Relatively quieter session yesterday, with mixed economic data and consolidation of asset prices against the recent ranges. US Richmond Fed manufacturing bounced 10 points to -5 in February, helped by a jump in the current and future employment components, while prices paid decelerated to 3.5% from 4.2%. On the other hand, US durable goods plunged -6.1% to register the largest decline since April 2020, with weak transportation orders (aircrafts) the main culprit with a -16.2% drop. Furthermore, consumer confidence missed expectations by a wide margin with weaknesses across current and future conditions, as well as the job strength component. All in all, while the US economy remains undoubtedly robust, we might be approaching an interim peak in data surprises, and would be on the lookout for some weakening in the upcoming labour data after its stunning start to the year.

Like clockwork, the deadline for a partial US government ‘shutdown’ charade will begin this Friday, with a more comprehensive shutdown on March 8th, should the political actors decide to run things to the 11th-hour again. Expectations are for details of the funding bill to be ironed out over the next few days, with a continuing resolution a likely option, which will increase headline risks all throughout next week.

In crypto, prices continue their upward ascent with BTC futures seeing nearly $300mm in short liquidations over the past day and a half, just as the ex-GBTC ETFs have been ratcheting up record volumes over the past few days as crypto market cap has gone back above the $2T mark. Futures-Cash basis have also been widening as traders FOMO into levered exposures, with margin capital in short-supply as FOMO fever is high as evident through the different altcoin rallies.

Unsurprisingly, crypto vols have exploded higher, with 1 week — 1 month vols all sitting around 57–61% levels. Dealers appear to be caught short-gamms on the explosive move higher in spot, though we are seeing short-dated put skews start to out-perform as prices near 60k.

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