Insights 
VT 
The latest auction of the United States 5-year note showed a decrease in the yield from 3.71% to 3.625%. This comes in the context of ongoing shifts in financial markets and currency exchanges.
The EUR/USD pair saw an increase as the US-China trade tensions eased, while GBP/USD remained steady at around 1.3330. Additionally, the USD/JPY experienced modest losses below 153.00.
Gold Prices Experience Shift
Amid changes in currency values and economic events, gold prices linger around the $4,000 mark per troy ounce. The market shows a marked loss in gold as risk appetite revives due to optimism surrounding a potential US-China trade deal.
Bitcoin saw activity with American Bitcoin acquiring 1,414 BTC, valued at over $160 million. The official Trump memecoin registered a 20% surge, aligning with the announcement regarding Bitcoin acquisitions.
In the broader context of financial trust, shifts are visible as some move away from reliance on the US Dollar. Alternatives like gold and Bitcoin are gaining traction due to decreased investor confidence in USD.
The lower yield on the 5-year Treasury note, now at 3.625%, tells us the market is betting on lower interest rates ahead. With the next Fed rate call looming, we see this as a clear signal to position for a more dovish stance from the central bank. The CME’s FedWatch Tool, as of this morning, shows an 85% probability of a 25-basis point rate cut at the next meeting, reinforcing this view.
Volatility and Market Strategy
This creates a tricky environment where short-term optimism from the US-China trade thaw is pushing down volatility, while long-term worries about the dollar persist. The CBOE Volatility Index (VIX) has fallen to 14.5 this week, a sharp drop from the highs near 20 we saw a month ago, which could make options pricing more attractive. We think using options to bet on a weaker dollar is a sound strategy, especially with the Greenback already retreating from last week’s highs.
Gold’s dip below $4,000 is a direct result of this risk-on mood, but we see this as a potential entry point for bullish positions. The underlying theme of a “Great Debasement” hasn’t gone away, and a Fed rate cut would only add fuel to that fire, making non-yielding assets like gold more attractive. Looking back, we saw a similar pattern in late 2019, when trade optimism and an accommodative Fed created a strong year-end rally in both equities and precious metals.
The ongoing strength in Bitcoin, underscored by American Bitcoin’s significant purchase, shows that a different kind of safe-haven trade is very much alive. While the TRUMP memecoin surge points to high levels of speculation, the institutional BTC buying suggests a continued, serious distrust of the US Dollar. The high volatility here makes derivative plays like straddles or strangles interesting for traders who expect a big move but are unsure of the direction after the Fed speaks.
