Aurelia Butler

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    in Economy

    Bumpy ride for US corporate bond spreads expected in 2025

    (Reuters) – It could be a bumpy ride for U.S. corporate bond spreads in 2025, with investors and strategists expecting more market volatility, as the new Trump administration implements a reform agenda that could be inflationary and slow the pace of U.S. interest rate cuts.Corporate credit spreads, the premium over Treasuries that companies pay for debt, widened last week after the Federal Reserve’s December meeting. The Fed cut interest rates by 25 basis points but Chair Jerome Powell expressed caution about further reductions without seeing progress in lowering stubbornly high inflation.The widening of spreads on Thursday followed a rise in Treasury yields after the Fed’s hawkishness.Strategists expect this pressure on spreads to persist as they see demand moderating for corporate bonds, which drove spreads to their tightest in decades this year.”We expect demand to moderate somewhat in 2025 given the expectation for rates to remain elevated,” said BMO credit strategist Daniel Krieter. He expects this moderation in demand, alongside struggling corporate fundamentals and volatility as Trump takes office, to send credit spreads wider in the new year. Krieter expects investment-grade bond spreads to touch a low of 70 bps in the first quarter of 2025, from 82 bps on Friday, and a peak of 105 bps by the end of next year. “A lot of the policy that’s out there right now is inflationary, or is expected to potentially be inflationary. It certainly leans that way,” said Nick Losey, portfolio manager at Barrow Hanley. The uncertainty about the impact of the new administration’s policies on markets is now expected to push companies to bring forward their debt-issuance plans to the first quarter.Some strategists predict investment-grade bond issuance next month to touch between $195 billion and $200 billion, and to set a record, beating $195.6 billion in January 2024.Junk bond issuance in January is expected to range between $16 billion and $30 billion, said one strategist. This compares to $28 billion this past January and $20 billion in January 2023, according to JPMorgan data.”We’re expecting January to be a busy month as long as the secondary market continues to look welcoming towards issuance, which I would argue is still very much the case right now, even with the little hiccup we’ve had the past two days,” said Blair Shwedo, head of public sales and trading at U.S. Bank.Demand for these new bonds will remain robust as returns on corporate bonds could be attractive in 2025 despite potential volatility, said Andrzej Skiba, head of BlueBay U.S. fixed income at RBC Global Asset Management.”The good news is that unlike in awful 2022, the starting yield level for the asset class is high. Even if both Treasury yields rise further and credit spreads widen, you’re still likely to have at worst a flattish total return on a forward-looking 12-month basis,” Skiba said.   More

  • 150 Shares18 Views

    in Cryptocurrency

    Michael Saylor’s Latest Bitcoin Bet Down by $62 Million, Will It Recover?

    As of this writing, Bitcoin is trading at $94,238.21, up by 1.52% in the last 24 hours. Despite its trading volume surging by 34.12% to $54.58 billion, investors’ confidence has not impacted the price.This slump in Bitcoin’s price has set MicroStrategy back by over $65 million from its last purchase alone. At BTC’s current rate of $94,238, MicroStrategy has suffered a loss of $65,375,088.This is significant given that MicroStrategy is always ahead, with huge profit margins in previous purchases. As this stands, unless Bitcoin rebounds quickly enough, MicroStrategy could have a lot of loss to deal with.Therefore, for MicroStrategy to meet its obligations to investors who bought these convertible notes, the price of Bitcoin must stay up. Primarily, a slump in price could trigger panic, causing its shares and MSTR to plunge as well. This development could negatively affect MicroStrategy’s capital base.Additionally, as the largest corporate holder of Bitcoin, which has about 2.2% of the total supply, MicroStrategy’s actions could tremendously impact the asset’s price outlook.Analysts insist that given the pending change of administration in the U.S. by Jan. 20, 2025, bullish sentiment could support Bitcoin on its price recovery path. How this unfolds, only time will tell.This article was originally published on U.Today More

  • 113 Shares14 Views

    in Cryptocurrency

    Bitcoin to Hit $250,000? Here Are 2025 Market Predictions

    Bitcoin has been on a tear in 2024, up 145% year to date and reaching a record high of $108,268 on Dec. 17. Other cryptocurrencies, such as Solana, BNB and PEPE, followed suit, reaching fresh all-time highs.As Bitcoin and many other cryptocurrencies rose to new all-time highs, demand for Tether’s USDT stablecoin — pegged to the dollar — has skyrocketed. The token’s market valuation increased by about $50 billion this year, reaching more than $140 billion.In a historic milestone, MicroStrategy has become the first Bitcoin holding company to enter the Nasdaq-100. The Bitcoin treasury company intends to raise $42 billion in capital over the next three years through at-the-market stock sales and convertible debt issues to buy more Bitcoin.According to a recent market prediction published by CoinGecko, Bitcoin’s growth trajectory appears promising given 2024’s momentum and the anticipated key events of 2025. An optimistic projection sees Bitcoin skyrocketing 154% in value, and in this scenario, Bitcoin might reach a price of $250,000.Other Bitcoin projections for 2025 include Fundstrat’s Tom Lee, who is very positive about Bitcoin for next year. According to Lee, Bitcoin might increase in 2025 to reach $250,000. Bitcoin has two tailwinds heading into the new year, one of which is the cryptocurrency’s halving price cycle, which is often bullish for the price of Bitcoin in the year after a halving event.Bitwise, a Bitcoin ETF producer, shares the same upbeat outlook, predicting that 2025 may herald the start of crypto’s golden period, given the historic year of 2024. One of the ten forecasts made was that Bitcoin may trade above $200,000.This article was originally published on U.Today More

  • 88 Shares21 Views

    in Economy

    US launches probe into Chinese semiconductor industry

    $75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

  • 113 Shares27 Views

    in Cryptocurrency

    Huge Bitcoin Reverse Explained by Bloomberg’s Mike McGlone: Details

    The analyst pointed out that unlike Bitcoin, the S&P 500 index has not seen any major drawdown in the fourth quarter this year, while BTC is trading roughly 3x the volatility of beta. Still, McGlone added, S&P 500’s remarkable strength that is being shown so far will not necessarily hold next year, according to the tweet: “That the S&P 500 hasn’t had a 10% drawdown since 4Q23 is unlikely to be sustained in 2025.”As for the current big Bitcoin drawdown, aside from the volatility, McGlone called the main reason for that to be “Just a bit of normal reversion.” Today, Bitcoin has declined by 2.45%, falling from $96,275 to $93,660. During the last week, the world’s flagship cryptocurrency has shed approximately 14% as it collapsed from above $108,300 to the above-mentioned price level where it is changing hands at the moment.He stated that the global crash of economies and financial markets, which he predicted multiple times earlier, has started and what lies ahead might be another Great Depression. He advised that his readers on the X platform should be smarter with their money and hold on to their jobs and sources of income.However, he pointed out that regardless of which path any economy in the world (but particularly the US one) takes, “gold, silver, and Bitcoin hold their value.” Kiyosaki also reminded the community his favorite thesis about making a fortune and opportunities during market crises: “For many people crashes are the best times to get rich.”This article was originally published on U.Today More

  • 175 Shares27 Views

    in Economy

    Bank of Canada’s Dec 11 jumbo rate cut was a close call, minutes show

    OTTAWA, Dec 23 (Reuters) – The Bank of Canada’s decision to cut rates by 50 basis points on Dec 11 was a close call, with some members of the governing council suggesting a smaller reduction, according to minutes released on Friday.The central bank slashed its key policy rate to 3.25% to help address slower growth. Governor Tiff Macklem indicated further cuts would be more gradual, a shift from previous messaging that continuous easing was needed to support growth.The minutes said the discussions had focused on whether a 50 basis point or a 25 basis point cut was more appropriate.”Each member of Governing Council acknowledged that the decision was a close call based on their own assessments of the data and the outlook for growth and inflation,” they said.Those preferring a bold move were concerned about a weaker growth outlook and downside risks to the inflation forecast, even while acknowledging that not all the recent data pointed to the need for a 50 basis point cut.”However, it seemed unlikely that a cut of 50 basis points would take rates lower than they needed to go over the next couple of meetings,” the minutes said. Those preferring a 25 basis point cut noted signs of strength in consumption and housing activity, suggesting the bank could be patient while the full effects of past cuts became clearer.The decision to opt for a larger cut reflected a weaker outlook for growth than forecast in October and the fact monetary policy no longer needed to be clearly restrictive.”Governing Council members also discussed the future path for interest rates. There was a range of views on how much further the policy rate would need to be reduced, and over what period that should happen,” the minutes said. “Members agreed that they would likely be considering further reductions in the policy rate at future meetings, and they would take each decision one meeting at a time.” More

  • 138 Shares24 Views

    in Cryptocurrency

    Just in: MicroStrategy Buys $561 Million More Bitcoin (BTC), Announces Saylor

    Despite impressive returns of 47.4% since the beginning of the quarter and 73.7% since the beginning of the year, skepticism about the company’s strategy is growing.It is believed that to sustain its purchases, MicroStrategy raises capital through methods such as issuing convertible and corporate bonds, securing credit lines and selling shares. This cycle appears to operate as follows: shares are sold to acquire the cryptocurrency, and the rising price per BTC increases asset value, enabling further loans, which are then reinvested in more Bitcoin purchases. Some observers warn that a significant decline in Bitcoin’s price or MicroStrategy’s stock could trigger a cascade effect. A sharp fall in MSTR shares would weaken the collateral backing its loans, potentially leading to forced asset sales, including BTC.This scenario could exert downward pressure on the broader cryptocurrency market, as the company holds 2.2% of the global Bitcoin supply now.Thus, while some view Michael Saylor’s approach as a bold bid to cement the cryptocurrency’s role in the financial system, others see it as unsustainable. History offers a cautionary note: in 2000, MSTR shares surged to $333 before plummeting 99%, a collapse that took 24 years to recover from.This article was originally published on U.Today More