Market Commentary – September 23rd, 2022

Crypto Market

At the time of writing, Bitcoin is trading at $18,900 and Ethereum at $1,288. Crypto markets were under pressure this week after the Federal Reserve raised rates by 75 bps on Wednesday (more details under the Macro section). During the course of the week, there was a net outflow of over $200M worth of Bitcoin from centralized exchanges as its price held around its low set in June 2022. This level may have attracted buyers. Exchange netflows are the net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges. Crypto going into exchanges (inflow) may signal selling pressure, while withdrawals (outflow) potentially point to accumulation.

XRP was an outlier and performed well this week adding as much as 13% to its market cap. This is on the back of expectations by some that the SEC’s lawsuit against the token’s issuer, Ripple, may soon be concluded. In two separate motions filed by Ripple and the SEC, both sides called for a ‘summary judgment.’ Summary judgements typically involve expedited rulings in a case when a side believes enough evidence has been presented to make a decision. In the case of Ripple, both sides called on the judge to make a ruling regarding whether the firm violated securities laws when it sold XRP to investors. 

In the USA, The House Financial Services Committee (FSC) is drafting legislation to regulate stablecoins, which according to Bloomberg, would place a two-year ban on algorithmic stablecoins like TerraUSD and make the issuing or creating of new “endogenously collateralized stablecoins” illegal. The definition would apply to stablecoins that allow users to convert, redeem, or repurchase the stablecoin for a fixed amount of monetary value. It also applies to stablecoins backed by other digital assets from the same creator to maintain their fixed price.


After the Federal Reserve meeting on Wednesday, stocks sold off and short yields rose when the Fed raised its benchmark rate by 75 basis points and projected the median terminal rate above market expectations. The Fed’s median forecast is for the Fed funds rate to rise to 4.4% by the end of this year, then 4.6% in 2023. The previous estimates had been 3.8% and 3.4% in the June dot plot.

The Fed substantially revised down GDP forecasts, with the median estimate for growth this year at 0.2%, down from 1.7% forecast in June. Unemployment rate forecasts were up, with the median now at 4.4% for both 2023 and 2024 while the long-run rate is unchanged at 4%. Both headline and core Personal Consumption Expenditures (PCE)  forecasts were also up for this year and next. The Fed doesn’t see inflation returning to its 2% target until 2025.

Stocks were volatile during Federal Reserve Chairman Jerome Powell’s press conference where he largely ‘toed’ the same line from his Jackson Hole speech, reiterating there is still ‘a ways to go’ on rates and he would want to be very confident inflation is moving back down significantly before even thinking about lowering interest rates. 

On the global front,  Russian President Putin ordered 300,000 reservists to mobilize amid the war in Ukraine and issued a nuclear threat to the West. The USD strengthened on this news because it was viewed as risk off and investors sold some assets to USD.

Equities, Fixed Income, FX and Commodities


Stocks have been under pressure after the Federal Reserve meeting on wednesday. At the time of writing, The Dow Jones Industrial Average is down 2.56% for the week and the Nasdaq Composite dropped -2.93%. Growth-oriented stocks were the hardest hit, as bond yields continued to drift higher. 

Fixed Income, FX & Commodities 

The USD gained strength during the course of the week. EUR/USD is at 20-year lows as various European PMI readings highlighted deepening economic downturn in the region. GBP/USD hit below the 1.12 level for its lowest level since 1985. The USD’s strength is unlikely to subside anytime soon as long as the Fed is hiking further and faster than other countries. At the time of writing, The US10Y yield is 3.80% a new high for the year while Brent crude oil is trading around $85 USD.

News we’ve been reading

The Fine Print


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