USDJPY, +0.01%, $112.95.
EURUSD, -0.59%, $1.1341.
GBPUSD, -0.50%, $1.2814.
USDCAD, +0.36%, $1.3237.
S&P500, -0.66%, 2,632.56
Nasdaq, -0.48%, 6,938.98
Nikkei (Bank Holiday)
CURRENCY MARKET WRAP
- There were no notable U.S. prints on Friday. The 2-yr yield added one basis point to 2.83%, while the 10-yr yield shed one basis point to 3.05%. Dollar remained bid on Friday amid European political woes and risk-aversion in capital markets.
- Tensions between Italy and the EU Commission continued weighing on the Euro. Italian PM Di Maio reiterated that the country is not willing to make changes to key reforms within the budget. November Markit indexes indicated that the region’s growth continues shrinking. German Flash Services PMI at 53.3 vs expected 54.6.German Flash Manufacturing PMI at 51.6 vs expected 52.3. E.U. Flash Manufacturing PMI at 51.5 vs expected 52.0. Flash Services PMI at 53.1 vs expected 53.6.
- Sterling was offered on Friday ahead of a busy Brexit weekend in Brussels. Over the weekend, EU leaders have approved an agreement on the UK’s withdrawal and future relations – insisting it is the “best and only deal possible”. The UK Parliament is expected to vote on the deal on 12 December, but its approval is far from guaranteed. Labour, the Lib Dems, the SNP, the DUP and many Conservatives MPs are set to vote against it. May has appealed to the public to get behind the agreement – saying that although it involved compromises, it was a “good deal that unlocks a bright future for the UK”.
- Canadian inflation also ticked higher, but BoC seen keeping rates steady. Statistics Canada said the annual inflation rate edged up to 2.4% from 2.2% in September. Analysts in a Reuters poll had forecasted it would stay at 2.2%. Canadian CPI m/m at 0.3% vs expected 0.1%. Core Retail Sales m/m at 0.1% vs expected 0.3%.
- WTI crude fell -6.1% to $51.28/bbl, extending its decline to -33.3% from its October 3 high. A Wall Street Journal report indicated that Saudi Arabia and OPEC are considering a disguised production cut to satisfy Trump. Specifically, OPEC would retain current output targets, first set in 2016, which would imply a production pullback because Saudi Arabia is allegedly overproducing by nearly 1 million barrels a day.
STOCK MARKET WRAP
- The S&P 500 lost -0.66% on Friday in what was a shortened, low-volume trading day on Wall Street. Friday’s volatile session extended the benchmark index’s weekly losses to -3.8%. FAANG stocks also struggled on Friday with Facebook (FB 131.73, -3.09, -2.3%) and Apple (AAPL 172.29, -4.49, -2.5%) leading the retreat. Apple reportedly resumed production of its 2017 iPhone X amid shrinking demand for its 2018 iPhone X Max model, according to IBN; and has also reportedly lowered the price of its iPhone XR in Japan to increase sales, according to the WSJ. Facebook and Apple shares dropped over -5.0% and 10.0%, respectively, last week.
BLOCKCHAIN & CRYPTOCURRENCY NEWS
Last week the SEC reached settlements with AirFox and Paragon in its first cases brought purely for lack of registration, rather than for fraudulent activity. In characteristic overreaction, the market seemed to assume that ICOs were now “over.” As a result, an SEC director revealed that the agency plans to release “plain English” guidance for when a token is and is not a security. The SEC announced a settlement with the founder of EtherDelta, a “decentralized exchange” for ethereum-based tokens, who had been accused of knowingly breaking securities laws by neither registering the platform with the SEC nor operating under an exemption. This was the SEC’s first enforcement action against a token exchange for failing to register. In its statement, the SEC outlines what exactly is considered an “exchange,” and under what circumstances a token trading venue would be required to register.
The owner of Bitcoininfo.ru has won an appeal against a ruling to block the cryptocurrency website. A court in Saint Petersburg has decided that access should be restored and that Nikolay Tonkoshkurov should be compensated for the unlawful actions of the prosecutors and judges who presided over the case. Experts claim the decision may set a precedent in Russia, where hundreds of websites with similar content have been blocked over the past few years. In March 2018, the Saint Petersburg City Court struck down a ban on 40 other Bitcoin-related sites offering information and exchange services, but the Bitcoininfo.ru case was the first to reach the Supreme Court. This is also the first time a government institution has been ordered to pay compensation to a defendant for abusing its authority in the digital space. Bitcoininfo.ru currently redirects to the Cryptorussia.ru domain, which hosts the same content as the original website, including news about cryptocurrencies, information about the legal framework for the crypto sector and the applicable tax regime, as well as exchange rates for major digital coins in both U.S. dollars and Russian rubles.
The U.S. Defense Advanced Research Projects Agency (DARPA) will host a two-day blockchain workshop in February, according to an official request for information (RFI). DARPA, the research arm of the U.S. Department of Defense, is looking to to investigate technologies for distributed consensus. As stated in the five-page RFI released by the agency’s Information Innovation Office (I2O), “of particular interest to DARPA are so-called ‘permissionless’ distributed consensus protocols.” Permissionless systems are described in the paper as protocols “where any individual may join in the computation.” The RFI also recognizes the potential of blockchain technology for data security and storage “resilience” for the government department stating “Technologies for distributed consensus protocols have been revolutionized by their prominent role in cryptocurrency and blockchain technologies. These technologies have dramatic implications for the security and resilience of critical data storage and computation tasks, including for the Department of Defense.”