The focus will be this week on the Federal Reserve meeting on Wednesday, with investors looking for clues as to how much more stimulus might be needed — if any is needed.
The United States’ agenda also includes CPI data, jobless claims, and consumer confidence. Investors will closely follow the rise in the yield curve on the sale of US bonds.
In the Eurozone, spokespersons for the European Central Bank are likely to offer more information on last week’s larger than expected increase in its stimulus program.
Concern over China’s growth could also grab some of the attention after the weakening of trade data on Sunday.
Here’s what you need to know to start your week, according to investing and other sources of opinion.
The US central bank’s monetary policy announcement on Wednesday will be the first since April, when Fed President Jerome Powell said the US economy could bear the brunt of the economic embargo for more than a year.
Investors will pay particular attention to the Fed’s views on economic forecasts in the wake of Friday’s US jobs report that showed the economy unexpectedly created jobs in May after suffering record losses in the previous month.
The report provided the clearest signal yet that the worst of the recessions caused by the Coronavirus crisis has probably passed, fueling a rally in equities and a sale in Treasury bills.
Raising The Performance Curve
Friday’s U.S. employment report added fuel to the fire of a dramatic sale of U.S. government bonds from their recent all-time highs, boosting the yield curve to its steepest level since March.
This rise — when the yield on bonds with the longest maturity increases faster than those with the next maturity — indicates a more rosy growth forecast. But too rapid an increase in borrowing costs could stifle the economic recovery.
While the Fed could introduce yield curve control measures to manage short-term rates, fund managers believe that yields will have to rise significantly to justify any intervention on most of the curve. Instead, they will be on the lookout for any indication that the central bank believes the economic rally could support the yield increase.
United States Economic Data
This week’s agenda also features updates to data on U.S. unemployment benefit claims, a key indicator of the state of the economy, along with consumer price inflation and consumer confidence.
Applications have declined since hitting all-time highs of 6.8 million in late March, dropping below 2 million last week for the first time since mid-March. The report suggests the worst is over for the job market, along with Friday’s nonfarm employment report.
Meanwhile, the CPI should continue to decline given the lack of demand in the economy, while the University of Michigan consumer confidence index should continue to rise in the face of continued economic reopens and a rebound in the stock markets.
Lagarde’s Appearance Euro Zone
On Monday, ECB President Christine Lagarde will appear via satellite link before the European Parliament’s Committee on Economic and Monetary Affairs. Lawmakers will have an opportunity to ask questions about the reasons for the ECB’s larger-than-expected increase in its emergency bond purchase stimulus program.
On the data front, Germany will release its industrial production data for April on Monday, followed by France and the eurozone as a whole over the course of the week. Germany, the largest economy in the euro zone, faces forecasts of its deepest recession since World War II, as the coronavirus pandemic is taking its toll, despite the fact that the containment measures that caused it are now being lifted the economic blockade.
Fears About China’s Growth
China’s trade data has indicated Sunday that global demand for goods produced by the world’s second-largest economy remains weak.
China’s exports contracted in May as global blockages due to the Coronavirus continued to devastate demand, while a sharper-than-expected drop in imports hinted at increasing pressure on manufacturers as global growth fades. stagnating.
The data could reinforce expectations that China may have no growth this year. Investors will be watching how bullish stock markets react as the unstoppable force of Chinese production meets the impregnable global recession.
Bitcoin And Its Unpredictable Instability
During the days leading up to the Bitcoin mining difficulty setting, the network experienced unusual congestion. Users had to decide whether to pay a transaction fee that is considered high or wait hours and days for a confirmation from the network.
There are three reasons why Bitcoin becomes an apparently unstable network. And that they are not linked to the cycles or crises of traditional markets as reported criptonoticias.
Scheduled Adjustments, Self-Regulation And Mining Performance
Almost on time just before each difficulty setting there is a short period of hash rate drop. Only in exceptional cases does this drop affect prices dramatically.
The main reason for this behavior of miners may be rather logical: if the estimate of the following difficulty setting is too high, miners could be betting on hash rate drops to maintain the level of difficulty. Difficulty imposes the measure of computational effort required to mine Bitcoin over the next 2,016 blocks.
This strategy seems to be effective in periods that coincide with a high supply of mining equipment. Since if you consider that more computers enter the network, the greater the competition and the greater the hash rate offer. Therefore, the difficulty of mining Bitcoin will increase.
This increase in hash rate has been progressive for years. Two factors are decisive in this process: the launch of more powerful equipment and the massification of mining as a business model.
Not surprisingly, as the power of available equipment grows, others become obsolete. And you have to turn them off. Bitcoin’s third halving intensified that effect. Less reward, less performance for teams with little potential.
Thousands Of Bitcoin Addresses
According to a study, an entity had been creating large numbers of addresses that were used to make transaction movements. It remains to clarify the real objective of this volume of unusual transactions, which were also carried out with excessive payments of commissions. For some, this attitude is not accidental.
Precisely because it occurs at a time when markets are more susceptible to events that have demanded much media attention. Network congestion, fear of losing money, are the ideal ingredients to manipulate a market. In this case, the earnings appear to have been in the total commissions earned by the mining sector.
The Very Idea Of Stability Plays Against The System
If the hash rate drop is understood as a predictable variable in a cycle, we could disregard the idea that any drop is itself negative. The specific reasons do not matter, because given the conditions to mine Bitcoin it seems impossible to avoid the tendency to turn off equipment that is becoming obsolete.
The change in chip power and the competition for the Bitcoin reward will also fuel further changes in the apparent stability of the network. Constant change is the law.
On the other hand, if Bitcoin’s rules don’t stop some rogue players from trying to manipulate exchange volumes, there’s no guarantee that those strategies will continue to be effective over time. The loss of credibility of rogue entities and the maturity of network users have changed the way we perceive threats, ends to say the opinion of the news.
Weekly we see that Bitcoin at the current price of $ 9700 is struggling to stay on the main trend line for the market.
That point represents for us a critical zone with fault tolerance. For now the main indicators showing Bitcoin is entering an overbought zone with a tendency to create a neutral balance.
See you in the next story! With love 💛 Rubika Ventures® Team!
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