Tag Archives: but

Trump’s trade war looms, but markets are betting on a Fed rate cut

Trump’s trade war looms, but markets are betting on a Fed rate cut

Recent developments, including softer-than-expected US inflation data, expectations of Federal Reserve rate cuts, and ongoing trade policy uncertainties, have driven a notable improvement in global risk sentiment. Meanwhile, political pressures on Federal Reserve Chair Jerome Powell, a robust Wall Street rally, and significant movements in cryptocurrencies like Bitcoin and Ethereum highlight the multifaceted nature of today’s markets.

The US economy remains at the forefront of global financial discussions, particularly following July’s softer-than-expected inflation data. This development has fuelled expectations of a Federal Reserve rate cut in September, as inflationary pressures from President Donald Trump’s tariff policies have not yet fully materialised. Inflation, a key metric for central banks worldwide, has been a persistent concern since the post-COVID-19 price spikes.

The Consumer Price Index (CPI), a primary measure of inflation, has shown signs of moderation, with recent readings suggesting that price pressures are easing. This has led investors to anticipate a more accommodative monetary policy from the Federal Reserve, which could lower borrowing costs and stimulate economic activity.

Goldman Sachs economists, for instance, have revised their forecasts, predicting a potential rate cut in September, three months earlier than previously expected, with a terminal fed funds rate of 3-3.25 per cent by 2026. This shift reflects a belief that tariffs may have a one-time effect on price levels rather than sustained inflationary pressure, coupled with signs of a softening labour market.

However, the Federal Reserve’s cautious approach underscores the uncertainty surrounding trade policies. President Trump’s tariffs, which include a 25 per cent duty on goods from Mexico and Canada and doubled tariffs on Chinese imports, have raised concerns about potential price increases. Fed Chair Jerome Powell has emphasised the need to “wait and learn more” about the tariffs’ impact on inflation before adjusting rates, a stance that has drawn significant criticism from the Trump administration.

Powell has acknowledged that tariffs have contributed to recent price increases, with retailers likely to pass on higher costs to consumers as pre-tariff inventories deplete. Despite these concerns, the Treasury Department, led by Secretary Scott Bessent, has downplayed the consumer impact, citing only a modest 0.1 per cent uptick in prices and highlighting record tariff revenues of US$23 billion in May. This revenue surge underscores the fiscal implications of tariffs, which have generated nearly US$100 billion this year, though businesses have borne much of the cost so far.

The political pressure on Powell has intensified, with Trump publicly considering a “major lawsuit” against him, accusing the Fed Chair of slow-walking rate cuts due to misplaced fears of tariff-driven inflation. Additionally, a referral by Rep. Anna Paulina Luna to the Department of Justice, alleging perjury by Powell over the Fed’s headquarters renovation, has added to the political overhang. These developments have raised concerns about the Federal Reserve’s independence, a cornerstone of effective monetary policy.

Investors worry that political interference could undermine the Fed’s ability to make data-driven decisions, potentially destabilising markets. The US Dollar Index, which measures the dollar against a basket of major currencies, weakened by 0.4 per cent following the inflation data and reports of Trump’s plan to nominate EJ Antoni to lead the Bureau of Labor Statistics. This nomination could signal a shift toward more administration-aligned economic reporting, further complicating the Fed’s policy landscape.

Despite these uncertainties, Wall Street has experienced a robust rally, with the S&P 500 gaining one per cent, the NASDAQ climbing 1.4 per cent, and the Dow Jones rising 1.1 per cent. The communications and information technology sectors have been key drivers, reflecting investor optimism about economic resilience and technological innovation.

The S&P 500’s recent highs mark a recovery from a 10 per cent correction earlier this year, triggered by tariff-related fears. US treasuries, meanwhile, have shown mixed performance, with front-end yields declining and long-end yields rising, resulting in a steepening yield curve. This dynamic suggests that investors anticipate stronger economic growth in the longer term, possibly driven by fiscal stimulus or reduced regulatory burdens under the Trump administration. The decline in the 10-year Treasury yield to 4.40 per cent reflects growing demand for safer assets amid trade tensions and geopolitical uncertainties.

In the commodities market, gold has remained largely unchanged at US$3,347 per ounce, maintaining its status as a safe-haven asset despite improved risk sentiment. Brent crude, on the other hand, fell 0.77 per cent to US$66 per barrel, reflecting a lack of significant catalysts and subdued demand expectations. The interplay between these commodities and broader market trends highlights the delicate balance between inflationary pressures and growth concerns. Gold’s stability suggests that investors are hedging against potential volatility, while the decline in oil prices points to weaker global demand, particularly in light of trade uncertainties.

In Asia, the Reserve Bank of Australia (RBA) has taken a dovish stance, lowering its policy rate by 25 basis points to 3.60%, marking its third rate cut this year. This move reflects easing inflation concerns and a shift in focus toward global trade and demand risks. Asian equity markets have responded positively, buoyed by Trump’s extension of the US-China trade truce and confirmation that gold imports will remain tariff-free. These developments have alleviated some concerns about trade disruptions, contributing to gains in Asian indices and a positive start to today’s trading session. US equity futures, however, suggest a mixed opening, indicating that investors remain cautious about the broader economic outlook.

The cryptocurrency market has also been a focal point, with Bitcoin retesting US$122,000 before pulling back to US$119,053. This rally reflects renewed investor enthusiasm, driven by broader market optimism and significant institutional activity. Binance’s dominance in global trading volume is a critical metric, as concentrated activity on a single exchange could signal limited market breadth, potentially undermining the sustainability of the rally.

Historical comparisons suggest that broader market participation is essential for sustained price gains at all-time highs. Meanwhile, Ethereum has surged over seven per cent to above US$4,500, fuelled by significant institutional adoption and capital flows. The Ethereum Foundation’s sale of 2,795 ETH, valued at US$12.7 million, has drawn attention, particularly as it coincides with ether’s strong price momentum. The wallet, linked to the “EF 1” address, now holds 99.9 ETH and 11.6 million DAI, reflecting a strategic move to lock in gains during the price surge.

Corporate adoption of Ethereum has further bolstered its performance, with companies like SharpLink Gaming and BitMine holding nearly US$9 billion in ETH. BitMine, under the leadership of chairman Tom Lee, has transitioned from Bitcoin mining to an Ethereum treasury, with holdings exceeding US$5 billion. Lee’s ambitious plan to raise US$20 billion to acquire more Ethereum underscores the growing institutional confidence in the cryptocurrency.

Spot Ethereum exchange-traded funds (ETFs) have also seen record inflows, with over US$1 billion in daily net inflows on Monday, marking a significant milestone since their debut. These developments highlight Ethereum’s outperformance of Bitcoin in year-to-date gains, driven by its utility in decentralised finance and institutional backing.

The broader economic and market environment remains fraught with uncertainty. Trump’s tariff policies, while generating significant revenue, pose risks to consumer prices and global trade dynamics. The Federal Reserve’s cautious stance reflects a delicate balancing act between fostering economic growth and containing inflation.

Political pressures on the Fed, combined with leadership transitions looming in 2026, could further complicate monetary policy. Meanwhile, the resilience of US equity markets and the surge in cryptocurrencies suggest that investors are navigating these uncertainties with a mix of optimism and caution.

In my view, the current improvement in global risk sentiment is a fragile one, heavily contingent on the trajectory of US monetary policy and trade negotiations. The Federal Reserve’s data-dependent approach is prudent, given the potential for tariffs to reignite inflationary pressures. Political interference in central bank operations risks undermining market confidence and could lead to volatility if not carefully managed.

The strength in equity markets, particularly in technology and communications, reflects the transformative potential of innovation, but valuations may be stretched if economic growth falters. Cryptocurrencies, while benefiting from institutional adoption, face risks of overheating, particularly if trading activity remains concentrated on platforms like Binance. The RBA’s rate cut and Asia’s positive response to trade truce extensions highlight the global ripple effects of US policy decisions. Investors should remain vigilant, balancing opportunities in risk assets with hedges like gold to navigate the uncertainties ahead.

 

 

Source: https://e27.co/trumps-trade-war-looms-but-markets-are-betting-on-a-fed-rate-cut-20250813/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Markets rally on Middle East ceasefire: But is it sustainable?

Markets rally on Middle East ceasefire: But is it sustainable?

Markets are a reflection of both human sentiment and hard data, reacting in real-time to geopolitical shifts, central bank rhetoric, and the emergence of new asset classes. Currently, a confluence of events easing tensions in the Middle East, measured commentary from Federal Reserve Chair Jerome Powell, and a surge of momentum in the cryptocurrency space have created a fascinating moment for investors.

Global risk sentiment has found a tailwind, lifting stocks, nudging commodities, and even breathing fresh life into digital assets like Bitcoin.

A ceasefire sparks relief

The Middle East has long been a geopolitical powder keg, and any hint of de-escalation sends ripples through global markets. The recent ceasefire between Iran and Israel, announced by President Trump, has done just that. For weeks, tensions between these two nations had kept investors on edge, with fears of a broader conflict threatening oil supplies and regional stability.

Now, with a delicate truce in place, the sigh of relief is almost audible in trading rooms from New York to Tokyo. This isn’t just about avoiding worst-case scenarios. It’s about the psychological boost it gives to risk-taking. When the world feels a little less chaotic, investors are more willing to step out of the bunkers of safe-haven assets and into the sunlight of equities and growth plays.

The evidence is clear in the US stock markets’ performance on Tuesday. The Dow Jones Industrial Average climbed 1.19 per cent, a hearty gain that reflects broad confidence across industries. The S&P 500 wasn’t far behind, up 1.11 per cent, signalling strength in the backbone of America’s largest companies.

And the Nasdaq Composite? It outpaced them both with a 1.43 per cent rise, suggesting that tech and innovation-driven stocks are capitalising on this newfound optimism. This rally feels like a release valve—after months of bracing for bad news, the market is finally catching its breath. But it’s a fragile moment. Financial markets remain closely watching the region, hopeful yet wary that this ceasefire will hold. One misstep, and that relief could evaporate as quickly as it arrived.

The Fed’s steady hand

While the Middle East offers a dose of good news, the Federal Reserve is playing a more measured tune. On Tuesday, Fed Chair Jerome Powell took the stage, emphasising the central bank’s unwavering focus on taming inflation. His message was clear: don’t expect rate cuts anytime soon, not until the Fed has a firmer grasp on how tariffs might jolt prices.

It’s a pragmatic stance, one that acknowledges the messy interplay between trade policy and economic stability. Powell’s upcoming testimony before the Senate Committee on Banking, Housing, and Urban Affairs on Wednesday night looms large. Investors are hungry for clues; Will he double down on this wait-and-see approach, or hint at flexibility if the data shifts?

To me, Powell’s caution feels like a tightrope walk. On the one hand, holding rates steady could anchor inflation expectations, providing businesses and consumers with a sense of predictability. On the other hand, it risks stifling growth if the economy cools too fast. The bond market seems to share this ambivalence.

US Treasury yields dipped on Tuesday, with the 10-year yield falling about 3 basis points to 4.29 per cent and the two-year yield shedding 1.4 basis points to 3.81 per cent. This suggests some investors are still hedging their bets, parking cash in bonds as they await more clarity. The US Dollar Index, down 0.57 per cent to 97.86, echoes this uncertainty; a weaker dollar often signals less demand for the greenback as a safe haven.

In my view, the Fed’s balancing act is a linchpin here. If Powell’s testimony strikes the right chord, it could solidify this risk-on mood; if it falters, we might see a quick retreat.

Commodities feel the shift

Commodities, ever sensitive to global currents, are telling their own story. Gold, the classic refuge in times of trouble, took a hit, dropping 1.5 per cent to US$3316.80 per ounce. It’s lowest in over two weeks. That’s no surprise. With Middle East tensions easing, the need for a safe-haven metal fades, and investors are cashing out.

Brent crude oil followed suit, plunging 6.1 per cent to US$67.14 per barrel. This drop is a double-edged sword. On one side, it’s a sign of supply stability as fears of disrupted oil flows recede; on the other, it could signal softer demand or an oversupply looming on the horizon.

I find the oil move particularly striking. Lower energy costs could ease inflationary pressures, giving the Fed more breathing room; however, if prices continue to decline, energy-dependent economies might feel the pinch.

Asia’s quiet watch

Across the Pacific, Asian markets are holding steady, if not exactly surging. Wednesday’s open saw equities mostly flat, mirroring a cautious tone in US equity index futures. But there’s plenty on the radar. Thailand’s Bank of Thailand (BOT) is expected to maintain its key rate at 1.75 per cent, a decision that signals a vote for stability in a region navigating global crosswinds.

Meanwhile, the Summer Davos in Tianjin is drawing attention, with heavyweights like China’s Premier Li Qiang, Vietnam’s PM Pham Minh Chinh, and Singapore’s PM Lawrence Wong set to speak. Their words could sway sentiment, offering insights into Asia’s economic playbook at a time when every policy signal counts. Asia’s muted response so far suggests a wait-and-see approach, watching the US and the Middle East before making any big moves.

Crypto’s big moment

And then there’s the cryptocurrency market, which is seizing this moment with both hands. Bitcoin blasted past US$105,000 on Tuesday, Ether leapt above US$2,400, and XRP hit US$2.19—a rally sparked by the ceasefire but fuelled by something bigger. The Senate’s Banking Committee dropped a bombshell: a new crypto bill aimed at reining in the SEC’s oversight and setting clear rules for digital assets.

Led by Chairman Tim Scott and Senator Cynthia Lummis, this legislation could redefine cryptocurrency as a commodity or security, allow exchanges to register with the CFTC, and loosen the regulatory chokehold envisioned by SEC Chair Gary Gensler. Robinhood CEO Vlad Tenev called it a game-changer on CNBC, arguing it could help the US reclaim its edge in a space where Europe has been gaining ground.

The momentum doesn’t stop there. Financial titans like Goldman Sachs and Citadel Securities poured money into Digital Asset, a blockchain-focused firm, signalling that Wall Street is warming to crypto’s potential. And in Norway, Green Minerals—a deep-sea mining company—announced a US$1.2 billion plan to build a Bitcoin treasury, joining a wave of public firms betting on digital gold.

Their stock took a hit Tuesday, perhaps reflecting investor skepticism, but the move underscores a broader trend: corporations are starting to see Bitcoin as a legitimate asset. Since January, public companies have snapped up 251,700 BTC, worth US$26.51 billion today. This feels like a tipping point. The ceasefire gave crypto a spark, but these regulatory and institutional shifts could turn it into a wildfire.

My take: A market at a crossroads

Stepping back, I see a global market teetering on the edge of opportunity and caution. The Middle East ceasefire has unlocked a wave of relief, lifting stocks and cryptocurrencies while easing pressure on safe-haven plays like gold and bonds. Powell’s steady hand at the Fed offers reassurance, but his reluctance to signal rate cuts keeps a lid on exuberance.

Investors want certainty, and he isn’t ready to provide it. In Asia, the calm feels deceptive; big decisions and speeches could shift the tide. In the crypto world, we’re witnessing a potential sea change, with regulatory clarity and institutional buy-in that could catapult digital assets into the mainstream.

The takeaway is this: we’re in a moment of transition. The risk-on vibe is real, but it’s fragile, hinging on a ceasefire that could unravel, a Fed that could pivot, and a crypto market that’s still finding its footing. As an observer, I’m cautiously optimistic. The data points to resilience.

Stocks are up, crypto is soaring, and yields are steady, but the human element, the unpredictability of geopolitics and policy, keeps me on edge. This isn’t a time for blind bets; it’s a time to watch, analyse, and adapt. 

 

Source: https://e27.co/markets-rally-on-middle-east-ceasefire-but-is-it-sustainable-20250625/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

El Salvador adds Bitcoin, but is complying with IMF deal — Director

El Salvador adds Bitcoin, but is complying with IMF deal — Director

El Salvador, the world’s first country to adopt Bitcoin as legal tender, is still acquiring Bitcoin despite comments from the International Monetary Fund (IMF) appearing to claim the opposite.

The treasury of El Salvador acquired 7 Bitcoin worth over $650,000 in the seven days leading up to April 27, blockchain data from El Salvador’s Bitcoin Office shows.

When asked about the country’s Bitcoin investments, Rodrigo Valdes, director of the Western Hemisphere Department at the IMF, said that the country continues to comply with its agreement to halt government Bitcoin accumulation.

“In terms of El Salvador, let me say that I can confirm that they continue to comply with their commitment of non-accumulation of Bitcoin by the overall fiscal sector, which is the performance criteria that we have,” said Valdes during an April 26 press briefing.

“But on top of that, I think this is very important for the discussion in El Salvador,” he added. “The program of El Salvador is not about Bitcoin. It’s much more, much deeper in structural reforms, in terms of governance, in terms of transparency.”

In December 2024, El Salvador struck a deal with the IMF for a $1.4 billion loan, which required the government to drop Bitcoin’s status as a legal tender and stop its BTC accumulation.

Flexible interpretation leaves room for Bitcoin buys

The IMF’s agreement may still enable room for purchases through non-governmental entities, according to Anndy Lian, author and intergovernmental blockchain adviser.

“The IMF’s ‘flexible interpretation’ suggests purchases may involve non-public sector entities or reclassified assets, maintaining technical compliance,” Lian told Cointelegraph, adding:

“This alternative approach allows El Salvador to retain its Bitcoin-friendly image while securing critical IMF funding to address unsustainable public debt and limited reserves.”

Lian added that El Salvador’s strategy highlights the growing tension between financial innovation and traditional economic policies.

“El Salvador’s experience offers valuable lessons for nations exploring crypto adoption, emphasizing the need for robust regulatory frameworks and state capacity to navigate international financial pressures,” he added.

 

Source: https://cointelegraph.com/news/el-salvador-continues-bitcoin-purchases-despite-imf-agreement

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j