ILCB - Weekly Market Pulse: The Crypto Distraction

• Bitcoin has had two bear markets since mid-April. There was a 27% decline followed by a 27% rally, followed by last week’s rout. From its intraday peak in April to its intraday low last week, bitcoin fell over 53%. Is that the end of the sell-off?
• Doubts about the post-virus boom scenario that has dominated markets since November are creeping into markets. Nominal bond yields have stalled since mid-March, while real yields have continued to fall. The result is that inflation expectations have been rising, while real growth expectations have been falling.
• Copper fell nearly 4% last week and is down 8% since making an all-time high earlier this month. Gold has been rallying, up another 2% last week and 6% since the beginning of May. The result was a drop in the copper/gold ratio of 6% just last week. Unless that reverses quickly, I would expect the 10-year yield to follow the ratio down.

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