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Global markets in flux: Tariffs stir the pot, CPI cools the heat

Global markets in flux: Tariffs stir the pot, CPI cools the heat

Key points:

  • U.S. 25% tariffs on steel and aluminum, effective March 12, 2025, sparked EU and Canadian retaliation, escalating trade tensions. This tit-for-tat war injects uncertainty into fragile global risk sentiment, reminiscent of a high-stakes chess game shifting power with each move.
  • U.S. February CPI rose 0.2% month-on-month, 3.1% year-on-year, below expected 0.3% and 3.2%, easing stagflation fears. S&P 500 gained 0.5%, Nasdaq 1.2%, and VIX fell to 24.23, as softer inflation lifted risk sentiment despite tariff-driven cost concerns.
  • The 10-year U.S. Treasury yield rose 3.3 basis points to 4.312%, 2-year up 4.3 to 3.987%, narrowing the spread to 32.6 basis points. This shift hints at growth worries, but also a Fed pause on rate cuts, guided by data.
  • Europe’s DAX surged 1.6% despite tariff fears, while ECB’s Lagarde warned of inflationary shocks. Canada cut rates to 2.75%, bracing for a “new crisis” as U.S. tariffs threaten its export-heavy economy, showing resilience and vulnerability in equal measure.
  • Bitcoin rose 1.8% to $83,511.6, but recession and trade war fears linger. Ethereum’s ETH/BTC fell 1.5% to 0.022, RSI at 23.32, signaling a persistent downtrend. Crypto reflects broader risk asset struggles amid global uncertainty.
  • Tariffs could spike steel prices 10-20%, raising costs, offset by softer CPI and Fed stability. Gold up 0.6%, Brent crude 2%, yet global risk sentiment teeters between trade war risks and hope for stabilization as central banks adapt.

 

The situation today feels like a high-stakes chess game, with each move—whether it’s a tariff imposition or a central bank decision—shifting the balance of power and sentiment. The escalation of trade tensions, sparked by the US’s imposition of 25 per cent tariffs on all steel and aluminium imports effective March 12, 2025, has sent shockwaves through global risk sentiment, and it’s a story worth unpacking in detail.

Let me offer my perspective on what’s happening, grounded in the facts and data at hand, and explore what this means for markets, economies, and even the average person watching from the sidelines.

The US tariffs, which hit the ground running yesterday, mark a bold escalation in President Donald Trump’s trade agenda. This isn’t a new playbook—during his first term, Trump levied similar duties on steel and aluminium in 2018, only to later exempt Canada and Mexico in 2019 after negotiations.

This time, though, the scope feels broader and the rhetoric sharper. The immediate retaliation from the European Union, with plans for tariffs on €26 billion (US$28.3 billion) of American goods, and Canada’s counterpunch of US$21 billion in tariffs on US exports, signal that trading partners aren’t backing down.

This tit-for-tat dynamic is classic trade war territory, and it’s injecting a heavy dose of uncertainty into an already fragile global risk sentiment. From my vantage point, it’s clear that markets are wrestling with two competing forces: the fear of economic disruption and the hope that cooler heads—or at least softer data—might prevail.

Take the US February CPI data released yesterday, for instance. It came in at +0.2 per cent month-on-month and 3.1 per cent year-on-year, undercutting expectations of 0.3 per cent and 3.2 per cent, respectively. The softer print, driven largely by weaker services inflation, was a sigh of relief for investors who’ve been jittery about stagflation—a toxic mix of stagnant growth and rising prices.

In a world where Trump’s tariffs could easily stoke inflation by driving up the cost of imported goods, this data offered a counter-narrative: maybe price pressures aren’t as relentless as feared. The market reaction was telling. The S&P 500 climbed 0.5 per cent, buoyed by mega-cap tech stocks that have become the darlings of this volatile era, while the Nasdaq jumped 1.2 per cent.

The VIX, often dubbed Wall Street’s “fear index,” slid to 24.23 from 26.92, marking its second day of easing. It’s not a full-on celebration—24.23 is still elevated compared to calmer times—but it’s a sign that the CPI data gave risk sentiment a much-needed lift.

Yet, beneath the surface, the bond market told a slightly different story. The 10-year US Treasury yield ticked up 3.3 basis points to 4.312 per cent, while the 2-year yield rose more sharply by 4.3 basis points to 3.987 per cent. This narrowed the yield spread between the two to 32.6 basis points, a subtle shift that hints at shifting expectations about growth and inflation.

Typically, a narrower spread can signal concerns about economic slowdown, but in this case, it might also reflect a market pricing in the Fed’s likely pause on rate cuts. The softer CPI didn’t dismantle the narrative of a patient Federal Reserve, which has been signaling it’s in no rush to ease policy further unless growth takes a serious hit. For now, the Fed seems content to let the data guide its hand, and investors are hanging on every number.

Across the Atlantic, Europe’s response to the tariff saga has been a mix of resilience and defiance. The DAX surged 1.6 per cent, leading a broader recovery in European indices that had been battered by tariff fears earlier this week. It’s a fascinating contrast: while the EU is gearing up to hit back at the US, its markets are finding some footing, perhaps buoyed by the US inflation reprieve and a sense that trade fragmentation, while disruptive, isn’t an immediate death knell.

ECB President Christine Lagarde’s comments yesterday added another layer to this narrative. She warned that large shocks—like these tariffs—could amplify inflationary risks and lead to “more disruptive relative price changes.” It’s a sober reminder that Europe isn’t just a bystander in this trade war; it’s a player with its own vulnerabilities, especially given its export-driven economies like Germany.

Meanwhile, in Canada, the Bank of Canada (BoC) made its move, trimming its key policy rate by 25 basis points to 2.75 per cent, right on cue with market expectations. But the tone from the BoC was anything but routine. Governor Tiff Macklem didn’t mince words, cautioning about “a new crisis” as the central bank braces for the fallout from US tariffs. Canada, which sends about 75 per cent of its exports to the US, is uniquely exposed here.

Steel and aluminium tariffs could hammer its industrial sector, and the ripple effects—think weaker growth, a softer loonie, and higher import costs—could test the BoC’s resolve. From my perspective, this rate cut feels like a preemptive strike, a way to cushion the economy against what’s coming. But Macklem’s crisis talk suggests the bank knows it might need to do more if the trade war digs in.

Then there’s the crypto angle, which adds a wild card to this already complex picture. Bitcoin climbed 1.8 per cent to US$83,511.6 early today, catching a tailwind from Wall Street’s overnight rebound. It’s a modest recovery from its weakest levels this year, but the bigger story is what’s holding it back: recession fears and trade war jitters. Trump’s tariffs, now in effect, and his promise of reciprocal duties by April 2—potentially targeting Europe with even higher rates—keep markets on edge.

The idea that these policies could choke global trade, juice US inflation, and tip the economy into recession isn’t just theoretical; it’s a scenario traders are pricing in. Trump and his team have brushed off these concerns, framing any turbulence as a necessary growing pain for their agenda. But their flip-flopping—like granting Canada and Mexico a temporary reprieve on some tariffs—only fuels the uncertainty.

Ethereum’s story is even bleaker. The ETH/BTC pair, which measures Ether’s strength against Bitcoin, slumped over 1.5 per cent to 0.022, its lowest since May 2020. That’s part of a brutal multi-year slide—down more than 85 per cent from its 2017 peak of 0.156. The two-week ETH/BTC chart shows the relative strength index (RSI) at a record low of 23.32, deep in oversold territory.

Normally, an RSI below 30 hints at a potential bounce, but Ether’s relentless decline suggests the downtrend has legs. As a journalist, I see this as a microcosm of broader market dynamics: risk assets, even speculative ones like crypto, are struggling to find solid ground amid all this noise.

Stepping back, what strikes me most is the interplay between fear and hope in these markets. The US tariffs are a tangible threat—steel and aluminium prices could spike 10-20 per cent based on 2018 precedent, jacking up costs for everything from cars to construction. Jobs might tick up in those sectors, but downstream industries could bleed positions as costs rise.

Canada’s retaliation, targeting US$21 billion in US goods, and the EU’s US$28.3 billion counterstrike, amplify the stakes. Yet, the softer US CPI and the Fed’s steady hand offer a counterweight, a glimmer that maybe this won’t spiral into chaos. Gold’s 0.6 per cent uptick reflects safe-haven buying, but Brent crude’s 2 per cent jump on gasoline demand shows there’s still some economic pulse out there.

We’re in a precarious moment. Global risk sentiment is fragile because it’s caught between real economic risks and the faint hope of stabilisation. Trump’s tariffs could be a negotiating tactic—he’s hinted at flexibility before—but if they stick, the damage could be profound. Central banks like the BoC and ECB are on high alert, ready to adapt, but their tools might not be enough if trade fragmentation deepens. For investors, it’s a tightrope walk: chase the rallies in tech or hunker down with gold and bonds.

“For the rest of us, it’s a waiting game—watching how this chess match plays out, move by unpredictable move.” — Anndy Lian

 

 

 

Source: https://e27.co/global-markets-in-flux-tariffs-stir-the-pot-cpi-cools-the-heat-20250313/

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

Global markets in flux: Trump’s tariff pause and bitcoin reserve shake sentiment

Global markets in flux: Trump’s tariff pause and bitcoin reserve shake sentiment

There is a whirlwind of events shaping the financial landscape on March 7, 2025. Today’s developments—ranging from tariff flip-flops to monetary policy shifts and the intriguing evolution of cryptocurrency as a national asset—offer a fascinating glimpse into the interconnected forces driving risk sentiment worldwide. The question posed to me is to offer my point of view on this complex tapestry of economic and political threads, and I’m eager to dive in with a detailed, human perspective grounded in facts and careful analysis.

Let’s start with the tariff saga that’s once again grabbing headlines. President Donald Trump’s decision to pause tariffs on Canadian and Mexican goods covered by the USMCA is a notable twist in his administration’s trade policy. This move, announced just days after imposing steep 25 per cent tariffs on most imports from these North American neighbours, reflects a pattern of unpredictability that’s keeping markets on edge.

The initial levies sparked swift retaliation from Canada, Mexico, and even China, igniting fears of a broader trade war. US equity markets felt the heat, with the S&P 500 sliding 1.8 per cent and the Nasdaq dropping 2.6 per cent as investors grappled with the uncertainty. The tech sector, in particular, seems to be bearing the brunt, not just from tariff jitters but also from disappointing guidance that’s failed to match the sky-high expectations set by Wall Street.

Add to that the intensifying global race in artificial intelligence—where US tech giants face stiffer competition from abroad—and it’s no surprise that risk appetite is faltering.

From my perspective, Trump’s tariff strategy is a double-edged sword. On one hand, it’s a bold attempt to flex American economic muscle and address trade imbalances, a cornerstone of his political brand. The pause on USMCA-compliant goods suggests a pragmatic nod to the importance of North American trade ties, perhaps in response to pressure from domestic industries reliant on these supply chains.

Yet, the broader market reaction—US stocks erasing post-election gains and Asian equities following suit—underscores the fragility of investor confidence. The whipsaw effect of these policy shifts is palpable, and I can’t help but wonder if this unpredictability is eroding the very economic stability Trump aims to bolster.

Businesses crave certainty to plan investments, and this rollercoaster approach risks stunting growth rather than spurring it. The International Monetary Fund’s warning of a “significant adverse economic impact” on Canada and Mexico if these tariffs persist only amplifies the stakes.

Turning to the bond market, the Treasury yield movements offer another layer of insight. The 10-year Treasury yield ticked up 3 basis points to 4.29 per cent, signalling lingering concerns about inflation and the fiscal implications of Trump’s policies. Meanwhile, the 2-year yield dipped slightly to 3.97 per cent, hinting at expectations of a more cautious Federal Reserve stance in the near term.

The narrowing yield curve is something I’ve been watching closely—it’s a classic indicator of economic unease, suggesting investors are bracing for slower growth ahead. The US Dollar Index’s fourth consecutive day of decline, its longest losing streak since September, further reflects a market reassessing the greenback’s strength amid this turbulence. For me, this currency softness ties directly to the tariff uncertainty; if trade partners retaliate and global demand shifts, the dollar’s dominance could face a real test.

Commodities, too, are telling a story of cautious recalibration. Gold, often a haven in times of strife, eased 0.1 per cent as higher Treasury yields and profit-taking tempered its allure. Brent crude, hovering just above US$70 per barrel with a modest 0.2 per cent gain, seems stuck in a holding pattern, caught between geopolitical tensions and lackluster demand signals. I see these muted movements as a sign that traders are waiting for clearer cues—perhaps tonight’s nonfarm payrolls data will provide the spark they need to take a firmer stance.

The European Central Bank’s decision to cut its deposit rate by 25 basis points to 2.50 per cent was hardly a surprise, but its messaging caught my attention. Describing monetary policy as “becoming meaningfully less restrictive” feels like a deliberate signal to markets that the ECB is ready to support a sluggish Eurozone economy.

The EUR/USD’s brief flirtation with a four-month high of 1.0854 before settling at 1.0784 suggests traders are still digesting the implications. European equities closing flat tells me there’s no euphoria here—just a steady, wait-and-see approach as the continent navigates its own challenges, including potential spillovers from US trade policies.

In Asia, the narrative shifts to wages and monetary policy, with Japan’s labor unions demanding a 4.5 per cent base pay rise for 2025—the highest in 32 years. This is a big deal. Inflation has clearly taken root, and workers are pushing back, which strengthens the case for the Bank of Japan to tighten policy further. I’ve long argued that Japan’s decades-long battle with deflation might finally be turning a corner, and this wage hike demand is a concrete step in that direction.

Asian equity indices, however, are a mixed bag, with Japan’s shares tumbling nearly two per cent while Chinese stocks retreat from a four-year high. The shadow of US tariff uncertainty looms large here, and I suspect regional markets will remain jittery until Trump’s trade stance crystallises.

Then there’s the cryptocurrency angle, which has injected a wild card into this already volatile mix. Bitcoin’s four per cent drop to US$86,000 after Trump’s executive order on a strategic reserve disappointed markets is a fascinating subplot. The order, paired with a stockpile of digital assets like XRP, Ether, SOL, and ADA, marks a historic acknowledgment of crypto’s role in national strategy.

But the caveat from White House crypto czar David Sacks—that no taxpayer funds will be used to buy these assets, relying instead on forfeiture proceedings—dashed hopes of a government-led buying spree. I find this pragmatic yet underwhelming. It’s a symbolic win for crypto advocates, but without active accumulation, the immediate market impact is limited. The slump in Bitcoin and other tokens reflects that reality.

South Korea’s response to this US move adds another dimension. At a seminar hosted by the Democratic Party, experts urged the country to integrate Bitcoin into its national reserves and issue a won-backed stablecoin. This isn’t just financial strategy—it’s geopolitical positioning. With the US, Switzerland, and Japan already advancing crypto adoption, South Korea risks falling behind if it doesn’t act.

The timing is critical, too, with a potential snap presidential election looming if President Yoon Suk Yeol’s impeachment holds. I see this as a smart play: a Bitcoin reserve could diversify South Korea’s assets and bolster economic resilience, while a stablecoin could enhance its digital finance ecosystem. The global momentum is undeniable—Switzerland’s “Crypto Valley” and Japan’s yen-backed stablecoins are proof—and South Korea’s tech-savvy economy is well-suited to join the fray.

So, what’s my overarching take? We’re in a moment of profound transition. Geopolitical uncertainty, driven by Trump’s tariff dance and crypto ambitions, is clashing with traditional economic signals like yields, wages, and central bank moves. Markets are understandably skittish, and risk sentiment is likely to stay volatile until there’s more clarity—perhaps from tonight’s payrolls data or Trump’s upcoming White House Crypto Summit.

Personally, I’m skeptical of tariff-heavy policies delivering long-term gains; the collateral damage to trade partners and domestic confidence could outweigh the benefits. On crypto, I’m cautiously optimistic—governments embracing digital assets is a game-changer, but execution matters more than intent. For now, I’ll keep my eyes peeled and my notebook ready, because this story is far from over.

 

Source: https://e27.co/global-markets-in-flux-trumps-tariff-pause-and-bitcoin-reserve-shake-sentiment-20250307/

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 in flux: Navigating economic uncertainty

Markets in flux: Navigating economic uncertainty

On February 4, 2025, global markets faced significant volatility following President Donald Trump’s announcement of new trade policies affecting Canada, Mexico, and China. The weekend’s initial shock sent ripples of instability across international markets, prompting a swift defensive posture among investors. However, a subsequent policy pivot, offering a one-month delay for Canada and Mexico alongside hints of upcoming dialogue with Chinese President Xi Jinping, momentarily stabilised markets, though the air remained thick with uncertainty.

This oscillation in policy has profound implications beyond mere market indices or commodity fluctuations; it fundamentally alters the landscape of international trade and economic steadiness. The reaction was swift: MSCI US dipped by 0.5 per cent, with the tech sector taking the hardest hit at a 1.7 per cent decline, a testament to how intertwined these industries are with global supply chains, especially those in Asia.

The US Dollar Index, after an initial spike due to trade policy fears, retreated by 0.6 per cent, signalling a sigh of relief in the financial community. Concurrently, gold reached unprecedented heights, climbing by 0.6 per cent, as investors flocked to the safety of traditional havens amid the economic tumult. This surge in gold prices serves as a stark reminder of how quickly investor sentiment can shift towards security in uncertain times.

The bond market wasn’t immune to these shifts either. US Treasuries experienced a yield increase, with the two year yield rising by 5.2 basis points to 4.25 per cent and the 10-year yield by 1.6 basis points to 4.55 per cent. Such movements reflect a nuanced investor outlook, anticipating potential inflationary pressures or shifts in economic policy stemming from these protectionist measures.

The impact wasn’t confined to US shores. Globally, Brent crude oil prices fell by 1.0 per cent in response to the delayed trade policies affecting Canada and Mexico, major US oil suppliers, showcasing how even short-term policy adjustments can sway commodity markets worldwide.

Navigating the stormy seas of Trump’s tariff wars

In Asia, there was a glimmer of optimism with the Hang Seng China Enterprises Index (HSCEI) rising by 3.3 per cent in early trading, buoyed by the prospect of diplomatic talks between Trump and Xi. Yet, this positive outlook was tempered by the fact that Chinese markets were closed for the Lunar New Year, potentially masking a more complex reaction had trading been active.

The cryptocurrency sector also reflected this broader market unease. Bitcoin plummeted to a three-week low at US$91,441.89, signalling widespread market jitters. Meanwhile, Ethereum experienced a dramatic 25 per cent surge, juxtaposed with an unexpected endorsement from Eric Trump, highlighting the unpredictable nature of digital currencies and their susceptibility to political influences.

Amidst this economic turbulence, Federal Reserve officials like Raphael Bostic from Atlanta and Susan Collins from Boston have advocated for a cautious approach to monetary policy. Bostic’s reluctance to rush into further rate cuts, coupled with Collins’s focus on stable inflation expectations despite trade-induced price spikes, underscores a broader strategy for maintaining economic equilibrium.

As we stand at this economic juncture, the outcome of these policy manoeuvres remains uncertain. They could herald a period of stabilisation if trade negotiations succeed, or they might usher in an era of protectionism, disrupting global supply chains, inflating consumer prices, and possibly inciting retaliatory actions from impacted nations.

The current market dynamics are not merely reactions to policy but are reflective of a complex geopolitical tapestry. Observers, investors, and policymakers will keenly watch how these developments unfold, potentially shaping the global economic narrative for years to come. The need for strategic foresight, adaptability, and above all, constructive dialogue, has never been more critical in navigating this uncertain economic landscape.

 

Source: https://e27.co/markets-in-flux-navigating-economic-uncertainty-20250204/

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