Dear Sir or Madam, will you read my book? It took me years to write. Will you take a look?

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Stock and bond markets have had a decent week, as the ECB confirmed on Thursday at their monthly meeting that they will cut interest rates by 25 basis points to 3.75%. This was the first move of the major developed economies between the US, Europe, and the UK. A while ago, there was the expectation that the ECB would not be the first to go and that all would wait for the Fed to lead and others would follow; in the end, she went first. At the follow-on press conference, ECB president Christine Lagarde said there was a “strong likelihood” the decision marked the beginning of “dialling back” rates from their all-time high.

If one thing emerged from the 2008 financial crisis, it was the need for closer cooperation of the world’s developed central banks as they sought to stabilise the global economy. Christine Lagarde flagged this change in policy well in advance. The ECB  was not the only one to start easing monetary policy this week, as the Bank of Canada cut by 25 basis points the previous day.  The actions this week of the BoC and the ECB could encourage bond markets to believe the Fed and, quite possibly, the Bank of England are more inclined to follow suit in the coming months, and we are at last fast approaching the start of the next easing cycle.

Bond yields in America have fallen across the curve this week, as data indicates that the US economy continues to slow and pricing pressures ease as it does. As yields have fallen, the treasury yield curve has further inverted, as longer-dated yields fell faster than the shorter-dated ones. This continues to indicate that the bond market is sniffing trouble in the US economy. Today, we get a raft of employment data. Initial jobless claims ticked up to 229,000 last week, slightly more than forecast, further signs the employment market is loosening. Today’s reports will further influence market expectations for when the Fed might move. Next week, we have the Fed meeting, the one many a few months ago hoped would be the one they also cut. That hope has long evaporated.

On a separate subject, and I have to admit to being only halfway through the book, but if anyone wants to get a fantastic insight into what Bitcoin is, Zeke Faux’s book Number Goes Up is a must-read. It’s mainly the story of the rise and fall of FTX, but the book also gives you a wonderful insight into the minds and types of the people who speculate and operate within it. What Bitcoin is or is not, how it came about, and what makes people trust their hard-earned dollars into a line on an Excel spreadsheet. It’s a real page-turner.