The week the Fed turned
This was the week the Federal Reserve turned. On Wednesday it raised interest rates by a quarter point, its first increase since 2023, and the currency market answered at once: the US dollar index rose 1.1% on the week, while the euro and the pound each lost more than 1.1% against it.
A rate hike usually takes the air out of speculative corners. This time it did the opposite. Stocks were mixed, with 107 of the 194 markets Kinzan tracks finishing higher, but crypto had a week to remember: the coins Kinzan follows rose 11.4% on average, and some of them far more than that.
Banks stumble, coins fly
The week started badly for the banks. On Monday Bank of America's chief executive warned that trading and investment-banking fees would come in weaker, and Bank of America shares dropped 5.14% that day. The selling spread across the sector: Bank of America finished the week down 7.9% and Goldman Sachs 8.5%, which helped drag the Dow down 1.7% even as the Nasdaq 100 edged up 0.9%.
In currencies, the hike did what hikes do. The dollar rose against most of the board, the New Zealand dollar was the weakest major at 1.3% lower, and dollar-yen climbed 1.1%. Yields barely moved by comparison, with the 10-year up just 2 basis points after the previous week's jump.
Crypto stole the end of the week. Smaller coins took off on Friday, when Aptos jumped 22.5% in a single session, and over the week NEAR rose 58.9% and Uniswap 47%, both closing at their highest levels in Kinzan's four-month window. Bitcoin came along more quietly, up 4.8%, and Strategy, the company built around holding it, was the best performer of all the stocks Kinzan tracks at 17.5%.
Commodities sent mixed signals. Energy shares slid, with Occidental and ConocoPhillips each falling more than 6% on Wednesday, while crude itself barely moved. The grains woke up instead: oats rose 14.2% on the week, and cocoa was the weakest commodity, down 10.2%.
A busy quake log
The quake log was busy. Bank of America's Monday fall was a 5.2σ move against its own volatility, oats jumped 9.29% on Tuesday in a 5σ session, and Friday belonged to crypto, with Optimism up 19.6% and Solana 10.8% in a day.
Long the kiwi, at the wrong moment
By the CFTC's Tuesday snapshot, speculators are crowded long the New Zealand dollar, near the top of their own history, just as the kiwi had the worst week of the majors. They are also near the top of their range in copper, while natural gas positioning sits at the very bottom. Futures positioning is a level, not a signal, but crowded trades leave little room for error, and a newly hawkish Fed has just raised the cost of being wrong.
That's the week, dug out. The Dig is back next Sunday. Follow The Dig by RSS.
Background checked against The Motley Fool, Yahoo Finance, KuCoin News, FXStreet. Every figure is Kinzan's own; see the methodology.
Analysis, not investment advice: nothing in The Dig is a recommendation or an offer to trade.