SignalPlus Macro Analysis (20240404): Significant Increase in BTC ETF Inflows

The economic data released by the U.S. yesterday was mixed. The morning's ADP employment data exceeded expectations, with an increase of 184,000 jobs, and the previous value was revised up by 15,000. The wage growth for job switchers was particularly notable, with an annual increase of over 10%. Accompanying comments pointed out that the largest wage growth occurred in the construction, financial services, and manufacturing sectors.

On the other hand, the U.S. ISM services index for March fell by 1.2 points to 51.4, with payment prices dropping significantly (-5.2 points), reaching the lowest level since March 2020. The remaining components showed mixed results, but the weakness in payment prices and employment temporarily prevented bond yields from continuing to rise.

Atlanta Fed President Bostic reiterated his hawkish stance, insisting on only one rate cut in the fourth quarter. However, he also stated that this depends on whether his economic outlook comes true, and he has not received any information indicating a softening job market.

On the other hand, Powell's attitude was more dovish, insisting that despite strong economic growth, the process of slowing inflation will continue, and hinted that interest rates are currently at restrictive levels and need to be lowered. Additionally, his Q&A was filled with dovish details, such as "productivity gains may exceed output," "significant population growth may help reduce inflation," and regarding capacity pressures, "there may be more supply-side growth that can be achieved."

The 10-year U.S. Treasury yield remains at this year's high, but the market has not shown much concern; however, this could become a resistance for the stock market in the second quarter.

Friday's non-farm payroll data is expected to remain strong, with a slight slowdown, but the significant divergence between institutional surveys (strong) and household employment data (weaker) will still be a major source of uncertainty. Considering the recent decline in fixed income, the market may lean hawkish when the data is released. If the non-farm payroll data is weak, the possibility of a rate cut in June may rise to over 75%.

In terms of cryptocurrency, the inflow into ETFs was significantly stronger yesterday, with large inflows into Fidelity and Blackrock, offsetting the unexpected outflow from ARK the previous day, resulting in a total net inflow of $220 million, which includes a $75 million outflow from Grayscale. The inflow of funds into ETFs helped stabilize the BTC price around $65,500.