assets and the anticipation surrounding key macro events, numerous factors are driving market movements across equities, volatility, digital assets, fixed income, currencies, and commodities.
I’ll break down these drivers and catalysts, weaving in specific data and headlines to provide a thorough understanding of the current landscape.
Equities: Trade tensions and regional resilience
The equities market is experiencing a tug-of-war between geopolitical uncertainty and regional strength. Donald Trump’s confirmation of a 50 per cent tariff on copper imports, a figure double the anticipated 25 per cent, has sent ripples through global markets.
This bold move, aimed at protecting domestic industries, is poised to increase costs for US businesses reliant on copper, such as those in construction, electronics, and renewable energy. The tariff’s immediate effect has been to heighten uncertainty, with investors bracing for potential retaliatory actions from trading partners.
Yet, despite this turbulence, equities in the European Union are holding strong. The STOXX Europe 600 Index has climbed over two per cent in the past week, fuelled by robust economic data and optimism about the region’s recovery. Sectors like technology and industrials are leading the charge, suggesting that European markets are, for now, shrugging off the broader trade war concerns.
Meanwhile, UK exporters are reaping the benefits of a weaker pound, which has depreciated by roughly 1.5 per cent against the dollar recently. This currency movement has made British goods more competitive internationally, boosting companies like Rolls-Royce and AstraZeneca, which have reported increased export orders. The FTSE 100 has seen modest gains as a result, though the shadow of escalating trade tensions looms large.
In my view, the resilience of EU and UK equities is impressive, but it’s tempered by the risk that Trump’s tariff policies could spark a broader trade conflict, potentially derailing these gains. Investors should keep a close eye on how these dynamics unfold, as the balance between regional strength and global uncertainty remains delicate.
Volatility: A calm before the storm?
Turning to volatility, the VIX, often dubbed the market’s “fear gauge,” has eased to 16.8, down from recent highs, signalling a period of relative calm. This decline suggests that investors are less worried about immediate market swings, possibly reassured by positive economic signals or the resolution of some geopolitical tensions.
The S&P 500’s expected move of ±0.44 per cent further supports this picture of stability, indicating a tight trading range for the index. Additionally, the flat volatility curve, where short-term and long-term expectations align, hints at a lack of imminent stress. Historically, a VIX below 20 is considered a sign of market confidence, and at 16.8, we’re in that territory.
However, I’m skeptical that this tranquility will last. A flat volatility curve can be a double-edged sword; while it reflects calm now, it’s often a precursor to sharp corrections when underlying risks such as Trump’s trade policies or upcoming macroeconomic events resurface.
My take is that this lull is a breather rather than a new normal. Investors might be lulled into complacency, but the potential for sudden disruptions remains high. Keeping an eye on catalysts like the FOMC minutes or unexpected tariff escalations will be critical in the days ahead.
Digital assets: Stability and divergence
The digital asset space presents a fascinating contrast to traditional markets, striking a balance between stability and selective growth. Bitcoin has held steady around US$109,000, a sign of its maturing role as a store of value amid broader market uncertainty. This resilience is bolstered by continued inflows into Bitcoin ETFs like IBIT, which have drawn institutional interest seeking exposure to cryptocurrencies.
Meanwhile, Ethereum has posted gains, trading at approximately US$2,557, likely driven by developments in decentralised finance (DeFi) and anticipation of network upgrades. However, not all digital assets are thriving equally, ETHA, an Ethereum-based ETF, has dipped, highlighting the nuanced dynamics within this sector.
Beyond the price action, there’s notable activity in the crypto-treasury space. Binance co-founder Changpeng Zhao’s family office, YZi Labs, is backing The BNB Treasury Company, a new firm offering exposure to BNB with plans to list on a major US exchange. With BNB trading at US$662.43, this move highlights the growing convergence of cryptocurrency and traditional finance.
Similarly, Donald Trump Jr.’s investment in Thumzup Media Corp, a social media marketing firm adopting Bitcoin as a treasury asset at US$111,178 per coin, reflects a broader trend of corporate Bitcoin adoption. Thumzup’s stock, trading at US$9.50 per share with Trump Jr. holding 350,000 shares valued at nearly US$3.3 million, illustrates how even non-tech firms are embracing crypto strategies.
Analysts also suggest Bitcoin may face a short-term dip below US$107,000 before its next rally, potentially hitting a Fair Value Gap between US$106,500 and US$106,200. This correction could be a strategic play by “smart money” to grab liquidity before pushing prices to new highs.
Fixed income: Yields on the rise
In the fixed income market, US Treasury yields are climbing ahead of the pivotal 10-year auction, with the benchmark 10-year yield reaching approximately 4.35 per cent. This uptick reflects investor expectations of tighter monetary policy from the Federal Reserve, as well as anticipation of higher interest rates to combat lingering inflation pressures.
Rising yields have broad implications: they make bonds more attractive compared to equities, potentially triggering a shift in investor allocations, and they increase borrowing costs, which could slow economic growth. The upcoming US$39 billion 10-year Notes auction at 1700 GMT will be a litmus test; strong demand could signal confidence in the US economy, while weak demand might raise red flags about yield sustainability.
The rise in yields is a double-edged sword. It reflects a healthy adjustment to economic realities, but it also risks stifling growth if rates rise too quickly. The auction’s outcome will be a key indicator of market sentiment, and I’d wager that investors are bracing for a bumpy ride as they balance yield opportunities against broader uncertainties.
Currencies: Dollar’s modest strength
The US dollar is enjoying modest gains against its G10 peers, buoyed by rising Treasury yields and its safe-haven status amid trade war jitters. It’s particularly strong against the Japanese yen and the euro, where dovish central bank policies have weakened local currencies.
However, these gains are restrained by concerns over the economic fallout from Trump’s tariffs, which could dampen US growth and, in turn, the dollar’s appeal. The pound’s 1.5 per cent drop, as noted earlier, is another piece of this puzzle, driven by export dynamics rather than broad dollar strength.
I see the dollar’s current position as a reflection of short-term flight-to-safety flows rather than a sustained bullish trend. If trade tensions escalate, the dollar could face headwinds, but for now, it’s holding its ground. Currency markets are notoriously sensitive to macro shifts, so the FOMC minutes and auction results could quickly alter this trajectory.
Commodities: Copper in the spotlight
Commodities are feeling the heat of Trump’s trade policies, with HG copper surging to a near 30 per cent premium over London prices following the 50 per cent tariff announcement.
Copper, a critical input for industries like electronics and construction, is now at the centre of supply chain concerns, with US manufacturers warning of price hikes and disruptions. This premium reflects anticipated shortages and higher costs, though global supply chains may eventually adapt to blunt the tariff’s impact.
In my view, copper’s surge is a classic case of policy-driven volatility. While the short-term effects are clear, the long-term picture depends on how producers and consumers adjust. For now, it’s a stark reminder of how quickly commodities can become geopolitical pawns.
Macro events and data: What’s next?
Two major macro events loom large: the US 10-year Notes auction and the release of the FOMC minutes from the June meeting at 1800 GMT. The auction will gauge investor appetite for US debt, while the minutes will offer clues about the Fed’s stance on rates and inflation, critical drivers of market expectations.
Elsewhere, macro data paints a mixed picture. US consumer inflation expectations for June 2025 have dropped to three per cent, a sign of cooling pressures, but commodity price expectations remain elevated for gas (4.2 per cent), medical care (9.3 per cent), college education (9.1 per cent), and rent (9.1 per cent). Taiwan’s trade surplus, meanwhile, jumped to US$12.07 billion, driven by exports of tech products, though exports to Europe declined.
Headlines amplify the noise: Trump’s tariff threats extend beyond copper to pharmaceuticals (up to 200 per cent, delayed 12-18 months) and India (an extra 10 per cent for BRICS ties), with no extensions on country-specific levies due in August. He’s also mulling a new tariff on the EU over tech disputes. These moves keep markets on edge, and I’d argue they’re a wildcard that could overshadow even the Fed’s signals if they materialise.
My take: Navigating the uncertainty
In wrapping up, the current market environment is a complex tapestry of opportunity and risk. Trump’s trade policies are the loudest drumbeat, shaking up commodities and equities while leaving volatility deceptively calm.
Digital assets are carving out a niche of stability, fixed income is adjusting to policy shifts, and currencies are caught in the crosscurrents. The upcoming macro events will either clarify or complicate this picture, but for now, caution seems warranted.
The markets’ resilience strikes me: EU equities, UK exporters, and Bitcoin are holding firm, but I can’t shake the feeling that we’re one tariff tweet away from a sharper correction. Investors would do well to remain nimble, closely monitor the data, and be prepared for surprises in this unpredictable landscape.
Source: https://e27.co/inflation-trade-and-tariffs-a-mixed-macro-picture-20250710/
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”.
