Tuesday's Markets Update (May 21, 2024)

21 May 2024 by rate3

On Tuesday, major stock indexes hit new records, again, despite mixed news. Investors weighed strong earnings reports against cautious comments from the Fed and disappointing outlooks from retailers. Internationally, commodities continue to rise due to geopolitical factors, with aluminum prices reaching a two-year high. BTC and ETH paused, hovering above 70K and 3.7K respectively, after an intense one-day rally sparked by a sudden resurgence of ETH ETF approval hopes.

Crypto

In a surprise turn of events SEC seems ready to approve spot ETH ETFs (19b-4s), a stark contrast to their previous stance. Companies scramble to understand this sudden shift, some suggesting political motives. While the trading division embraces approval, lacking coordination within the SEC raises questions about internal disagreements on the matter. (source)
BTC ATMs are on a slight dip. Globally, 280 machines vanished in May (the total number of ATMs fell from 37,902 to 37,621), with the US leading the decline. Law enforcement crackdowns on illegal activity might be a factor (the theft of $1.5M BTC from ATMs operators was registered). (source)

World Markets

Brazil's bond yield dipped below 11.62% after hitting a 6-month high at 11.83%. Investors expect a central bank rate cut due to rising inflation, a weak economy (0.34% contraction), and global worries. This suggests a dovish shift by Brazil's central bank.
South Africa's business confidence dropped sharply in March by 1.9%, the biggest fall in 19 months. This follows a smaller increase the prior month. Fewer building permits and slowing car sales were the main reasons for the decline. However, wider interest rate spreads and rising export commodity prices offered some positive signs. (SARB)
Russian bond yields are dropping to 14.1% after a recent spike to its highest level since 2001. Investors are waiting for government auctions and watching the central bank's next move on interest rates. Inflation is high (at a 14-month high of 7.8% in April), though, keeping pressure on yields and suggesting the central bank might stay hawkish.

Currencies

The dollar is flat at 104.6 after mixed messages from the Fed. While Waller hinted at future rate cuts, Bostic suggested they might hold steady at higher rates for a while. Investors are less confident about a rate cut this year, with September and November possibilities down slightly (61% and 73%, below 64% and 77% in the beginning of the week). Everyone's waiting for the Fed's minutes for more clues.

Commodities

Aluminum prices rose to a two-year high (2675) in May due to supply disruptions. Gas shortages and uncertain weather in China limited production, while sanctions on Russia restricted deliveries. Stockpiles also shrank after new trading rules, raising concerns about future availability.