Wednesday's Market Minute: Macro Indicators Are in a Dead Heat

Last week I wrote about the charts of bitcoin and bonds. One’s changed, one hasn’t.

Bitcoin ripped through my key level of $18,500 and it looks like that was indeed an important threshold. It had a clean break, held there Friday, and took off into the weekend. Now it’s trading just-so slightly above its November high, and its 14-day RSI is the hottest since the end of 2020. For some assets that type of energy is unsustainable, but for a pure momentum play like bitcoin, it’s often a sign things are just getting started. We’ll know if that’s the case if it can get through $24,000, a level that acted as a ceiling for the second half of last year.

Bonds are suspiciously quiet. According to some very smart people I spoke with yesterday, we may continue to expect that to be the case. Simplify’s Mike Green and Zed Francis of Convexitas – two investors who were spot-on throughout all of 2022, particularly when it came to the impact of bond volatility on markets – both outlined a vision for this year that allows for more calm in the Treasury market.

Simplify’s macro fund late last year began to position more overweight in fixed income, and Francis is expecting the 10-year yield to stay range-bound, with a low around 3% and an upper bound that will be a function of how much the economy slows.

Maybe we’re seeing that in the works, with the 10-year yield still hovering at 3.5%. 

If we’re keeping track of the macro scorecard – which is precisely what I try to do with my Risk Radar on Market on Close – we’re in a dead heat. The dollar’s decline combined with bitcoin’s bounce both point to risk-on, but the lack of direction in Treasuries and now breakout in the S&P 500 above its downtrend line, mean it’s still a coinflip for investors. For bulls that's better than it was a week ago before bitcoin's move, but still a coinflip.

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