Fed’s hawkish stance boosts stocks, but crypto lags.

Macro Markets is a show hosted by crypto analyst Marcel Pechman, which is broadcasted every Friday on the Cointelegraph Markets & Research YouTube channel. The show aims to explain complex financial concepts in simple terms and focuses on how traditional financial events affect day-to-day crypto activity.

Episode 13 of Cointelegraph’s Macro Markets begins with an exploration of why the United States Federal Reserve’s latest move has been linked to the recent stock market rally. According to Cointelegraph analyst Marcel Pechman, some parts of the market were skeptical that the Fed would be able to sustain interest rates above 5% for the remainder of 2023, especially with the increasing risk of an economic recession. However, it seems that they were wrong.

Pechman states that the US government has signaled that it is not worried about unemployment and weaker corporate earnings, as long as inflation is under control. Therefore, the most likely reasons for the stock market rally were the risk of the Fed raising interest rates, which did not happen, and recent macroeconomic data, which showed 4% inflation and 1.6% retail sales growth.

Meanwhile, Pechman believes that the regulatory environment for crypto is unfavorable, and the two biggest risks for the US dollar – the debt ceiling and out-of-control inflation – have now dissipated. Consequently, given the weak real estate sector, it seems that investors are right to choose the stock market as their preferred investment instrument in the coming months.

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The next part of the show discusses the European Central Bank (ECB) raising interest rates for the eighth successive time. According to Pechman, it has become clear that the ECB has not been as hawkish as the US Federal Reserve and is now trying to catch up with its 3.5% basic interest rate.

Pechman explains how credit default swaps work and shows the distortion between the risk of US and European countries according to market pricing. His conclusion is that perhaps the US dollar will hold its dominant reserve status for longer than expected. However, the odds are not looking great for the euro, as the region has already entered a technical recession after two successive quarters of negative growth.

If you would like exclusive and valuable content from leading crypto analysts and experts, subscribe to the Cointelegraph Markets & Research YouTube channel and join us on Macro Markets every Friday.

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