Daily Brief - 12 Jan 2024

Bitcoin ETFs storm Wall Street with record-breaking launch

The first US Bitcoin ETFs made a spectacular debut on Wall Street, sparking excitement among investors. These funds, including those from big names like BlackRock and Fidelity, traded a whopping $4.6 billion on their first day. While some platforms like Robinhood are eager to offer these ETFs, others like Vanguard are holding back. The launch even sparked a fee war among issuers, slashing costs to attract investors. Amidst this buzz, there's anticipation for the next step: approval of options trading for these ETFs later in the year. It's truly a groundbreaking moment for Bitcoin and its journey into mainstream investment.

Mega trade in Fed funds futures sets record after inflation data

A record-breaking block trade happened in the fed funds futures market, right after the latest US inflation data was released. This massive trade involved 72,000 contracts and occurred at 10:46am in New York. It's the largest of its kind since at least 2016. The trade seems like a buy, possibly to cover a short position, though the exact reason is still unclear. It's worth noting that such large trades aren't unusual in this market and don't necessarily signal immediate financial trouble. The trade is particularly interesting as it may relate to expectations around the Federal Reserve's upcoming policy meeting.

Oil prices soar as US and allies strike Houthis in Yemen

Oil prices leaped following US-led airstrikes on Houthi rebels in Yemen, in response to attacks on Red Sea shipping routes. This action by the US and its allies, including the UK, was to protect vital fuel and goods flow through this crucial area. President Biden has indicated readiness for further action if needed. These developments have reintroduced a 'war-risk premium' into oil markets, with experts noting the potential for wider disruptions, especially if Iran gets directly involved. The airstrikes have raised concerns about further inflaming regional tensions, and have led to higher costs for commercial shipping, as many now avoid the risky Red Sea route.