A $3.5 trillion economic blueprint passes Senate, inflation data due and crypto weathers storm.
A plan
The Senate passed a $3.5 trillion budget framework, as expected, that opens the way for President Joe Biden’s economic agenda. The party-line 50-49 vote will allow Democrats to implement their priorities and make a clear break from the policies of the Trump administration -- providing the party can agree on what those priorities are in the House. In leading the opposition to the proposal, Senate Republican leader Mitch McConnell said the GOP wouldn’t assist Democrats in playing “Russian Roulette” with the economy.
Transitory?
The biggest question in monetary policy will come a little closer to being answered this morning. While economists expect headline inflation to come in at 5.3% for July, only slightly lower than June’s 5.4% reading, they will be looking for any signs that price growth has already peaked. If inflation is actually looking transitory, then there will be less pressure on the Fed to quickly unwind stimulus. Some policymakers, like Dallas Fed President Robert Kaplan, are suggesting that inflation may remain elevated for longer than previously expected.
Crypto
Fresh from the lobbying loss in Washington, the crypto industry has been hit with more troubles. A hack saw $600 million in coins stolen from a decentralized finance protocol known as PolyNetwork. A group of companies that operated the BitMEX crypto exchange will pay $100 million to settle the first big U.S. anti-money laundering case. Faith in stablecoins, the backbone of fiat to crypto transactions, took a hit when Coinbase Global Inc. dropped a promise that its USD Coin was fully backed by cash. None of this has dampened appetite for Bitcoin, which is trading above $46,000 this morning.
Markets mixed
It’s another relatively quiet day on global equity markets as investors await this morning’s inflation data. Overnight the MSCI Asia Pacific Index was little changed while Japan’s Topix index closed 0.9% higher, lead by a rally in banks. In Europe the Stoxx 600 Index was 0.1% higher at 5:50 a.m. Eastern Time as not much continued to happen. S&P 500 futures pointed to a small move lower at the open, the 10-year Treasury yield was at 1.371%, oil was flat and gold rose.
Coming up...
The U.S. July CPI number is at 8:30 a.m. Latest oil inventories numbers at 10:30 a.m. are expected to show a drop in stockpiles of gasoline and crude. The U.S. sells $41 billion 10-year notes at 1:00 p.m. The July monthly U.S. budget statement is at 2:00 p.m. Atlanta Fed President Raphael Bostic and Kansas City Fed President Esther George speak today. eBay Inc., Bumble Inc. and Canada Goose Holdings Inc. report earnings.
What we've been reading
Here's what caught our eye over the last 24 hours.
And finally, here’s what Justina’s interested in this morning
Yesterday hackers stole about $600 million in cryptocurrencies from the PolyNetwork protocol in what looks like the biggest theft ever in decentralized finance. It highlights one of the biggest risks of DeFi and what sets it apart from even centralized crypto or traditional finance. There’s a distinct smart-contract risk for token investors and yield farmers that requires some degree of computer-science expertise to properly evaluate -- the kind that’s not necessarily typical if you’ve decided to take your TradFi trading prowess to the crypto world. Worse yet, the peril of a hack is one that could obliterate much of your otherwise hefty profits from the tantalizingly high yields in DeFi.
You can get a sense of the vulnerabilities from some code post-mortems we’re starting to see from the PolyNetwork hack.
Many DeFi traders tend to deal with this risk with a series of shorthands. How long has the project been around? What are the developers’ background and are they pseudonymous? Is the code for the project copied from another one, and how reputable is that original one? Is there a third-party audit? One warning sign about the PolyNetwork hack, I’ve heard this morning, is that cross-chain protocols, which facilitate communication across various blockchains, are particularly complex and nascent.
So if you have the patience and skill to peruse a smart contract, you have an edge -- and an understanding of how to best take advantage of a protocol’s mechanics. Unfortunately for PolyNetwork and some of its users, it seems like someone applied that to nefarious ends.
Follow Bloomberg's Justina Lee on Twitter at @justinaknope
Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close.
Five Things You Need to Know to Start Your Day - Bloomberg
Read More
No comments:
Post a Comment