Monetary Policy Developments Result in Continued Market Uncertainty

The Federal Reserve Raises Interest Rates

The Federal Reserve recently moved forward with an expected rate increase, the first of nearly five planned increases. Many worry that U.S. economic growth could be negatively impacted if rates increase too rapidly, while some experts attribute the economy's fragility to the fact that rates have been too low for a prolonged period of time. Despite concern from investors, the number of Americans filing new claims for unemployment benefits fell last week as demand for labor remained strong, positioning the economy for another month of solid job gains.

Institutional Adoption Continues for Bitcoin

Many U.S. states have announced plans to welcome bitcoin and cryptocurrency infrastructure and payments, and Colorado has recently followed suit. In an effort to make Bitcoin and crypto usage more convenient in Colorado, Governor Jared Polis recently announced his state will soon accept cryptocurrency as payment for state taxes and fee payments. Investment bank Goldman Sachs is actively positioning itself in the market for derivatives tied to digital assets by participating in a Bitcoin-related trade. The bank traded a bitcoin-linked instrument called a non-deliverable option with crypto merchant bank Galaxy Digital, making them the first major U.S. bank to trade crypto over the counter.

Historic Bitcoin Bonds Delayed by El Salvador

El Salvador's government has delayed the launch date of their "volcano bonds". President Nayib Bukele announced that its volcano bonds, backed by bitcoin, would be available for purchase by March 20th. The sale of the bonds is intended to finance the development of a bitcoin-centric city in El Salvador. However, an international conflict between Ukraine and Russia has delayed the initial sale. Meanwhile, neighboring nation Honduras could follow suit to become the second nation to accept Bitcoin (BTC) as legal tender.

Russian Bond Yields Spike as Trading Resumes

Financial markets in Russia came to a halt following the invasion of Ukraine and subsequent sanctions. In a change of events, some Russian assets returned to trading on Monday morning after almost a month on the sidelines. The benchmark 10-year OFZ ruble treasury bonds in Russia settled about 13% higher following the announcement by the Central Bank of Russia on Friday.