Oil tries to find a bottom, Gold wavers, Bitcoin softens

• US Oil rig counts rise by two to 591 (Gas rigs up 2 to 161)
• Gold sub $2000 as yields slide, 10-year Treasury yield falls 8.1 bps to 3.439%
• Bitcoin falls 1% to $29,344

Oil

The oil market selloff got out of control.  Technical selling was not going to end until they filled the gap made from the OPEC+ production cut announcement earlier this month.  The pulse of the US economy is not too bad if you ask the Atlanta Fed and if the US economy comes anywhere close to growing at 1.7% in the second quarter, oil prices will probably be much higher.

After hearing from Exxon and Chevron, it is hard not to be short-term bullish oil prices. Exxon CEO Woods was constructive on the demand outlook, adding that gasoline demand is reasonable and that jet fuel demand is trending up.  Regarding China, Chevron’s Wirth noted that jet demand is growing and travel is up to nearly 90% of pre-covid levels.     

Crude prices should have no trouble rallying above the $80 a barrel level if China’s weekend PMI data shows the recovery is gaining steam.

Gold

Gold prices are wavering as some hot wage data will likely keep the pressure on the Fed. Wall Street is confident the Fed will raise rates next week, but it seems these latest inflation pressures may not allow them to signal they are ready for a pause.  The last few key data points leading up to the Fed could suggest the service sector is still healthy and that manufacturing activity is stabilizing. 

The banking crisis isn’t over but it appears it won’t lead to a systemic problem that will cripple the US economy.  Gold probably won’t be benefitting that much from safe-haven flows on banking jitters but it should rally if the Fed is comfortable enough to signaling they are reading to hold rates for a while. Monetary policy is restrictive and as it filters through the system, we will start to see larger parts of the economy enter slowdown mode.

Cryptos

The crypto market is struggling for a fresh catalyst as the banking crisis looks like it might very well end with First Republic Bank.  The Fed will protect the banks and that should mean the recent trend of crypto strength on banking woes is coming to an end. Bitcoin isn’t getting a boost despite an upbeat mood on Wall Street as many traders remain in wait-and-see mode over US crypto regulation. 

The Consensus 2023, a key gathering of crypto insiders, drew attention to the need for coordinated regulatory clarity with cryptos. 

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