Geo-economics

Crypto assets lose $800 billion: Top economics stories to read this week

An aerial view of the Phillips 66 Company's Los Angeles Refinery.

Fuel prices remain high in the United States. Image: REUTERS/Bing Guan/File Photo

Joe Myers
Writer, Forum Agenda
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Geo-economics

This article is part of: World Economic Forum Annual Meeting

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  • This weekly wrapper brings you the latest stories from the world of economics and finance.
  • Top economy stories: crypto assets shed $800 billion in market value in one month; US inflation higher than expected in April; French economy set to grow just 0.2% this quarter.

1. Top global economy news stories

The 10-year Treasury yield has hit 3% for the first time since 2018. It comes as prices for Treasurys, municipal debt, and corporate bonds have fallen as a result of the Federal Reserve moves to tackle inflation, reports the Wall Street Journal.

The European Central Bank will start raising rates gradually this summer, ECB member and Bank of France head Francois Villeroy de Galhau told France Inter radio on 11 May. It was a sentiment echoed by ECB President Christine Lagarde later the same day.

Emerging market debt and equity portfolios saw foreign investor outflows for a second straight month in April, data from the Institute of International Finance showed on Tuesday, building on record outflows from China in the first quarter.

Federal Reserve Governor Christopher Waller said on Tuesday it is time to 'hit it' on raising interest rates to deal with inflation that is too high and a labour market, with nearly two open jobs for every job seeker, that is 'out of whack'. "It's time to raise rates now when the economy can take it," Waller told the Economic Club of Minnesota. "Front-load it, get it done, and then we can judge how the economy is proceeding later, and if we have to do more, we're going to do more."

Fewer than a fifth of actively managed emerging market equity funds have cut their exposure to Russian stocks to zero, data from Copley Fund Research shows, with a number of funds unable to sell out.

China's producer price index rose 8% from a year earlier in April, compared to 8.3% in March. Consumer price growth rose to 2.1% from 1.5% in March.

New Zealand will fully reopen its borders two months early, from 11:59pm on 31 July, in an effort to kick-start demand for its spring and summer tourist seasons.

The Bank of France has said that the French economy will only grow 0.2% in the second quarter.

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2. Crypto assets shed $800 billion in market value in one month

Crypto assets lost nearly $800 billion in market value in the month to 10 May, touching a low of $1.4 trillion on that date, according to data site CoinMarketCap. Reuters reports that the end of easy monetary policy is diminishing appetite for risk assets.

Bitcoin, which makes up nearly 40% of the crypto market, hit a 10-month low earlier on 10 May, before rebounding to $31,450, just six days after touching $40,000. It was more than 54% below its 10 November all-time high of $69,000.

Digital asset prices have slumped, mirroring a plunge in equities on fears of aggressive interest rate hikes across the globe to stave off decades-high inflation. The tech-heavy Nasdaq was down 28% from its November 2021 record high.

Total crypto market value was at $2.2 trillion on 2 April, well off of its all-time peak of $2.9 trillion in early November, according to CoinMarketCap.

"Bitcoin remains highly correlated to the broader economic conditions, which suggest the road ahead may unfortunately be a rocky one, at least for the time being," blockchain data provider Glassnode said in a note.

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3. US inflation higher than forecast in April

US consumer prices rose by more than forecast in April. The core consumer price index, which doesn't include food or energy, rose 0.6% from a month earlier and 6.2% from April 2021. A Bloomberg survey of economists had estimated a median projection of 0.4%.

The wider CPI rose 0.3% from the previous month and 8.3% on a year-on-year basis. This suggests a slight cooling, reports Bloomberg. However, fuel prices remain high, with the latest data showing gasoline is at $4.404 a gallon, with diesel at $5.553.

Bureau of Labor Statistics data suggests that, in major cities, inflation is highest in Phoenix, Atlanta and Miami.

Chart showing 12-month percentage change, Consumer Price Index
Year-on-year inflation remains high in the US. Image: US Bureau of Labor Statistics

Economics research to read this week

A new World Bank report shows that the war in Ukraine will cause world trade to drop 1%.

IMF research suggests the world is better positioned to deal with oil price shocks than in the 1970s.

Chart showing mileage per barrel of oil now and in 1970s.
The world is better positioned to deal with oil price shocks than in the 1970s. Image: IMF

How does the productivity of different types of workers vary across countries? A VoxEU column explores.

New research looks at the impact of the pandemic on global trade suggesting "the pandemic broke the old trade patterns".

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Related topics:
Geo-economicsInequalityFinancial and Monetary SystemsDavos Agenda
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Revised figures for US Q4 growth, and other economic stories to read

Joe Myers

March 1, 2024

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