Macro moves the market: How to reposition in a shifting landscape

Let's dive into those events, how the environment might change, and how to position to accommodate these changes. 

TLDR

• Economic data shows resilience, but sticky inflation has markets pricing out Fed rate cuts for 2023
• Treasury's Quarterly Refunding Announcement signals more bond issuance, pressuring yields and risk assets.
• Yellen's fiscal concerns hint at potential hawkish QRA, lowering market liquidity - a negative for crypto.
• One or two Fed rate cuts are still possible to reduce U.S. debt costs but may require offsetting policy tightening.
• Powell will likely reiterate "higher for longer" rates but could surprise slightly dovish versus hawkish markets.
• Crypto has bullish catalysts like forthcoming ETFs, but the near-term outlook is cautious - we recommend repositioning into majors and memes.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. "One Glance" by Cryptonary sometimes uses the R.R. trading tool to help you quickly understand our analysis. These are not signals, and they are not financial advice.

Key talking points

• The economic data continues to show strength, and although inflation isn't accelerating, it's also remaining sticky, which so far has seen the market price out Fed rate cuts for this year. Maybe we still get one or two interest rate cuts, but for other reasons.
• Yellen and the U.S. Treasury delivered the initial Quarterly Refunding Announcement statement yesterday (to be finalised and released on Wednesday). This was bearish due to more Bond issuance than expected, meaning more Bonds for the market to absorb. Yields are up, and risk assets are lower.
• Yellen also mentioned today that she is concerned about the U.S.'s fiscal situation. This is likely an attempt to front-run what may be a hawkish QRA tomorrow, which would decrease overall market liquidity. Crypto is positively correlated to liquidity, so this wouldn't be positive for crypto (if this is what we get tomorrow).
• We will likely still see one or two interest rate cuts this year simply to reduce the $ expense the U.S. owes on its debt. A 4.0% Yield is less $ to pay out than a 5.5% Yield. However, cuts would ease financial conditions, which the Fed won't want, so they may have to tighten in other areas, which may be the Treasury's job to do so, hence the walking back of fiscal stimulus.
• Powell speaks tomorrow and will likely emphasise 'higher for longer' and that the next move is still likely an interest rate cut. He may find it hard to outhawk (be more bearish than) the markets. This means there is the potential for a slight dovish surprise.
• Crypto still has bullish catalysts. ETFs will increase in accessibility from Q3 onwards.

Cryptonary's take 

Based on this, we will assess the charts and, with the macro context known, reposition them accordingly. To clarify, I have not sold any BTC, ETH, SOL, WIF, or POPCAT. I have moved out of mid-caps and into the majors (BTC, ETH, and SOL) and the memes (WIF and POPCAT). 

Action points

• Move out of the riskier plays and into the majors and core memes.
• Continued barbell approach (majors and memes), but adjusting allocation sizes to risk-off.
• When risk-on sentiment improves, we'll reallocate again, even if it takes just a few days or a few months.