Rate Hikes - Valkyrie

Weekly Macro Market Updates


Rate Hikes

Markets opened lower Monday as investors continued to price in the Federal Reserve’s strategy on fighting inflation expected to start in March. Minutes from the meeting in December were released last week with markets immediately reacting to a more hawkish, or inflationary controlling, tone. While non-farm payrolls were below estimates for a second straight month, the unemployment rate improved to 3.9% last month. The 10 year Treasury yield jumped to 1.8% this morning after rising almost 30 basis points already last week. S&P 500 Index was down about 75 points today near the 4600 level, down from the recent high of 4800 last week.

In December, the Fed announced plans to end its asset buying program by March and start raising interest rates that same month, with three total rate hikes expected for the year. Over the weekend, Goldman Sachs released its latest forecast calling for an additional interest rate hike added in December, for a total of four hikes this year. Goldman also called for an earlier balance sheet run-off schedule starting in July rather than in December. This is done by allowing bond positions to mature, also known as quantitative tightening.

A busy week for economic releases start Wednesday with the Consumer Price Index, a closely watched inflationary indicator currently surveyed at 7% year over year, up from 6.8% the previous month. Thursday’s releases include the Producers Price Index and Jobless Claims, then December’s retail sales Friday, in addition to the start of earnings season.

On-Chain Outlooks

The potential Bitcoin price double bottom was quickly nullified last week with price threatening further lows into the bottom quartile of the 2021 price range. Strong volume support sits from $31,000 from $40,000 based on 2021’s price action. The daily Relative Strength Index (RSI), a momentum indicator, has hit a multi-month low with levels last seen in May 2020. Despite bearish activity in traditional markets, a relief rally back to $47,500 becomes more and more likely based on oversold conditions, with price now down 42% from the current all-time high set in November 2021. Overall, the price trend is likely to continue to lean bearish and range bound until prices regain the $50,000 region for a significant period of time.

Valkyrie in the Press

The Portfolio Management Team

Steven McClurg, CIO
Bill Cannon, Portfolio Manager
Wes Cowan, Portfolio Manager, Head of Defi
Josh Olszewicz, Head of Research
Sean Rooney, VP Research and Trading
Will McDonough, Vice Chairman, Investment Committee
Leah Wald, CEO, Investment Committee
Shannon Smith, Head of Investor Relations