilitates access to GPUs, is down more than 25% over the last 24 hours.

The total market cap of cryptocurrencies in the AI sector is also hard-hit, down by 10% from $47.54 billion on Jan. 26 to $42.50 billion at the time of writing. The trading volume has increased by more than 38% in 24 hours to $3.41 billion, reinforcing the intensity of the sell-side pressure.

Leveraged liquidations drive crypto prices lower

A wave of leveraged liquidations has accompanied the crypto market’s downturn today. Leverage allows traders to borrow funds to increase their trading position, amplifying both potential gains and losses.

When the market moves against these positions, especially in a highly volatile environment like crypto, it can lead to a cascade of liquidations.

The latest data indicates that the crypto market has seen nearly $853 million in liquidations over the last 24 hours, with $794 million being long liquidations. $247.95 million in long Bitcoin (BTC) positions have been liquidated, with the tally continuing at the time of publication. Why Is the Crypto Market Down Today?_3

Total crypto liquidations. Source: CoinGlass

This phenomenon can create a feedback loop where falling prices trigger more liquidations, further driving down prices.

Crypto market cap struggles at 50 SMA resistance

Today’s drawdown in crypto prices has seen TOTAL—the combined market capitalization of all cryptocurrencies—lose key support provided by the 50 simple moving average (SMA) at $3.38 trillion in the daily timeframe.

Additionally, the relative strength index (RSI) has dropped from the positive region at 57 on Jan. 24 to 43. This suggests that the market sentiment is shifting in favor of the bears.

If the selling intensifies, the crypto market will likely drop toward the $3.20 trillion psychological support. Losing this support would pave the way for further declines to $3.1 trillion, embraced by the 100-day SMA. Note that this has been a dynamic support trendline for TOTAL since Nov. 21. Why Is the Crypto Market Down Today?_4

TOTAL/USD daily chart. Source: Cointelegraph/TradingView

On the other hand, a resurgence in buying pressure could push the crypto market cap back above the 50-day SMA and toward the local high of $3.69 trillion reached on Jan. 20.

Source: Cointelegraph

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Warren Takunda

Economic

The Dollar endured its worst week in more than a year last week, allowing the recovery in the pound-to-dollar exchange rate (GBPUSD) to breach the downtrend line that defined the direction of trade since last October.

A look at the chart below shows the break above the trend line confirms an interim base at the mid-January low at 1.2099:

Pound to Dollar Week Ahead Forecast: Recovery to 1.2606 Possible_1

Above: GBPUSD at daily intervals with Fib retracement lines shown, the Oct-Jan downtrend line and the nine-day EMA.

GBPUSD has risen above the nine-day exponential moving average (EMA), which suggests upside is possible over the coming two to three days, which would keep a constructive tempo into the midweek Fed decision.

The RSI has turned up of late, confirming improved upside momentum, which leaves us scoping out a test of 1.2606, the 38.2% Fibonacci retracement of the October-January decline.

Taking a step back, there remains a good chance that we are only witnessing a pullback within the broader trend and that weakness will eventually resume.

For us to grow more confident that the selloff has been completed, a break above the 200-day EMA at 1.2717 must transpire, at which point the technical conditions of a trend turn have been fulfilled.

The underlying fundamentals that lead GBPUSD higher in the short-term is, of course, the broader pullback in the U.S. Dollar.

Markets get the sense that Donald Trump is unwilling to pursue a universal tariff, which was the all-out USD-positive policy decision that markets feared when he won in November.

Instead, Trump is using Tariffs as a potent geopolitical bargaining tool, as shown in Sunday's spat with Colombia over the refusal to accept the return of illegal migrants. Trump threatened tariffs as high as 50% on Colombian imports, and by the end of the day, Colombia had backtracked and tariffs avoided.

This is the playbook going forward. Importantly, it signals that tariffs are a bargaining tool and there is ample space for their avoidance.

The Federal Reserve is in focus midweek as the pause button is expected to be pressed on the interest rate cutting cycle. This pause has long been expected, explaining much of the USD's strength over recent months.

The commentary around future rate hikes will matter for the Dollar, with weakness likely to emerge if Fed Chair Jerome Powell suggests there is scope to cut rates on more than one occasion this year.

One of the most interesting takeaways from Donald Trump's talk at the World Economic Forum last week was his insistence that U.S. interest rates must fall faster. This signals he will sound a more activist tone on the Fed as he wants the Trump economy to grow at a gangbuster pace.

The Fed is independent of the executive, but there is now the chance the Fed errs on the 'dovish' side when facing finely balanced decisions for fear of upsetting the uppity U.S. president.

Pound Sterling Turns a Corner

Buy the British Pound and UK bonds; the pessimism towards the UK is overdone, says Dhaval Joshi, Chief Counterpoint Strategist at BCA Research.

"Playing the over-pessimism on the UK is to go long GBP/USD, which is also oversold based on its collapsed 65-day complexity," he says.

The call is founded on a stance that Pound Sterling looks to have finally exited the January selloff that leaves it as the worst-performing G10 currency of 2025. Declines followed a flush-out of crowded long positioning in the currency, which followed two years of outperformance.

Rising bond yields and fears of a stagnating UK economy appear to have contributed to this flush-out, as did rising market expectations for the number of Bank of England interest rate cuts in 2025.

A better-than-forecast January PMI reading, released on Friday, showed that the economy started the year with some growth, potentially easing fears that a recession was underway.

Inflation and wage growth remain elevated, ultimately limiting the GBP-negative direction of travel in interest rate expectations.

The UK economic outlook is challenging, but the gloomier reappraisal now appears 'in the price', allowing the Pound to further recover from recent lows.

Source: Poundsterlinglive

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Warren Takunda

Economic

U.S. stock futures and Asian shares outside China slumped on Monday as investors weighed the implications of Chinese startup DeepSeek's launch of a free, open-source artificial intelligence model to rival OpenAI's ChatGPT.

Meanwhile, the dollar rose after U.S. President Donald Trump threatened Colombia with retaliatory levies and sanctions for turning away military aircraft carrying deported migrants before a last-minute deal was agreed.

U.S. Nasdaq Composite futures tumbled 2.3% as of 0634 GMT and S&P 500 futures sank 1.3%.

Japan's Nikkei dropped 0.9%, reversing an initial advance. New Zealand's equity benchmark slipped 0.2% and Singapore's Straits Times index eased 0.1%.

At the same time, Hong Kong's Hang Seng rallied 1% and mainland blue chips added 0.1%, even after data showed a surprise contraction in manufacturing this month.

Pan-European STOXX 50 futures dropped 0.9%.

DeepSeek "has raised the spectre of disruption in the tech landscape, with its emergence suggesting that China can continue to make strides in the AI race despite US restrictions," Yeap Jun Rong, a strategist at IG, wrote in a note.

It "seems to instil some concerns over U.S. tech dominance", putting "tech companies' lofty valuation back under scrutiny", he said.

In currencies, the dollar advanced 0.4% against the Chinese yuan in offshore trading , and gained 0.4% versus the Aussie and the New Zealand dollar , with the antipodean currencies tending to act as more liquid proxies for China's currency due to close trade ties.

The Mexican peso slumped about 0.7% and the Canadian dollar eased 0.2%. The Colombian peso had yet to trade against the dollar, but had rallied 3.4% over the previous three sessions.

The euro eased 0.2% to $1.0461. Sterling edged 0.1% lower to $1.2457. The yen was little changed at 156.13 per dollar.

DOLLAR STRENGTH FLEETING

China, Mexico and Canada face a nervy wait with Trump last week earmarking Feb. 1 for additional tariffs on the United States' top trading partners.

However, Nomura strategist Naka Matsuzawa expects dollar strength on tariff worries to be fleeting.

"As a trend, Trump is taking a more realistic, less aggressive stance on tariffs," Matsuzawa said.

"Bottom line: Trump doesn't want big tariffs because he's worried about inflation," he said. "The dollar will be overall weaker."

Trump last week soothed market concerns by saying he wanted to avoid tariffs on China, and said he could reach a trade deal.

The volatility across asset classes kicks off a crucial week for markets that will see the Federal Reserve and European Central Bank - among others - set monetary policy.

At the same time, many bourses have extended holidays this week for the Lunar New Year. Among them, South Korea and Taiwan were already closed on Monday. Markets in mainland China are shut from Tuesday and do not reopen until Feb. 5. Australia was closed on Monday for Australia Day.

Meanwhile, crude oil prices slumped after Trump on Friday reiterated his call for OPEC to cut oil prices.

Brent crude futures dropped 0.8% to $77.85 a barrel, while U.S. West Texas Intermediate crude lost 0.9% to $74.00 a barrel.

Gold sank 0.7% to $2,753 per ounce.

Leading cryptocurrency bitcoin slumped more than 5% to below $100,000 for the first time in a week, and was last at $99,215.

Source: Reuters

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