Macro: Crypto: Bitcoin Spot ETF And Fed Digital Currency Report and more

• SEC rejected several applications to offer bitcoin spot ETF, and Grayscale Investment is considering suing the agency turns down its long-running proposal to convert its bitcoin trust to an ETF.
• FED offered a balanced view on risk and reward of potential US central bank digital currency (CBDC), which could imply that FED might intend to issue CBDC in the future.
• We estimated crypto trading volumes are down over 40% quarter-over-quarter on the back of lower prices and volatility. Bitcoin spot price was down as much as 27% in 1Q22.

• In Depth: Shanghai residents organize themselves to survive lockdown chaos

• Nio joins caravan of automakers halting production in China due to Covid

• Foreign investors cut China bond holdings at record pace

• Rates volatility remains high with the latest boost coming from the rising probability of a global recession as possible outcomes of the ongoing Fed tightening and Russia’s invasion of Ukraine.
• After inverting briefly, the US 2s10s slope has started steepening, which should continue despite recessionary risks as the Fed’s balance sheet reduction should weigh heavily in the long end.
• With the US 5s10s switching to steepening from flattening, the case for similar steepening is strong in a few emerging countries that are ahead in terms of monetary tightening.

• The ECB “reinforced” a Q3 end to asset purchases while reserving the flexibility to respond to incoming data. This emphasis and state-dependence matched our view. 
• Describing underlying inflation as above 2% recognises the persistent pressures pushing the ECB’s hiking conditions towards being met. 
• We still expect the ECB to announce an imminent end to purchases at its June meeting ahead of raising the deposit rate by 25bp in Sep-22.

• CPI inflation came in at 6.95% in March’22, significantly above our estimate of 6.50% and Bloomberg consensus estimate of 6.40%. It was also up from 6.1% in Feb’22.
• The upside surprise mainly came from Food & Beverage inflation, which stood at 7.5% against our estimate of 6.5%, and up from 5.9% in Feb’22.
• The rise in food inflation was led by Meat & Fish, which rose by 5% MoM, and Oils & Fats, which rose by 5.30% MoM against our expectation of a 3.6% MoM increase.

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