Coinbase and proprietary trading; revisiting the Plaza Accord, and a weakening British pound…

As of 11:06 am EDT. This is what I’ve been reading today, 23 September 2022. Hopefully my takeaways are valuable.

Proprietary trading. Market maker. Coinbase. Crypto. “Coinbase vociferously denies that it engages in proprietary trading—but asserts that some of its competitors do.” — Decrypt

Proprietary trading is defined as a financial firm or investment bank that invests for direct market gain versus trading on behalf of its clients. The takeaway from the article is Coinbase is concerned that the bad taint proprietary trading received from the 2008 financial crisis will spread to the crypto exchange.

A market maker is a firm or individual actively quoting two sides of a market, providing bids and asks and providing information on the size of a market.

Foreign exchange. The dollar. The Plaza Accord redux. “Fueled by hawkish Federal Reserve policy, U.S. economic strength and investors in search of a haven from market swoons, the greenback is surging relentlessly against counterparts big and small by the most in decades. On Friday, it pushed up to its highest level against the euro in 20 years, and was the strongest against the pound since 1985.” — Idaho Statesman.

The article argues that nations may emphasize defending their own currencies as the dollar strengthens during the geo-political turmoil in Eastern Europe and as central banks seek to combat inflation. The idea of another Plaza Accord, where nations discuss actions for bringing their currencies into balance is discussed. The Plaza Accord, an agreement on currency balancing signed by France, Germany, Japan, and the United States in 1985, had as a goal the weakening of the US dollar in order to ease the US trade deficit.

Foreign exchange. British pound. “The pound sank to a fresh 37-year low as the Chancellor unveiled tens of billions of pounds of tax cuts and spending.” — AOL.

My takeaway here is investor concern about the ability of the government to meet its spending objectives. Investor fear is being captured in increased rates on government issued debt (the gilt) and slumping value of the British pound.

Effective federal funds rate: 2.33%

2-year Treasury: 4.02%

10-year Treasury: 3.51%

Source: Board of Governors-Federal Reserve System


Source: MarketWatch