Tag Archives: fed

Fed’s caution vs market optimism: What’s the real story? Could Bitcoin to US$120K be it?

Fed’s caution vs market optimism: What’s the real story? Could Bitcoin to US$120K be it?

I reflect on the whirlwind of economic and market developments from last week and cast an eye toward what’s coming, and it’s clear we’re in a fascinating moment. The financial world feels like it’s teetering on the edge of something big—optimism tempered by uncertainty, bold moves shadowed by lingering risks.

Let’s dive into what happened last week, what it means, and what we might expect in the days ahead, weaving together the threads of global trade, monetary policy, housing, and even the wild ride of Bitcoin. This is my take, grounded in the facts and data at hand.

Last week: A rally fuelled by trade relief and resilience

Last week kicked off with a bang. Markets opened with a decisive gap above the 200-day moving average—a technical signal that traders love to see, often interpreted as a sign of sustained bullish momentum. The catalyst? A breakthrough in the US-China trade saga. After months of tension, the two economic giants agreed to a 90-day suspension of most tariffs.

US duties on Chinese goods dropped from a staggering 145 per cent to a more manageable 30 per cent, while Chinese tariffs on US imports fell from 125 per cent to 10 per cent, with some categories excluded. This wasn’t a full resolution—those exclusions hint at sticking points yet to be ironed out—but it was a lifeline for markets that trade war fears had battered. Investors exhaled, and you could almost feel the relief rippling through Wall Street.

The numbers back this up. The S&P 500 and Nasdaq logged their strongest single-day gains since early April, and the Dow surged over 1,100 points on Monday alone. By Friday, major indexes were trading within five per cent of their all-time highs. That’s no small feat when you consider the headwinds of the past year—supply chain disruptions, inflation spikes, and geopolitical uncertainty. The tariff truce, announced after negotiations in Geneva, seemed to flip a switch, turning fear into opportunity.

Tuesday added fuel to the fire. A cooler-than-expected Consumer Price Index (CPI) print hit the wires, suggesting that inflation might not be the runaway train some had feared. Lower inflation readings ease pressure on the Federal Reserve to slam the brakes with aggressive rate hikes, and that’s music to investors’ ears. The rally accelerated, with stocks climbing higher as the week progressed. It wasn’t all smooth sailing, though.

Later in the week, Fed Chair Jerome Powell threw a bit of cold water on the party. His tone was neutral at best, hawkish at worst, as he pointed to persistent supply shocks and hinted at a higher long-run rate path. In plain English, he’s saying the Fed might need to keep rates elevated longer to tame inflation and stabilise the economy. That could’ve rattled markets, but it didn’t. Risk appetite held firm, which tells me investors were more focused on the trade win than the Fed’s cautious outlook. It’s a testament to the momentum at play—bullish sentiment was too strong to be derailed.

Looking ahead: Housing, Fed signals, and global pulse points

Now, let’s shift gears and look forward. The coming week feels like a crossroads. We’ve got a slew of data and events that could either cement this bullish run or throw a wrench into it. One area I’m particularly curious about is housing.

Earnings from Home Depot and Lowe’s, coupled with April home sales data, are due out soon, and they’ll be a litmus test for the real estate market. Housing is a huge piece of the economic puzzle—when it’s strong, it signals consumer confidence and spending power; when it’s weak, it can drag everything else down. Interest rates have been a rollercoaster, and buyers have been skittish.

If these reports show resilience—say, steady sales or upbeat guidance from the home improvement giants—it could bolster the case that the economy’s on solid footing. But if they disappoint, it might spark worries about a slowdown. Traders will be watching closely, and so will I.

The Federal Reserve isn’t stepping out of the spotlight either. We’ve got a packed lineup of Fed speakers this week, and their words could move markets. Powell’s recent comments already stirred the pot, and now his colleagues have a chance to elaborate—or pivot.

Then there’s Thursday’s flash Purchasing Managers’ Index (PMI) data, which gives a snapshot of business activity. Strong PMIs could reinforce the bullish vibe; weak ones might signal trouble ahead. These events can reset expectations; in a market, this jittery is no small thing. We’ll see some volatility as investors parse every word and number.

Monday’s spotlight: A glimmer of economic hope?

Let’s zoom in on Monday, May 19, 2025. At 14:00 GMT, April’s US Conference Board Leading Economic Index (LEI) drops. This is one of those forward-looking indicators that economists love—it’s designed to predict where the economy’s headed over the next six to twelve months. It fell by 0.7 per cent in March, which wasn’t great news; a decline signals contraction. The forecast for April is a smaller drop of 0.2 per cent. That’s still negative, but the narrower slide caught my eye.

Could it mean the pace of economic deceleration is slowing? Maybe. If the data comes in as expected—or better—it might suggest recessionary pressures are easing. I think stronger corporate earnings or loosening credit conditions could be at play here, giving businesses and consumers more breathing room. The LEI’s still in the red, so we’re not out of the woods, but a less-bad number could lift spirits. I’ll be checking that release at 2:00 PM GMT with interest.

On the earnings front, we’ve got Diageo and Trip.com reporting. Diageo’s a heavyweight in the alcoholic beverages world, and its results could tell us how consumers are spending on discretionary items like a bottle of Johnnie Walker. Trip.com, a big name in China’s online travel scene, might shed light on whether travel demand is holding up amid economic shifts. These aren’t make-or-break for the broader market, but they’re pieces of the puzzle—clues about how people feel and spend.

Tuesday’s global view: Rates, inflation, and trade

Tuesday, May 20, brings a trio of international events worth watching. First up, at 04:30 GMT, the Reserve Bank of Australia (RBA) announces its interest rate decision. The current rate sits at 4.1 per cent, but the buzz is they’ll cut it to 3.85 per cent. That’s a notable shift. Australia’s economy has been grappling with slowing growth, weaker consumer spending, and cooling inflation.

Recent data showing a softening labor market and sluggish wage growth backs this up—households are stretched, and the RBA might see a rate cut as a way to juice demand and fend off a deeper slump. If they go through with it, it could ripple beyond Australia, maybe nudging other central banks to rethink their own stances. Global markets will take note.

Later, at 12:30 GMT, Canada’s Inflation Rate Year-over-Year hits the docket. Inflation’s been a hot topic everywhere, and this number will tell us if Canada’s price pressures are easing or digging in. A lower reading could ease fears of aggressive rate hikes from the Bank of Canada, while a stubborn one might stoke them.

Then, at 23:50 GMT, Japan’s Balance of Trade data rolls out. Japan is a trade powerhouse, and this shows how its exports and imports are stacking up. With global supply chains still shaky, a surplus could signal resilience; a deficit might hint at trouble. Together, these data points paint a picture of the world economy—interconnected and complex.

Bitcoin’s big moment: US$120K in sight?

Now, let’s talk Bitcoin, because it’s impossible to ignore. On May 18, 2025, it was trading at US$103,895, with a market cap of US$2.064 trillion. That’s a colossal figure, hovering near all-time highs, bouncing between US$102,771 and US$104,002 in a tight consolidation range.

As I write this, it’s ticked up to US$104,826. The 24-hour trading volume—US$19.865 billion—shows plenty of action. What’s driving it? Bitcoin’s got this uncanny knack for thriving whether markets are in risk-on or risk-off mode, a point Bitcoin Suisse has flagged. Its Sharpe ratio, a measure of risk-adjusted returns, sits at 1.72, second only to gold. That’s a big deal—it’s saying Bitcoin’s maturing, delivering solid gains without wild swings.

The market’s buyer-heavy right now, with institutional players and retail investors piling in. That could tighten supply and push prices higher. I’m starting to think the odds of Bitcoin cracking US$120,000 in May are climbing. And it’s not just market dynamics—there’s news fuelling this too.

Ukraine is planning a National Bitcoin Reserve, with lawmaker Yaroslav Zhelezniak finalising the legislation. That’s a bold move, mirroring US efforts to do the same, and it screams adoption. Then there’s American Bitcoin, the Trump family’s crypto venture, announcing plans to go public via a Nasdaq merger. Love them or not, the Trumps bring attention, and this could legitimise crypto further. If these dominoes fall right, we might see a rally that takes Bitcoin to new heights. 

My take: Optimism with eyes wide open

So, where does this leave us? Last week was a shot in the arm for markets—trade relief sparked a rally that held up against Fed hawkishness. The bullish momentum feels real, with indexes knocking on the door of record highs.

Looking ahead, I’m cautiously optimistic. Housing data and Fed signals will be key—if they hold steady, this run could keep going. The LEI’s smaller drop and the RBA’s potential rate cut suggest economies adapt, not collapse. And Bitcoin? It’s a wild card that might steal the show.

But I’m not blind to the risks. Powell’s warnings about supply shocks and rates aren’t idle chatter, and a stumble in housing or PMIs could shake things up. For now, though, the data’s tilting positive, and the vibe is upbeat.

I’ll be watching Monday’s LEI, Tuesday’s global releases, and Bitcoin’s next move like a hawk—because in this market, every moment counts. What do you think—am I onto something, or is there a curveball I’m missing? Let’s keep the conversation going.

I must emphasise again that Bitcoin at US$120,000 is just my humble prediction.

 

Source: https://e27.co/feds-caution-vs-market-optimism-whats-the-real-story-could-bitcoin-to-us120k-be-it-20250519/

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

How CPI, retail sales, and Powell’s speech could shape Fed policy and market sentiment

How CPI, retail sales, and Powell’s speech could shape Fed policy and market sentiment

As we head into a pivotal week for the US economy and financial markets, a confluence of significant events is poised to shape expectations for Federal Reserve rate cuts and influence market sentiment in profound ways.

The upcoming release of Consumer Price Index (CPI) and retail sales data, Federal Reserve Chair Jerome Powell’s speech on Thursday, and ongoing US trade negotiations with China and the UK are all critical pieces of this puzzle.

I’ll analyse how these developments might unfold, their potential economic implications, and how they could sway both the Fed’s monetary policy decisions and the broader market mood. This analysis will weave together the latest economic indicators, policy signals, and geopolitical dynamics to provide a comprehensive view of what’s at stake.

The economic barometers: CPI and retail sales data

The CPI and retail sales figures due this week are among the most important economic releases, serving as key barometers of inflation and consumer spending, two pillars of the Fed’s dual mandate to maintain price stability and maximise employment. These data points will set the tone for how markets and policymakers interpret the health of the US economy.

The Consumer Price Index measures changes in the prices consumers pay for a basket of goods and services, making it a primary indicator of inflation. If this week’s CPI report reveals a higher-than-expected uptick in prices, it would suggest that inflationary pressures remain stubbornly persistent.

This could unnerve the Fed, which has been wary of easing monetary policy prematurely only to see inflation reaccelerate. A hot CPI print might push back expectations for rate cuts, as the central bank would likely prioritise keeping inflation in check over stimulating growth.

Conversely, a softer-than-anticipated CPI reading—indicating that price pressures are easing—could bolster the case for monetary easing, particularly if paired with signs of economic slowdown elsewhere. Investors are already on edge, with bond markets pricing in rate cuts as early as July, per the latest weekly recap, and the 10-year Treasury yield lingering near 4.38 per cent, reflecting uncertainty about the Fed’s next move.

Recent economic reports cited in the recap underscore that inflation has been trending upward in the US, adding complexity to the outlook. This trend aligns with concerns raised by Fed Chair Jerome Powell about the inflationary impact of President Trump’s tariff policies, which I’ll explore further in the trade section. For now, it’s clear that a high CPI number could reinforce the Fed’s cautious stance, while a lower one might give policymakers room to consider rate cuts sooner.

Retail sales: A window into consumer health

Retail sales data, which tracks consumer spending across various sectors, offers a direct glimpse into the strength of the US consumer—a driving force of economic growth. Robust retail sales would signal that households are still spending freely despite higher prices and borrowing costs, suggesting resilience in the economy.

Such strength could lessen the urgency for rate cuts, as the Fed might see no immediate need to juice up an already healthy consumer base. On the flip side, a disappointing retail sales report—showing consumers tightening their belts—would raise red flags about economic momentum, potentially tilting the Fed toward easing to support growth.

The weekly recap hints at consumer fragility, noting that Americans are beginning to feel the pinch of tariffs as ships carrying tariffed goods arrive. This could dampen spending, especially if paired with rising inflation. Powell has also flagged declining consumer sentiment tied to trade policy uncertainty, which could foreshadow weaker retail sales.

The interplay between these data points will be crucial: strong sales with high inflation might keep the Fed on hold, while weak sales with moderating inflation could pave the way for cuts.

Powell’s speech: Decoding the Fed’s intentions

Following the CPI and retail sales releases, Jerome Powell’s Thursday speech will be a linchpin event, offering markets a chance to parse the Fed’s thinking on monetary policy.

With the Fed holding rates steady for three consecutive meetings and highlighting “elevated risks” to both inflation and unemployment, Powell’s words will carry outsized weight.

Dovish or Hawkish signals?

Powell’s tone will be everything. A dovish slant—where he expresses concern about economic slowdown or signals that inflation is under control—could ignite expectations for rate cuts, lifting equities and easing bond yields. Markets would interpret this as a green light for monetary support, especially if the week’s data leans soft.

However, a hawkish stance—emphasising persistent inflation or the need for sustained tightness—might temper those hopes, suggesting that rates will stay higher for longer. This could pressure stocks, already struggling near technical resistance levels (S&P 500 down 0.5 per cent, Nasdaq off 0.3 per cent, Dow down 0.2 per cent last week), and push yields upward.

Powell’s recent rhetoric offers clues. He’s underscored the Fed’s cautious, data-dependent approach, wary of acting too soon amid trade-driven uncertainties. The recap notes his focus on tariff-related risks, which could simultaneously hike inflation and slow growth—a stagflationary bind that complicates rate decisions.

How is the UK-US trade deal shaping cryptocurrency and stock market trends?

If Powell doubles down on this narrative Thursday, he might signal that the Fed is in a holding pattern, waiting for clearer evidence before pivoting. This wait-and-see posture could leave markets in limbo, amplifying volatility as traders grapple with mixed signals.

Trade talks: Tariffs, supply chains, and economic ripple effects

The US trade negotiations with China and a limited deal with the UK inject another layer of uncertainty into this week’s outlook. These talks could either mitigate or exacerbate pressures on inflation, growth, and market sentiment, depending on their outcomes.

US-China trade dynamics

The US-China trade saga has been a rollercoaster, with tariffs already disrupting supply chains and raising costs. Progress in this week’s talks—say, a rollback of tariffs or a broader agreement—would be a boon, easing inflationary pressures by lowering input costs and boosting business confidence.

This could reduce the need for Fed intervention, supporting growth organically and lifting market sentiment. Stocks might rally, and risk assets like Bitcoin (recently at US$104,077) could see further gains as uncertainty fades.

But the flip side is grim. If talks falter or new tariffs emerge, it would amplify the economic headwinds Powell has flagged. Higher costs would fuel inflation, while disrupted trade could crimp growth—echoing the stagflation fears he’s voiced.

The recap ties this directly to consumer impacts, noting tariffed goods hitting US shores. This scenario might nudge the Fed toward rate cuts to offset a slowdown, though persistent inflation could tie its hands. Markets would likely sour, with equities sliding and safe-haven flows propping up yields or crypto.

UK seal: Limited but symbolic

The limited UK trade deal raises questions about tariff relief and supply chain benefits. While less consequential than a China breakthrough, it could still ease costs for specific sectors, offering a modest tailwind.

However, its impact might be overshadowed by the China talks’ broader stakes. Powell’s focus on trade policy as a whole suggests the Fed will weigh these developments collectively, not in isolation.

Market sentiment: A week of reckoning

Markets are at a crossroads, with stocks pausing near resistance and investors bracing for this week’s catalysts. The S&P 500, Nasdaq, and Dow’s recent dips reflect caution, while Bitcoin’s climb past US$100,000 and Ethereum’s rally (up 37.14 per cent last week to US$2,600) hint at risk-on bets amid uncertainty. But sentiment hinges on how these events play out.

Scenarios and reactions

A “Goldilocks” outcome—moderate CPI, solid retail sales, dovish Powell, and trade progress—could spark a rally, with rate cut odds firming up for July and equities breaking resistance. Yields might dip as bonds gain favour, and crypto could ride the wave.

But a stagflationary mix—high CPI, weak sales, hawkish Powell, and trade tensions—might tank stocks, lift yields, and drive volatility. A middle ground, with mixed data and a noncommittal Fed, could keep markets range-bound, prolonging the wait for clarity.

Broader context: Trump’s policies and crypto

The recap’s nod to Trump’s Executive Order slashing drug prices (set for May 12, 2025) adds a wildcard. Early market reactions—Pfizer down 3.2 per cent, Johnson & Johnson off 2.8 per cent, XLV ETF dropping 1.9 per cent—suggest sectoral pressure that could spill over, nudging investors toward alternatives like Bitcoin and Ethereum (up 1.5 per cent and 1.2 per cent post-announcement).

Crypto’s resilience amid this, plus Ethereum’s Petra upgrade boosting scarcity, underscores its growing role as a sentiment barometer.

My view: A tense balancing act ahead

In my view, this week’s events will test the Fed’s resolve and market nerves. I expect CPI to come in slightly above consensus, reflecting tariff-driven price pressures, while retail sales hold steady but show early cracks from consumer caution.

Powell will likely strike a balanced tone, acknowledging risks but avoiding firm commitments—keeping rate cut bets alive but distant. Trade talks with China might yield incremental progress, though not enough to shift the tariff burden significantly, while the UK deal offers symbolic relief.

This mix suggests the Fed will stay pat for now, with rate cuts more likely in late 2025 unless growth falters sharply. Markets could seesaw—equities dipping on inflation fears, then recovering if Powell soothes nerves, while crypto holds firm as a hedge.

The bigger story is the Fed’s tightrope walk: tariffs and inflation threaten its mandate, but robust data might delay easing. Investors should buckle up for a bumpy ride as these forces collide.

 

Source: https://e27.co/how-cpi-retail-sales-and-powells-speech-could-shape-fed-policy-and-market-sentiment-20250512/

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

Navigating market volatility: Bitcoin Hits US$99K, US stocks rally amid trade talks and fed decisions

Navigating market volatility: Bitcoin Hits US$99K, US stocks rally amid trade talks and fed decisions

The financial markets have been a whirlwind of activity this week, with major US stock market benchmarks—the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite—navigating a volatile, choppy session to ultimately close near their session highs.

The Dow gained 284.97 points (0.70 per cent) to close at 41,113.97, the S&P 500 climbed 24.37 points (0.43 per cent) to 5,631.28, and the Nasdaq added 48.50 points (0.27 per cent) to 17,738.16. This late-session rally came amidst a barrage of high-impact catalysts that kept investors on edge: US-China trade talks slated for this weekend in Switzerland, the Federal Reserve’s decision to hold interest rates steady, President Trump’s plan to roll back Biden-era restrictions on artificial intelligence chips, and a steep 7.5 per cent selloff in Alphabet shares due to concerns over declining Google search volumes.

Beyond the stock market, central banks made headlines with contrasting moves—the Fed maintaining its cautious stance while the People’s Bank of China (PBOC) slashed rates to stimulate its economy.

Meanwhile, in the cryptocurrency realm, Bitcoin soared past US$99,000, inching closer to the US$100,000 milestone, while Ethereum’s much-hyped Pectra upgrade failed to ignite immediate enthusiasm. I see a market teetering between opportunity and uncertainty, shaped by geopolitical tensions, monetary policy decisions, and shifting investor sentiment.

Stock market performance and catalysts

Let’s dive into the US stock market’s rollercoaster session. The major benchmarks’ ability to close near their highs despite intraday volatility speaks to the resilience of investor confidence, albeit tempered by unease. One of the day’s biggest drivers was the surge in chipmakers, catalysed by news that the Trump administration intends to rescind Biden-era curbs on AI chip exports.

The PHLX Semiconductor Index, a barometer for the sector, rose 1.7 per cent after an earlier dip of one per cent, reflecting a late rally in stocks like Nvidia and AMD. This policy shift could unlock significant growth for the US tech sector, which has been hamstrung by restrictions aimed at limiting China’s access to advanced technology. However, the broader market’s choppiness suggests that investors remain wary of other headwinds.

The most anticipated news was the announcement that US and Chinese officials, including Treasury Secretary Scott Bessent and trade negotiator Jamieson Greer, will meet in Switzerland this weekend to discuss trade. Initially, this sparked optimism that the long-standing US-China trade war might see a thaw, especially given Trump’s recent 145 per cent tariffs on Chinese imports.

However, Bessent quickly dampened expectations, telling Reuters that these would not be “advanced” discussions. His realism—or perhaps pessimism—echoes China’s guarded response, with a foreign ministry spokesperson citing a proverb about actions speaking louder than words.

For context, the trade war has disrupted global supply chains, driving up costs and stoking inflation fears. Walmart CEO Doug McMillon recently warned of potential product shortages if tariffs persist, a sentiment shared by many corporate leaders. From my perspective, this weekend’s talks are a critical juncture, but the lack of concrete progress signals more volatility ahead as markets grapple with uncertainty.

Another key factor was the Federal Reserve’s decision to keep interest rates unchanged at 4.25–4.50 per cent for the third consecutive meeting, aligning with market expectations. Fed Chair Jerome Powell, in remarks, acknowledged that the US economy continues to grow at a solid pace, though swings in net exports—likely tied to trade disruptions—have clouded the data.

The Fed’s statement flagged rising risks of inflation and unemployment, particularly due to Trump’s tariff policies. Powell’s cautious tone, emphasising the need for more data before signalling rate cuts, disappointed some investors hoping for dovish hints.

LSEG data suggests markets still anticipate a 25-basis-point cut by July, but the Fed’s focus on tariff-driven inflation risks complicates that outlook. I see the Fed walking a tightrope: easing too soon could fuel inflation, while holding firm might choke growth if trade tensions escalate. This limbo is likely to keep markets jittery.

Alphabet’s sharp 7.5 per cent drop added to the session’s turbulence. Reuters reported that the selloff stemmed from concerns about declining Google search volumes, a critical metric for the tech giant’s revenue. This stumble dragged down the broader tech sector, highlighting how even industry titans face scrutiny in a rapidly evolving digital landscape.

Juxtaposed with the chip sector’s gains, Alphabet’s woes underscore the uneven performance within tech, driven by policy shifts and competitive pressures. As a journalist, I view this as a reminder that market leaders aren’t invincible, especially as AI and other innovations challenge established business models.

Investor behaviour and corporate strategy

Investor sentiment has shifted noticeably amid these developments. Bank of America’s weekly flow data, cited by CNBC, revealed that investors yanked US$8.9 billion out of US equities last week—the largest outflow since March—while funnelling US$7.8 billion into foreign stocks. This pivot suggests growing unease about US market valuations and the potential fallout from trade wars.

At the same time, US companies are planning a record US$500 billion in stock buybacks, according to the Financial Times, as tariff uncertainty stalls capital investment. Buybacks can prop up share prices in the short term, but they also signal a defensive mindset, with firms opting to reward shareholders rather than bet on expansion in a shaky environment.

This trend reflects a broader wait-and-see approach. If trade tensions ease, those funds could shift toward growth initiatives, potentially sparking a rally. For now, though, caution reigns.

Central bank actions

On the monetary policy front, central banks offered contrasting narratives. The Fed’s decision to hold steady reflects a steady-hand approach, balancing solid US growth against inflationary pressures from tariffs. Across the Pacific, the People’s Bank of China took a more aggressive tack, cutting its seven-day reverse repo rate from 1.5 per cent to 1.4 per cent and lowering the reserve requirement ratio by 0.5 per cent effective May 15, per Bloomberg.

These moves aim to counter US tariff pressures and bolster China’s economy, which faces deflation, a property crisis, and slowing growth. The PBOC also signalled regulatory flexibility for tariff-hit firms and encouraged equity investments by insurance funds, rounding out a multi-faceted stimulus package.

China’s actions are a pragmatic response to external shocks, but their success depends on whether global trade stabilises. If US-China talks falter, this stimulus might not fully offset the tariff drag, with ripple effects for global markets.

Cryptocurrency trends

The cryptocurrency space provided a stark contrast to traditional markets, with Bitcoin surging past US$99,000 late Wednesday, hitting $99,027.83 as of 11:47 p.m. ET, per CoinDesk. This milestone in its 2025 bull run—just shy of the psychologically significant $100,000 mark—cements Bitcoin’s status as the year’s top-performing major asset.

Several factors are fuelling this rally. Institutional momentum is a big driver: BlackRock’s IBIT spot Bitcoin ETF has outpaced the SPDR Gold Trust in year-to-date inflows, while firms like Japan’s Metaplanet and US-based Strategy (formerly MicroStrategy) continue aggressive BTC accumulation.

Bitcoin’s realised capitalisation has also hit a record US$890 billion, reflecting growing confidence among long-term holders. Macro tailwinds, including expectations of future Fed rate cuts, further bolster its appeal as a hedge against inflation and currency devaluation.

Ethereum, however, painted a different picture. Its widely anticipated Pectra upgrade, activated Wednesday, failed to spark immediate excitement. ETH rose a modest 0.96 per cent, with trading volume inching up just 0.52 per cent over 24 hours. This muted response contrasts sharply with Bitcoin’s surge, highlighting their divergent roles: Bitcoin as a store of value, Ethereum as a platform for smart contracts.

I see Bitcoin’s rally as proof of its maturation as an asset class, embraced by institutions and retail investors alike. Ethereum’s lackluster reaction suggests that its technological upgrades, while promising, need time to translate into market momentum.

My take

Stepping back, the financial landscape feels like a high-stakes chess game, with each move—whether by governments, central banks, or investors—carrying outsized implications. The US stock market’s resilience amid choppy trading reflects a tug-of-war between optimism (chip policy relief, potential trade progress) and anxiety (tariffs, inflation risks).

The Fed’s steady hand contrasts with China’s stimulus push, illustrating how global economies are responding to shared pressures in distinct ways. Investor flight from US equities and the surge in buybacks signal a defensive crouch, while Bitcoin’s ascent underscores a hunger for alternative assets in an uncertain world.

In my view, the US-China talks this weekend are the linchpin. A breakthrough could calm markets and redirect corporate funds from buybacks to investment, fueling growth. But Bessent’s tempered outlook and China’s reticence suggest a slog ahead, keeping volatility high.

The Fed’s caution makes sense given tariff-driven inflation risks, though it risks lagging if the economy softens. China’s rate cuts are a bold play, but their impact hinges on global trade dynamics. And in crypto, Bitcoin’s dominance is clear, though Ethereum’s slow burn could pay off long-term as its upgrades mature.

I’ll be watching how these threads—trade, policy, and innovation—unravel in the weeks ahead. For now, the markets are a crucible of uncertainty and opportunity, and investors are navigating it with a mix of boldness and caution that’s fascinating to witness.

 

Source: https://e27.co/navigating-market-volatility-bitcoin-hits-us99k-us-stocks-rally-amid-trade-talks-and-fed-decisions-20250508/

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