The overriding theme in today’s markets is a subdued global risk sentiment, driven largely by President Trump’s aggressive tariff threats. He’s put the world on notice, warning of 100 per cent “secondary” tariffs on any country that continues to do business with Russia unless there’s a ceasefire in Ukraine within 50 days.
This bold move is a clear escalation in the US’s strategy to pressure Russia into de-escalating its ongoing conflict, but it’s also a high-stakes gamble that could backfire by targeting nations that trade with Russia, potentially including major players like China, India, or even some European countries.
Trump is risking a disruption of global supply chains and a wave of retaliatory measures. The European Union isn’t sitting idly by; it’s already gearing up to deepen ties with other affected nations, such as Canada and Japan, to forge a coordinated response. This could mean joint diplomatic efforts or even counter-tariffs, adding yet another layer of complexity to an already tense situation.
From my vantage point, this feels like a geopolitical chess game where every move could either stabilise or destabilise the global economy further. The 50-day deadline adds urgency, and I suspect markets will remain jittery as we approach that critical juncture.
Despite this uncertainty, US equities have managed a modest rebound, which tells me investors are trying to find a silver lining amid the storm clouds. The S&P 500 eked out a 0.1 per cent gain, the NASDAQ climbed 0.3 per cent, and the Dow Jones rose 0.2 per cent. These aren’t blockbuster numbers by any stretch, but they suggest a cautious optimism or perhaps a calculated bet that the tariff threats won’t fully materialise.
I think part of this resilience stems from faith in the Federal Reserve’s ability to navigate inflationary pressures or hope that diplomatic backchannels might soften the blow. However, the muted gains also hint at lingering unease. Investors are clearly hedging their bets, and I wouldn’t be surprised if we see sharper swings in the coming weeks as more details emerge about the tariff plans and international reactions.
Switching gears to the bond markets, US treasuries took a hit, with yields ticking higher in a way that’s caught my attention. The 10-year yield rose 2.4 basis points to 4.433 per cent, while the two-year yield edged up 1.5 basis points to 3.900 per cent.
This uptick was partly influenced by a curve-steepening selloff in Japanese government bonds, which seems to have set a ripple effect across global sovereign debt markets. With no major US economic data releases to anchor sentiment, external factors like Japan’s bond dynamics are taking the lead.
A steepening yield curve typically signals expectations of stronger growth or rising inflation, but in this context, I see it more as a reflection of investor nerves about the tariff fallout. Higher yields could make borrowing more expensive and weigh on growth if the trend continues, something I’ll be watching closely as the situation unfolds.
Then there’s the US Dollar Index, which is on a tear with an eight-day winning streak—the longest since February, adding a 0.2 per cent gain to its run. At first glance, this strength makes perfect sense: the dollar often shines as a safe haven when geopolitical risks flare up, and Trump’s tariff saber-rattling fits that bill.
But I think there’s more to it. The US economy still looks relatively robust compared to its peers, and the prospect of higher interest rates here versus, say, Europe or Japan is keeping the greenback in demand.
From my perspective, this dollar rally could amplify the tariff impact by making US exports pricier and imports cheaper, potentially widening trade imbalances. It’s a double-edged sword that could either bolster US leverage or stoke further tensions with trading partners.
Commodities, meanwhile, are painting a mixed picture that’s worth digging into. Gold, the classic refuge in times of trouble, slipped 0.4 per cent to US$334 per ounce, which surprised me given the geopolitical backdrop. I suspect profit-taking is at play here, investors cashing in after a strong run rather than abandoning the safe-haven narrative altogether.
Brent crude, on the other hand, dropped 1.6 per cent to US$69 per barrel, and that feels more tied to fundamentals. If tariffs spark a trade war or slow global growth, demand for oil could soften, and that’s likely what’s spooking the energy markets.
I’d wager we’re also seeing some speculative unwinding after recent volatility. Both moves underscore how sensitive commodities are to shifts in risk sentiment, and I’ll be keeping an eye on whether these declines deepen or reverse as tariff news evolves.
All of this brings us to two pivotal events on the horizon: today’s US inflation data and the start of major bank earnings reports. The inflation numbers are the big ones, everyone’s eager to see if Trump’s tariff threats are already pushing up final goods prices. If we get a hot reading, say above the expected 2.6 per cent year-over-year for the Consumer Price Index, it could jolt the Fed into a more hawkish stance, maybe even accelerating rate hikes.
That’d be a game-changer for equities, bonds, and the dollar. On the flip side, a tame report might ease some nerves and buy time for diplomatic solutions. As for the bank earnings, from giants like JP Morgan and Goldman Sachs, I’ll be scouring their outlooks for clues about how they’re bracing for tariff risks or higher rates.
Any whiff of caution could drag sentiment lower, while upbeat forecasts might fuel a rally. My gut tells me these reports will be a mixed bag, reflecting the uncertainty we’re all grappling with.
Now, let’s talk about the wild card in this whole saga: cryptocurrencies. Bitcoin just smashed through US$120,000, peaking at US$122,404 with a 2.8 per cent daily gain and a 10 per cent surge over the past week. This rally, turbocharged since Trump’s election win, is riding a wave of excitement about new US legislation that could cement America’s status as the “crypto capital.”
Lawmakers in the Republican-led House are set to debate three bills this week: the Genius Act, the Digital Asset Market Clarity Act, and the Anti-CBDC Surveillance State Act. These could streamline regulations, clarify stablecoin rules, and push digital assets deeper into mainstream finance. Ether hit US$3,081.94, its highest since February, and XRP jumped 2.7 per cent, lifting the crypto market’s total value to US$3.8 trillion, per CoinMarketCap data.
I see this as a fascinating counterpoint to the tariff gloom, a sign that some investors are betting big on a parallel financial system less tethered to traditional risks. If these bills pass, we could see crypto’s momentum accelerate, though I’m wary of a pullback if regulatory hopes fizzle.
My take on all this is that the tariff headlines are casting a long shadow, muting global risk appetite and forcing markets into a defensive crouch. There’s resilience too: US stocks are holding up, the dollar’s flexing its muscles, and crypto’s soaring on its own trajectory.
I think the next few weeks will be defining. If the tariff threats escalate into action and inflation spikes, we could see a sharper risk-off move, think falling equities, surging yields, and a choppier dollar. But if cooler heads prevail, or if the Fed signals steady support, markets might muddle through with minimal damage.
The crypto boom adds an intriguing twist; it’s almost like a barometer of faith in innovation amid chaos. For now, I’d advise investors to stay nimble, watch the data, and brace for volatility because in this environment, the only certainty is uncertainty itself.
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”.
