What about digital gold hedging? Taking stock of asset performance after the Israel-Palestine conflict

After the Palestinian militant group Hamas attacked Israel over the weekend, Israel vowed a "full blockade", escalating into a full-scale war. During this time, investors flocked to US bonds and gold for safe haven, even as US stocks broke free from the September curse, rising for three consecutive days. However, Bitcoin, known as digital gold, did not seem to attract significant buying interest, while Ether fell nearly 3% during this period due to the impact of the Ethereum Foundation selling coins.

Investors Flock to US Treasuries and Gold for Hedging

US Treasury yields fell on Tuesday as investors rushed to hedge during the Israel-Hamas conflict. The 10-year Treasury yield dropped by about 10 basis points to 4.645%, while the 2-year Treasury yield fell below the 5% level to close at 4.967%. As yields move inversely to prices, this indicates that bond prices rose on the back of hedging demand.

From early morning on October 6th to yesterday's closing prices, or using today's 9 am Taiwan time price if no closing price is available, it was found that besides US Treasuries, gold as a hedging tool also rose by nearly 2%. Due to geopolitical risks in the production areas, the price of crude oil increased by 4.29%. However, cryptocurrencies, especially Bitcoin known as digital gold, did not see significant buying pressure this time, while Ethereum performed poorly, dropping by nearly 3% due to the selling of coins by the Ethereum Foundation.

Israel-Palestine conflict leads to oil price rise, Ethereum Foundation selling coins causes ETH to plummet

US Stocks Rise for Three Consecutive Days, Investors Continue to Focus on Economic Data

The US stock market has broken free from the September curse, rising for three consecutive days, with the S&P 500 and Nasdaq indices both showing gains of over 2% this week.

The Producer Price Index (PPI) for September to be released tonight and the Consumer Price Index (CPI) on Thursday are both focal points for investors. At the tail end of rate hikes, have the series of rate hikes already transmitted to the economic level? How long will the Fed's "Higher for longer" stance last? In the face of potential rate hikes and geopolitical turmoil, are safer assets like US Treasuries more meaningful? These are all questions that investors need to consider.

Although the dot plot released at the end of September suggests that the Fed may hike rates one more time by the end of this year, the current data from the CME FedWatch tool indicates that investors generally believe September was the last rate hike, and a rate cut may not come until after June next year.