What We See in the Markets: October 9, 2023

US and Japan markets are closed today for holidays, and morning trading in securities and derivatives was cancelled in HK due to Typhoon Koinu. Economic calendar is pretty empty and there are far bigger global developments playing out anyway.

It's a significant week for inflation. US September PPI is set for Wednesday, followed by the Fed Meeting Minutes. US September CPI and the OPEC Monthly Report are both scheduled for Thursday as well. Oil hit above $85, over 5% following the geopolitical tensions in the Middle East. The situation has been accelerating as additional countries are stating their stance, and at a time when US strategic petroleum reserve is at historically low levels. Would be surprised if Oil and Gold don't climb even higher in the short term following the gap up over the weekend.

BTC has remained trapped between $25.1k and $28.3k since August, currently trading at $27.9k today under range highs, remaining buoyed despite a strong dollar. I would expect PPI to be largely a non-event unless actual data differs significantly from predicted data since CPI is the following day. In the short term, CPI under forecast of 3.6% YoY on Thursday could provide a chance for BTC to break out higher from this range, whereas a hot CPI would push us back into the range lows as markets fear the Fed may be forced to hike 25bps in the next meeting.

In the L1 space: Aptos - The development of Gran Saga: Unlimited has been officially discontinued. This project was a key milestone that Aptos and Metapixel have been collaborating on since the end of 2022, and was one of the most anticipated Web3 MMORPGs in the space. APT is down 2% since the announcement, and moreover $23.8M worth of $APT will be unlocked on Oct. 12. Worth noting that despite a 7 month lead time, SUI is also rapidly catching up to APT in terms of TVL as Sui Defi space continues to grow, I would expect this gap to close soon.

In DeFi space - MKR is one that I really want to continue to highlight – given how Maker protocol generates positive cash flows, as long as the Fed keeps hiking I believe that this narrative will be fine despite a 10% pullback last week after a strong September. Up 175% TYD, one of the only major tokens to outperform SOL over that same lookback period (132%).