Gains in New York futures, bond yields stable and Bitcoin continues to soar
Nasdaq rises by 0.7%, but indices are on track to break a three-week winning streak. Bitcoin is heading for its sharpest weekly gain since March 2023. US 10-year bond yield remains almost unchanged. Oil prices show a slight increase, with modest gains in Europe.
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Ken Griffin, founder and CEO of Citadel, addressed clients in a letter on Friday regarding the acquisition of assets from Leopold Aschenbrenner's hedge fund, Situational Awareness. According to Griffin, Citadel reduced the total risk in the acquired portfolio by more than 80% through over 100 block trades, totaling more than 4 billion dollars in cumulative volume. This indicates that after purchasing the portfolio, the firm acted quickly to mitigate the risk exposure inherent in the original positions.
Wall Street opened with gains, though some have since been erased. The Dow Jones is up 0.5%, the S&P 500 is up 0.3%, while the Nasdaq is trading flat. The story of the day belongs to Bitcoin, which is on track for its best week in over three years. The cryptocurrency is surging by 9.4%, trading around 77,000 dollars, with a weekly gain of approximately 22%.
Market enthusiasm renewed after US Treasury Secretary Scott Bessent announced on Wednesday that the Treasury would at least double the volume of long-term bond purchases. This move ignited a rally and led to the liquidation of short positions worth billions of dollars. On the same day, President Donald Trump met with leaders of the crypto industry, further boosting optimism. "The significant trigger for the rise in Bitcoin was the Treasury's move to repurchase bonds at the long end of the yield curve," noted analysts at Bernstein. "We are not macro experts, but we know that Bitcoin has historically reacted positively to liquidity expansion." Bitcoin ETF IBIT (+6.74%) and Ether ETF ETHA (+3.11%) are surging, alongside crypto-linked stocks: MicroStrategy (+7.45%), Coinbase (+9.54%), and Robinhood (+11.78%).
Moderna shares (+13.38%) continue their rollercoaster ride. Today they are surging after falling by about 25% yesterday, following an unusual 177% jump on Wednesday. This marked the sharpest daily rise for an S&P 500 stock in the last 25 years, driven by the success of a cancer vaccine developed with Merck to prevent melanoma recurrence.
In the currency market, the dollar continues to weaken following US Treasury efforts to curb bond yield growth. The DXY dollar index has fallen to around 98 points, its lowest level since May. Jonas Goltermann of Capital Economics noted that the Treasury's announcement regarding increased long-term bond purchases has revived investor concerns about the "erosion" of the dollar's value.
US 10-year bond yields remain almost unchanged at around 4.70%, while 30-year yields fell by one basis point to 5.24%. Ulrike Hoffmann-Burchardi, Chief Investment Officer at UBS in America, commented: "Unlike quantitative easing by the Federal Reserve, the Treasury cannot create money to finance asset purchases. Any repurchase must be financed from another source, likely through increasing short-term bond issuance or adjustments in other parts of the financing plan."
