PANews reported on September 28 that QCP Capital pointed out in its latest report that this week, risk assets rose sharply, mainly driven by the stimulus measures of the People's Bank of China aimed at revitalizing the Chinese economy. Earlier, the Federal Reserve announced a 50 basis point interest rate cut, setting a positive tone for global markets. In Japan, political developments have also changed market sentiment. Shigeru Ishiba, who is about to become the new prime minister, has been outspoken in criticizing the Bank of Japan's ultra-loose monetary policy. This has changed market expectations of the Bank of Japan's low interest rate stance, adding another layer of complexity to the financial landscape.
The core personal consumption expenditure index, the Fed's preferred inflation indicator, rose 2.6% year-on-year, lower than expected (2.7% year-on-year). This increased market expectations for a 50 basis point rate cut at the next FOMC meeting, with the probability of a 50 basis point cut currently at 53%, while the probability of a 25 basis point cut is 47%. After the data was released, the Dow Jones closed at an all-time high, climbing 137.89 points.
Heading into next week, the focus will be on upcoming labor market indicators including JOLT, ADP, US unemployment rate. Strong performance in these indicators could strengthen the case for a 50 basis point rate cut in November, further driving risk assets higher. In crypto, the BTC ETF saw a sharp increase in inflows this week, with inflows of $494.4 million at the close of Friday. Despite the recent lack of funds flowing into the ETH ETF, the ETH ETF has recovered and saw inflows of $58.7 million at the close of Friday. ETH's implied volatility remains higher compared to BTC (8% higher), while ETH/BTC remains stable above the 0.04 mark.
Although risk assets have rebounded well in the fourth quarter, we are bullish on the upper structure that can deliver high returns as we remain optimistic about the next quarter.
