Fed’s big choice: Save the economy or unleash inflation hell?

Fed’s big choice: Save the economy or unleash inflation hell?

Weakness in the US labour market has cast a shadow over investor confidence, while trade policy announcements and fiscal uncertainties in the UK add layers of ambiguity. At the same time, financial markets, from equities to cryptocurrencies, are sending mixed messages, reflecting both resilience and caution.

In this analysis, I’ll explore these factors in depth, weaving together the data and offering my perspective on what it all means for the global risk landscape.

A troubling signal from the US labour market

The US economy, often seen as the engine of global growth, is showing signs of faltering, particularly in its labour market. The latest ADP employment report revealed that private sector employers shed 33,000 jobs in June, a stark reversal from the consensus expectation of a 98,000 job gain.

This marks the first negative reading since March 2023, a period when the economy was still grappling with post-pandemic recovery challenges. With the nonfarm payrolls (NFP) release looming, this data has heightened anticipation and anxiety among investors and policymakers alike.

The significance of the ADP figure lies in its role as a leading indicator for the NFP, which provides a broader snapshot of employment trends. A weak NFP report could confirm fears of a slowing US economy, potentially signalling the end of the robust growth narrative that has supported markets in recent years.

This possibility is particularly concerning given the Federal Reserve’s delicate balancing act between taming inflation and sustaining economic expansion. If the labour market continues to soften, the Fed might lean toward a more accommodative stance, perhaps lowering interest rates, though this could risk reigniting inflationary pressures.

This labour market weakness is a pivotal driver of the subdued global risk sentiment. Investors are understandably jittery, as a faltering US economy could ripple across global markets, dampening demand and weighing on corporate earnings.

The uptick in gold prices to US$3,357 per ounce and the slight dip in the US Dollar Index suggest that some are already positioning for a risk-off environment. The stakes are high, and the NFP release will likely be a defining moment for market sentiment in the near term.

Trade policy: A glimmer of hope amid uncertainty

On the trade front, President Trump’s announcement of a deal with Vietnam has sparked a flicker of optimism. The prospect of a new trade agreement could ease some of the tensions that have plagued global commerce, particularly in the context of the US-China rivalry.

Vietnam’s growing role as a manufacturing hub makes it an appealing partner for diversifying supply chains, potentially reducing reliance on any single country and bolstering economic resilience. Yet, this optimism is tempered by significant uncertainty. At the time of writing, no official confirmation has come from Vietnamese authorities, and details about the deal remain frustratingly scarce.

Trump’s track record of issuing bold, unilateral trade proclamations, sometimes followed by protracted negotiations or reversals, further adds to the skepticism. Without clarity on the agreement’s scope, timeline, or enforceability, it’s difficult for markets to embrace this development as a game-changer fully.

The trade announcement is a double-edged sword. On one hand, it hints at progress in stabilising global trade dynamics, which could lift risk sentiment if substantiated. On the other hand, the lack of concrete information leaves it as more of a headline than a foundation for confidence. Until Vietnam weighs in and specifics emerge, this remains a wildcard in the broader risk equation.

UK fiscal woes stir global ripples

Across the Atlantic, the UK is grappling with its own set of challenges that are reverberating through global markets. The government’s abrupt reversal on welfare reforms has reignited concerns about fiscal stability, amplifying political uncertainty at a time when clarity is sorely needed.

This policy shift triggered a sharp bear-steepening in gilt yields, a technical term that describes a scenario where long-term yields rise faster than short-term ones. In practical terms, it signals growing investor unease about the UK’s fiscal health and the potential for higher borrowing costs.

This market reaction hasn’t stayed confined to British shores. The upward pressure on gilt yields has contributed to a broader rise in global bond yields, including US Treasuries, where the 10-year yield climbed to 4.277 per cent and the two-year yield reached 3.785 per cent. This interconnectedness underscores how fiscal instability in one major economy can unsettle others, particularly when confidence is already fragile.

The UK’s predicament is a sleeper issue in the global risk narrative. While it may not dominate headlines like US labour data or trade talks, its implications are profound.

A sustained loss of faith in the UK’s fiscal management could erode its standing in global markets, prompting investors to shift toward safer assets and further dampen risk appetite. The bear-steepening in gilts is a warning shot, one that global markets would be wise not to ignore.

Markets reflect a tug-of-war

Overnight, US equity markets offered a mixed bag of results that mirror the broader uncertainty. The S&P 500 rose by 0.5 per cent and the NASDAQ gained a more robust 0.94 per cent, buoyed by strength in technology stocks.

Meanwhile, the Dow Jones slipped by a modest 0.02 per cent, hinting at uneven investor sentiment across sectors. This divergence suggests that while some corners of the market remain optimistic, perhaps driven by innovation or earnings resilience, others are more guarded.

The rise in US Treasury yields and the movements in commodity prices further illustrate this cautious mood. The 10-year Treasury yield rose by 3.5 basis points, and the two-year yield increased by 1.2 basis points, reflecting expectations of tighter financial conditions or lingering concerns about inflation.

Gold, a classic safe-haven asset, climbed 0.6 per cent to US$3,357 per ounce. In comparison, Brent crude surged three per cent, its most significant jump in two weeks, after Iran announced it was suspending cooperation with the UN atomic agency, stoking fears of oil supply disruptions.

In my analysis, these market movements reveal a tug-of-war between risk-on and risk-off impulses. The equity gains suggest some investors are betting on resilience, while the rise in yields and gold prices points to underlying worries about economic stability. Brent crude’s leap adds another layer of complexity, as higher energy costs could fuel inflation, complicating central banks’ efforts to manage growth and prices.

Bitcoin’s highs meet trader caution

In the cryptocurrency realm, Bitcoin is making waves, surging past US$109,000 and trading just two per cent below its all-time high. This rally coincided with monetary expansion in the eurozone and the softening of the US labour market, factors that often bolster Bitcoin’s appeal as an inflation hedge or alternative asset.

Yet, derivatives data tell a more cautious tale. The Bitcoin futures premium, a gauge of trader sentiment, remains below the five per cent neutral threshold, inching up from four per cent but still far from bullish territory.

This hesitancy is echoed in other metrics, like the USDT discount in China and outflows from spot Bitcoin ETFs, which highlight investor wariness amid global trade tensions. Despite the price surge, traders seem unconvinced of its staying power, perhaps mindful of past volatility or macroeconomic headwinds.

A standout development is BlackRock’s iShares Bitcoin Trust ETF (IBIT) outpacing its iShares Core S&P 500 ETF (IVV) in annual fee revenue. With US$75 billion in assets, IBIT generates US$187.2 million yearly at a 0.25 per cent expense ratio, edging out IVV’s US$187.1 million from US$624 billion at 0.03 per cent. This shift, driven by steady inflows over 17 of the last 18 months, underscores Bitcoin’s growing institutional allure.

Bitcoin’s story encapsulates the broader risk sentiment. Its price reflects optimism and speculative fervor, but the cautious derivatives data and ETF outflows suggest a market on edge, awaiting clearer signals. BlackRock’s revenue milestone is a watershed moment, hinting at a future where cryptocurrencies rival traditional assets in prominence.

Bottom line

Pulling these threads together, the global risk sentiment feels like a tightrope walk, balanced between tentative hope and palpable concern. The US labor market’s stumble is a red flag, potentially foreshadowing a more challenging road ahead if the NFP disappoints.

Trade optimism from the Vietnam deal is a bright spot, but its vagueness keeps it from being a game-changer. The UK’s fiscal turbulence and rising yields exacerbate the unease, while markets fluctuate between gains and safe-haven moves.

For me, the overriding sense is one of caution. The mixed signals —equity advances, gold’s rise, and Bitcoin’s cautious rally — suggest that investors are hedging their bets and braced for volatility. The NFP release will be a litmus test, but even beyond that, clarity on trade and fiscal fronts will be key to shifting this subdued mood.

 

Source: https://e27.co/feds-big-choice-save-the-economy-or-unleash-inflation-hell-20250703/

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”.

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BingX Webinar- Future Proofing the Digital Economy: AI and Web3 Synergies

BingX Webinar- Future Proofing the Digital Economy: AI and Web3 Synergies

Discover how artificial intelligence and Web3 technologies are transforming the digital landscape, driving innovation, and generating new opportunities for growth and decentralization.

In a recent webinar hosted by Will, experts Vivian (Chief Product Officer at BingX), Kanging Liu (AI research scientist), Anndy Lian (author and investor), and Gareth Jenkinson (moderator from Cointelegraph) shared their insights on this transformative intersection.

They discuss real-world use cases, future trends, and strategies for staying ahead in the evolving digital economy.

02:02 Panel Self-Introductions
05:06 Redefining Crypto Through Intelligence
15:18 Simplifying Complexity with AI Systems
23:17 The Power of Web4
28:59 What are the most significant recent advancements in AI, and how are they poised to reshape business and company operations?
35:09 Where can AI deliver the first “easy wins” for digital economy in the next 12 months?
40:10 What has surprised you most about AI’s take-up compared with blockchain and DeFi’s early days?
43:05 How might AI tools make it simpler for a complete crypto beginner to get started?
44:17 In Web3 today, which slice feels most overdue for an AI-powered shake-up, and why?
54:10 Beyond trading, which adjacent Web3 vertical stands to benefit most from an exchange-led AI platform, and what collaboration models could unlock that value?
59:57 Audience Q&A

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”.

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Global economy on edge: What it signals for investors amid economic uncertainty

Global economy on edge: What it signals for investors amid economic uncertainty

The global financial landscape today, March 21, 2025, is a complex tapestry woven with threads of uncertainty, cautious optimism, and shifting economic priorities. Let’s unpack this and offer my perspective on what’s driving these dynamics, where things might be headed, and what it all means for investors, policymakers, and everyday people keeping an eye on their financial futures.

Global risk sentiment and central bank ambiguity

The global risk sentiment being described as “tentative” feels like an apt reflection of the moment we’re in. Central bank meetings, which are typically a cornerstone for market stability, seem to have left us with more ambiguity than clarity. It’s not uncommon for these gatherings—whether it’s the Federal Reserve, the European Central Bank, or others—to set the tone for monetary policy expectations, influencing everything from interest rates to currency strength.

But when they raise “more questions than answers,” as the Market Wrap notes, it signals a lack of consensus or a hesitancy to commit to bold moves. Perhaps central bankers are grappling with the same uncertainties as the rest of us: inflationary pressures that refuse to fully subside, geopolitical tensions exacerbated by trade policies, and a global economy that’s still finding its footing post-pandemic.

My take is that this ambiguity is less about indecision and more about a deliberate wait-and-see approach. Central banks are likely holding their cards close, waiting for clearer signals from corporate earnings and trade developments before making significant policy shifts.

Corporate earnings, tariffs, and market reactions

Speaking of corporate earnings, they’re poised to be the next big litmus test for the markets. Investors are hungry for guidance, and rightly so. With tariff fears casting a long shadow, the performance of major companies could either bolster confidence or deepen the unease.

In the US, where the MSCI US index slipped by 0.2 per cent, the energy sector’s modest 0.4 per cent gain stands out as a bright spot. This uptick aligns with the rise in Brent crude prices to US$75 per barrel, fuelled by OPEC+’s new schedule for oil output cuts.

It’s a reminder that energy markets remain a critical driver of sentiment, especially as supply constraints—like the US sanctions on a Chinese refinery tied to Iranian oil—tighten the screws further. For American investors, the upcoming earnings season will be a chance to see if companies can navigate these headwinds, particularly with new tariffs looming on the horizon.

Those tariffs, announced by US President Donald Trump to take effect on April 2, are a game-changer. The promise of both broad reciprocal tariffs and sector-specific measures suggests a continuation of his administration’s aggressive trade stance.

From my perspective, this move is less about economic protectionism in a vacuum and more about geopolitical leverage. Trump’s strategy seems to hinge on using tariffs as a bargaining chip—pressuring trading partners into concessions while signaling strength to domestic audiences. The timing, just over a week from now, adds urgency to the mix.

Markets hate uncertainty, and with Asian equities already showing mixed responses and US equity futures pointing to a flat open, it’s clear that investors are bracing for turbulence. The delay of the European Union’s proposed tariff on American whiskey this week feels like a small reprieve, perhaps a diplomatic nod to avoid escalating tensions further, but it’s a drop in the bucket compared to the broader tariff storm brewing.

In China, the focus on bellwethers like Xiaomi Corp. and Tencent Holdings Ltd. is particularly telling. These tech giants have been at the heart of China’s recent stock surge, a rally that’s defied global headwinds to some extent. Investors are now asking whether this momentum is sustainable or if it’s a house of cards built on speculative exuberance.

My view is that China’s market resilience reflects a mix of domestic policy support and a pivot by companies to diversify away from US-centric supply chains—a direct response to past tariff pressures. Xiaomi’s push into emerging markets and Tencent’s dominance in digital ecosystems could provide the earnings firepower needed to keep the rally alive. But if these reports disappoint, it might expose cracks in China’s economic facade, especially as US sanctions and tariffs tighten the noose on key sectors like refining.

Financial indicators and the energy-crypto divide

Shifting to the financial indicators, the US Treasury yields dropping—with the 10-year at 4.24 per cent and the 2-year at 3.96 per cent—suggests a flight to safety amid the uncertainty. Lower yields typically signal that investors are seeking the relative security of government bonds over riskier assets, a trend reinforced by the US Dollar index’s 0.4 per cent gain as it consolidates recent losses. Gold holding firm above US$3,000 per ounce further underscores this cautious mood—it’s the classic safe-haven play.

Yet, there’s a paradox here: Brent crude’s 1.7 per cent rise indicates that not all risk assets are out of favour. My interpretation is that we’re seeing a bifurcated market—energy and commodities holding up due to supply-side dynamics, while equities and bonds reflect broader trepidation about growth prospects.

Now, let’s dive into the cryptocurrency angle, which adds another layer of intrigue. Bitcoin’s market sentiment hitting a two-year low, as per CryptoQuant’s Bull Score Index of 20, is a stark warning. This index, blending ten metrics like network activity and investor behaviour, paints a picture of a “weak environment” unlikely to support a sustained rally.

Historically, Bitcoin needs a score above 60 to fuel significant price surges, and prolonged periods below 40 align with bear markets. As someone who’s tracked crypto’s rollercoaster ride, I see this as a natural ebb in the cycle. The euphoria of past bull runs—often tied to macroeconomic stimulus or institutional adoption—has given way to a sober reality.

Regulatory scrutiny, energy cost debates, and now tariff-induced economic uncertainty could be dampening enthusiasm. For Bitcoin holders, this might feel like a gut punch, but it’s not necessarily a death knell. Markets move in waves, and a bearish phase could set the stage for a stronger rebound if fundamentals like adoption or halving effects kick in later.

Ethereum, meanwhile, offers a glimmer of hope amid the gloom. Its price hovering around US$1,970, with a key support level at US$1,861, suggests resilience. The nine per cent recovery earlier this week, followed by a 3.5 per cent dip, shows volatility but also potential. If that US$1,861 support holds, a push toward the March 7 high of US$2,258 isn’t out of the question. The technicals back this up: the RSI climbing to 40 from an oversold 30 indicates fading bearish momentum, though it needs to break 50 for a confirmed recovery.

The MACD’s bullish crossover and rising green histograms above zero add to the case for upward strength. From my standpoint, Ethereum’s outlook hinges on broader market sentiment and its ability to differentiate itself from Bitcoin’s struggles. If tariff fears ease or corporate earnings surprise to the upside, ETH could ride that wave. But a break below US$1,861 would open the door to a drop toward US$1,700—a level that could test the resolve of even the most ardent HODLers.

The interconnectedness of markets

Stepping back, what strikes me most about this Market Wrap is the interconnectedness of it all. Tariffs don’t just affect trade balances; they ripple through equity markets, commodity prices, and even cryptocurrencies. Central bank hesitancy amplifies the noise, leaving corporate earnings as the next beacon.

My point of view is cautiously pragmatic: we’re in a transitional phase where old playbooks—whether for stocks, bonds, or crypto—are being rewritten. Investors should watch China’s tech giants for signs of durability, lean into energy’s relative strength, and brace for tariff-driven volatility. For crypto enthusiasts, patience might be the best strategy—Bitcoin’s malaise and Ethereum’s teetering recovery suggest a market in purgatory, awaiting a catalyst.

In conclusion, the global economy today feels like a tightrope walk. The stakes are high, and the safety net is fraying. I see my role as cutting through the noise to spotlight the data and trends that matter. Right now, that means recognising the weight of tariffs, the pivotal role of earnings, and the fragile state of risk assets like crypto.

We’re not in freefall, but we’re not on solid ground either—April 2, when those tariffs hit, could be the tipping point that defines the next chapter.

 

Source: https://e27.co/global-economy-on-edge-what-it-signals-for-investors-amid-economic-uncertainty-20250321/

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”.

j j j