SignalPlus Macro Analysis (20240130): Strong U.S. Economic Data, SPX Remains Bullish

Yesterday's economic data was relatively calm, with the most important possibly being the U.S. Treasury's refinancing announcement. In short, the Treasury has lowered its first-quarter financing estimate by 6.9% to $760 billion, below market expectations, helping U.S. Treasuries to rebound slightly, with the overall yield curve declining by about 5-6 basis points, and the SPX index breaking to a new high.

The reduced borrowing demand from the Treasury is due to expected increases in fiscal funds, as well as higher-than-expected cash levels at the beginning of the year.

Despite adjustments in interest rate cut expectations since the beginning of the year, the stock market continues to rise, although the correlation between stocks and bonds continues to decline. Strong economic data combined with the dovish stance of global central banks (with rate cuts just a matter of time) is still driving up risk sentiment. The options market has already reflected the warming of risk sentiment, with the skew of SPX call options significantly increasing over the past two weeks, and even small-cap stocks seem poised to break out of a two-year consolidation. Rising bull markets are often the hardest to trade.

In the cryptocurrency space, just as the outflow from GBTC finally shows some signs of slowing down, Blackrock's IBIT is gradually catching up to GBTC in terms of trading volume, with spot prices rebounding accordingly, and BTC returning above $43,500.

In terms of fees, the price war continues, with Invesco/Galaxy agreeing to lower ETF fees from 39 basis points to 25 basis points, in line with other institutions, far below Greyscale's 1.5% fee. The entry of TradFi into the cryptocurrency space means lower fees, narrower spreads, and ultimately lower Alpha (increased competition)… hopefully, the window of opportunity won't close too quickly.