Selling bitcoin, buying copper
November 27, 2020
–This morning copper is making a significant new high, with HGH1 over 3.40. Yen denominated Nikkei futures also at a new high for the move. The dollar index is just under 92, sitting around the year’s lows. Bitcoin has seen a big drop, down 2000 this morning with the December future just above 17000. The Greyscale bitcoin ETF lost about half its premium on Wednesday as VanEck launches a competing “physically-backed” ETN on Deutsche Boerse. The premium compression in GBTC may have contributed to long liquidation. As is now often the case, derivatives of one sort or another dominate the price action, even though the VanEck product should lead to more demand. US equity index futures are higher. Somewhat surprisingly, yields are a bit lower this morning with the ten year yield at 87 bps.
–FOMC minutes on Wednesday were of interest due to discussion of asset purchases. No end in sight, though composition and communication about size and duration are continuing topics. “Most participants judged that the guidance for asset purchases should imply that increases in the Committee’s securities holdings would taper and cease sometime before the Committee would begin to raise the target range for the federal funds rate.” The increasing taper schedule with FF hikes at the same time was a major error in 2018.
–It’s a short day today. Enjoy the weekend!
