[Daily Outlook] Bitcoin recorded its longest rally since September last year, with Shiba soaring

01

The U.S. and Japan are reported to announce an end to Trump-era steel tariffs on Japan:

The United States and Japan are set to announce a deal on Monday to end tariffs imposed on Japanese steel under Trump, according to people familiar with the matter. Washington will suspend 25 percent tariffs on steel from Japan under certain conditions, but additional duties will still be required if the quota is exceeded, the sources said. In October last year, the United States and EU countries reached an agreement to end punitive tariffs on up to $10 billion of goods from both sides. The “truce” excludes aluminum imports, which are still subject to a 10 percent tariff, the people said. Japan is the fifth-largest steel importer to the U.S., according to the U.S. Department of Commerce. A spokesman for the U.S. Trade Representative’s office declined to comment. The U.S. Commerce Department and the Japanese embassy in the U.S. did not respond to requests for comment.

02

The U.S. is reported to be growing impatient as China fails to deliver on its trade deal promises:

U.S. officials say the U.S. is running out of patience with China over its failure to honor purchase commitments in a trade deal with the Trump administration. The U.S. has engaged with the Chinese government about the lack of compliance, but has not seen any real signs of China fulfilling its commitments in the past few months, said the official, who asked not to be named because he was not authorized to comment publicly. China continues to negotiate with the U.S., and the Biden administration wants China to take concrete actions, which China has not done, officials said. The U.S. continues to press China to comply, officials said, but argue that experience so far shows the limits of the phase one deal. Under the deal, China pledged to buy $200 billion more in U.S. agricultural, energy and manufactured goods over the two years to 2021 than it did in 2017. U.S. Trade Representative Dai Qi has said many times that the Biden administration is not only worried about China not fulfilling its procurement commitments, but also about Beijing’s state-centered industrial policies.

03

With the U.S. government shutdown looming, the House plans to vote on a stopgap spending bill on Tuesday:

The U.S. House of Representatives released the text of a stopgap spending bill, which it plans to vote on Tuesday to avoid a federal shutdown after Feb. 18. The bill, if passed, would prop up the administration until March 11, giving Republicans and Democrats more time to negotiate the full $1.5 trillion funding package. Since the start of fiscal year 2022 on October 1, the U.S. government has relied on a temporary spending bill. Republicans and Democrats have been unable to agree on spending, with Democrats calling for a 13 percent increase in domestic social welfare spending. Republicans want the defense budget to grow by the same amount and have urged Democrats to drop a series of policy changes. The stopgap spending bill has gained new attention in recent weeks as Biden’s massive tax and spending bill has largely ground to a halt in the Senate. The short-term financing bill is not part of Biden’s “Building Back for a Better Future” bill, which plans to raise taxes and use the additional revenue for environmental measures, health care and childcare, in addition to lowering prescription drug prices.

04

U.S. 10-year yields are approaching key levels that could help them break above 2%:

The U.S. 10-year Treasury yield edged closer to 2 percent for the first time since August 2019, a level poised to hit that level as investors in mortgage-backed bonds got a boost. As U.S. Treasuries fell, the 10-year yield rose nearly 0.5 percentage point this year, reaching a high of 1.938% on Monday. Further gains are likely once it hits 1.95%, strategists said, as mortgage-backed bond investors typically protect portfolios from yields by selling Treasuries or hedging convexity in the interest rate swap market. rising impact. Convexity hedges tend to be concentrated at certain specific yield levels, and despite a surge in yields following January’s nonfarm payrolls data, convexity hedges have not played a significant role so far this year. Citi strategists William O’Donnell and Edward Acton said in a note that last Friday Citi traders “did not see strong signs related to convexity operations” but doubted that if yields breached 1.95%, it could trigger some convexity trade.

05

The ECB is caught up in the rate hike debate, with Lagarde promising policy changes will be “gradual”:

European Central Bank President Christine Lagarde said any adjustments to monetary policy would follow a “step-by-step” principle as the debate over interest rate hikes in the euro zone heats up. As the economy emerges from the shock of the pandemic, “data-based decision-making” becomes more important, and officials must be more careful than ever to maintain policy flexibility and optionality, she said. “We will continue to monitor the upcoming data and carefully assess its impact on the medium-term inflation outlook,” Lagarde told MEPs. “Any adjustments to our policies will be incremental.”

06

Bitcoin recorded its longest rally since September last year, with Shiba soaring:

Bitcoin rose for a fifth day in a row, its longest winning streak since September last year, as investors re-entered risk assets around the world. Bitcoin, the largest cryptocurrency by market capitalization, rose as much as 3.2% to $43,017. XRP rose as much as 16% at one point, with cryptocurrencies other than Bitcoin gaining even more. According to CoinMarketCap, Shiba led the meme coin strength, surging 24%. Global markets have been roiled in recent weeks as investors ponder the prospect of a rapid tightening of monetary policy. After reaching a record high of nearly $69,000 in early November last year, Bitcoin lost almost 50% of its market value, dubbed the “crypto winter.”

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