August 12th, 2025

Why tonight’s inflation report could shake global markets to their core

July Consumer Price Index (CPI) data is a critical indicator of inflationary trends that could shape monetary policy and asset prices worldwide. The muted global risk sentiment reflects a cautious stance among investors, driven by uncertainty surrounding the inflation report and its implications for Federal Reserve policy.

Meanwhile, President Donald Trump’s executive order extending the China tariff deadline by 90 days into early November has provided a temporary reprieve, lifting sentiment in Asian markets. However, Wall Street’s cautious retreat from near-record highs, coupled with developments in cryptocurrencies like Ethereum and Bitcoin, underscores the intricate interplay of macroeconomic data, trade policies, and speculative assets in shaping market dynamics.

The US July CPI report, due tonight, is a focal point for markets, as it will provide insight into whether inflationary pressures are intensifying or moderating. Economists project a year-over-year headline inflation increase of 2.8 per cent, up 10 basis points from June’s 2.7 per cent, with core CPI, which excludes volatile food and energy prices, expected to rise 0.3 per cent month-over-month and 3.0 per cent annually. These figures are critical because they could influence the Federal Reserve’s decision on interest rates at its September meeting.

A softer-than-expected CPI reading could bolster expectations for a 25-basis-point rate cut, signalling that the Fed views inflation as manageable and is prioritising economic growth amid signs of a slowing labour market. Conversely, a higher-than-expected figure could dampen hopes for immediate rate cuts, as persistent inflation driven by tariffs and supply chain pressures might force the Fed to maintain its current stance. This uncertainty has kept investors on edge, contributing to a cautious tone in global markets.

The recent executive order from President Trump extending the China tariff deadline by 90 days has introduced a layer of optimism, particularly in Asian equity markets. The decision, while light on specifics, signals a temporary de-escalation in US-China trade tensions, which have been a significant driver of market volatility in 2025.

Asian equity indices opened higher this morning, reflecting relief that the immediate threat of escalated tariffs has been deferred. This extension aligns with earlier trade agreements, such as the May 12 deal that paused additional tariffs and set US tariffs on Chinese imports at 30 per cent, while China lowered its tariffs on US goods to 10 per cent.

However, the fluid nature of trade policy under the Trump administration keeps markets wary. A social media post from the White House on May 30 suggested that China may have violated the agreement, raising the specter of renewed tariffs. Such unpredictability underscores the fragility of the current truce and its potential to disrupt global trade and inflation dynamics.

Wall Street’s reaction to these developments has been subdued, with major indices like the S&P 500, NASDAQ, and Dow Jones retreating slightly from near-record levels, declining by 0.3 per cent, 0.3 per cent, and 0.5 per cent, respectively. This pullback reflects investor caution ahead of the CPI data, as a higher-than-expected inflation reading could pressure risk assets, including equities and cryptocurrencies.

US treasury futures have shown limited volatility, with yields remaining rangebound, indicating that bond markets are also in a wait-and-see mode. The US Dollar Index, up 0.3 per cent, has benefited from this cautious sentiment, as investors seek safe-haven assets amid uncertainty. Gold, however, retreated 1.4 per cent to US$3,351 per ounce after Trump clarified that bullion imports would be exempt from tariffs, reducing its appeal as a hedge against trade-related inflation.

In the commodity markets, Brent crude oil edged up 0.1 per cent, consolidating at higher levels despite a lack of significant news flow. The oil market’s stability reflects a balance between demand concerns and supply dynamics, with OPEC+ reportedly considering a larger-than-expected production hike.

This development could cap upside potential for oil prices, particularly if trade tensions resurface and dampen global demand. The interplay between tariffs, inflation, and commodity prices remains a critical factor for investors, as higher input costs could further fuel inflationary pressures, complicating the Federal Reserve’s policy calculus.

The cryptocurrency market, meanwhile, has emerged as a bright spot amid the broader caution. Ethereum has outperformed Bitcoin in year-to-date gains, rising 29 per cent to US$4,311.58 compared to Bitcoin’s 28 per cent increase to US$120,020.83. Ethereum’s surge past the US$4,000 mark, a level not seen since December 2024, reflects growing institutional demand and inflows into US spot Ethereum exchange-traded funds (ETFs).

These funds have attracted US$5 billion in net inflows over the past month, with total assets under management reaching US$20 billion since their launch in July 2024. Digital asset treasury companies (DATs) are also stockpiling ETH, emulating the strategy pioneered by Bitcoin advocate Michael Saylor. This institutional buying has bolstered Ethereum’s price, despite a 0.9 per cent daily decline, and highlights the increasing integration of cryptocurrencies into mainstream finance.

Bitcoin, while slightly trailing Ethereum in year-to-date performance, has also seen significant gains, climbing above US$122,000 over the weekend. The total cryptocurrency market capitalisation has surged to US$4.1 trillion, reflecting renewed investor enthusiasm. The correlation between Bitcoin and US equity markets has strengthened since mid-July, suggesting that cryptocurrencies are increasingly viewed as risk assets sensitive to macroeconomic developments.

Options market activity underscores this dynamic, with Bitcoin options open interest at US$43 billion and Ethereum at US$13.9 billion, approaching record highs. Traders are positioning for volatility around the CPI release, with elevated open interest indicating both hedging against downside risks and bets on further upside momentum. Short-call covering in Bitcoin options suggests reduced bearish sentiment, but implied volatility is expected to remain high until the CPI data provides clarity.

From my perspective, the current market environment reflects a delicate balance between optimism and caution. The extension of the China tariff deadline offers a reprieve, but the lack of clarity on trade policy keeps investors on edge. The CPI report will be a pivotal moment, as it could either reinforce expectations for a dovish Federal Reserve or signal persistent inflationary pressures that delay rate cuts.

The resilience of cryptocurrencies like Ethereum and Bitcoin, driven by institutional adoption and ETF inflows, highlights their growing role as alternative assets in a volatile macroeconomic landscape. However, their correlation with equities suggests that a negative surprise in the CPI data could trigger a broader sell-off in risk assets.

The Federal Reserve faces a challenging path. Two Fed governors, Michelle Bowman and Christopher Waller, dissented in the last meeting, advocating for rate cuts due to signs of a slowing labor market and their belief that tariff-driven inflation may be transitory.

However, Fed Chair Jerome Powell has emphasised a data-dependent approach, and a higher-than-expected CPI reading could strengthen the case for holding rates steady. The labor market, while still robust, shows signs of softening, with recent revisions slashing job growth figures for May and June to 19,000 and 14,000, respectively. These figures, the lowest two-month job growth since April 2021, add pressure on the Fed to balance its dual mandate of price stability and maximum employment.

Asian markets’ positive response to the tariff deadline extension underscores the global sensitivity to US trade policy. However, the risk of retaliation from trading partners, such as the EU’s potential €95 billion countermeasures, looms large.

Tariffs have already driven price increases in categories like furniture, auto parts, and electronics, contributing to inflation expectations of 4.4 per cent in the coming year, according to the University of Michigan’s consumer sentiment survey. Despite these concerns, consumer sentiment improved in July to 61.8, reflecting resilience in the face of tariff threats and robust retail sales data.

In conclusion, the US CPI report serves as a critical catalyst. The interplay of trade policy, inflation, and monetary policy will shape market sentiment in the coming weeks. Cryptocurrencies, particularly Ethereum, are carving out a significant role in this environment, driven by institutional demand and speculative interest.

However, the risks of higher inflation and renewed trade tensions could disrupt the current rally in risk assets. Investors should remain vigilant, balancing opportunities in equities and digital assets with the need to hedge against potential volatility. The next few days will be crucial in determining whether the current cautious optimism gives way to renewed confidence or a retreat into risk-off sentiment.

Source: https://e27.co/why-tonights-inflation-report-could-shake-global-markets-to-their-core-20250812/

Anndy Lian

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

August 1st, 2025

From dollars to digital coins: Tariffs shake the financial world

Solid earnings from megacap technology firms have failed to buoy broader market confidence, while movements in currencies, stock indices, Treasury yields, commodities, and even cryptocurrencies like Bitcoin reflect a pervasive sense of caution.

I will walk you through what’s driving this retreat, weaving in my perspective on its implications for investors and the global economy.

Trump’s tariffs: The spark of uncertainty

At the forefront of this market unease is President Trump’s tariff policy update. The White House has confirmed that a minimum global tariff of 10 per cent will persist, with countries enjoying trade surpluses with the United States facing steeper duties of 15 per cent or more. Specific nations have been hit harder: Canada now faces a 35 per cent levy, and Switzerland a hefty 39 per cent.

What amplifies the market’s anxiety is the lack of clarity on when these new rates will take effect. This ambiguity leaves businesses and investors grappling with unanswered questions about how these tariffs will reshape global trade flows, corporate profitability, and economic growth.

This tariff strategy reflects Trump’s ongoing commitment to addressing perceived trade imbalances, but it risks igniting a broader trade conflict. Tariffs of this magnitude could disrupt supply chains, particularly for countries like Canada, a key US trading partner, and Switzerland, known for its precision exports. The absence of a timeline only deepens the uncertainty, forcing companies to delay investment decisions and prompting markets to price in potential downside risks.

I see this as a double-edged sword: while it may bolster certain domestic industries, it could also inflate costs for consumers and businesses reliant on imported goods, potentially stoking inflation at a time when central banks are already on edge.

The immediate market response underscores this concern. US stock markets closed lower, with the S&P 500 slipping 0.4 per cent, the NASDAQ holding flat, and the Dow Jones dropping 0.7 per cent. These declines suggest that investors are prioritising the macroeconomic fallout of tariffs over other positive signals, a theme that recurs across asset classes.

Tech earnings: A bright spot overshadowed

Amid this tariff-induced turbulence, megacap tech firms have delivered robust earnings reports. Companies like Apple, Microsoft, and Amazon have showcased strong quarterly results, buoyed by resilient demand for technology products and services. Under normal circumstances, such performances might spark a rally in equity markets. They have failed to lift broader sentiment, a telling sign of the market’s preoccupation with larger forces.

In my view, this disconnect highlights a critical shift in investor psychology. While these tech giants demonstrate operational strength, their success cannot offset the uncertainty surrounding trade policies. Investors appear more focused on how tariffs might erode profit margins for multinational corporations, many of which rely on global supply chains.

For instance, higher duties on imported components could squeeze profitability, even for firms reporting solid earnings today. This suggests to me that the market is in a risk-off mode, where macroeconomic narratives trump individual company fundamentals.

Currency markets: Diverging reactions

Currency markets offer a mixed picture, reflecting the varied impacts of Trump’s policies. The US Dollar Index climbed 0.2 per cent, signaling a modest strengthening of the dollar. This uptick likely stems from its safe-haven status amid uncertainty, as well as expectations that tariffs might bolster US economic activity in the short term by favouring domestic production.

However, other currencies tell a different story. The Swiss franc edged lower, likely pressured by the 39 per cent tariff on Swiss exports, which could dent its export-driven economy. Meanwhile, the Canadian dollar held steady despite a 35 per cent levy, perhaps buoyed by its linkage to commodity prices, particularly oil.

The dollar’s modest gain suggests cautious optimism about US resilience, but the stability of the Canadian dollar surprises me given the tariff burden. It may indicate that traders see Canada’s energy exports as a buffer, though I suspect prolonged trade tensions could eventually weigh on the loonie. The franc’s decline, conversely, aligns with expectations, as Switzerland’s smaller, trade-dependent economy has less room to absorb such shocks.

Treasury yields and commodities: Inflation fears and demand worries

In the bond market, US Treasury yields rose, with the 10-year yield increasing 0.4 basis points to 4.374 per cent and the two-year yield climbing 1.7 basis points to 3.957 per cent. This upward movement stands out against the risk-off backdrop, where yields typically fall as investors seek safety in bonds.

To me, this suggests that markets are anticipating higher inflation, possibly driven by tariffs raising the cost of imported goods. It could also reflect concerns about the fiscal implications of trade policies, as reduced trade volumes might not offset the revenue gains Trump envisions.

Commodities present a contrasting narrative. Gold rose 0.5 per cent to US$3,290 per ounce, reinforcing its role as a safe-haven asset during uncertain times. I view this as a classic flight to safety, with investors hedging against both geopolitical risks and potential economic slowdowns.

Brent crude, however, fell 1.0 per cent to US$72.5 per barrel, driven by expectations of increased OPEC+ output following their upcoming meeting to set September quotas. This decline puzzles me somewhat: while higher supply makes sense, softening global demand due to trade tensions could also be at play, signalling broader growth concerns.

Jobs report: A looming test

The market’s gaze now shifts to the upcoming July jobs report, due Friday, which economists predict will show a more deliberate pace of hiring and an unemployment rate rising to 4.2 per cent. This data point carries significant weight.

A softening labor market could amplify fears of an economic slowdown, especially if paired with tariff-related headwinds. Conversely, a stronger-than-expected report might offer temporary relief, though I doubt it would fully dispel the tariff overhang.

In my opinion, this report will serve as a litmus test for US economic resilience. A tick up in unemployment could prompt the Federal Reserve to reconsider its rate stance, particularly if inflation pressures from tariffs persist. For investors, it’s a moment to watch closely, as it could either reinforce or challenge the current risk-off sentiment.

Bitcoin’s plunge: A crypto microcosm

The cryptocurrency market, particularly Bitcoin, mirrors this broader retreat. Bitcoin’s price dropped 2.18 per cent to US$115,621 over 24 hours, a decline fuelled by leveraged liquidations, technical breakdowns, and waning institutional enthusiasm. Between July 31 and August 1, over US$560 million in crypto positions were liquidated, with US$153 million tied to Bitcoin alone.

This cascade of forced selling intensified as Bitcoin breached the US$118,859 support level (the 23.6 per cent Fibonacci retracement of its 2024-2025 rally), turning it into resistance and accelerating technical selling.

Technical indicators reinforce this bearish turn. The Relative Strength Index (RSI) is at 49.44, and a MACD histogram at -630 signals weakening momentum, with the next support at US$114,500 (38.2 per cent Fibonacci) in sight. If breached, an additional US$149 million in liquidations could follow, per technical analysis data.

Beyond technicals, institutional demand has cooled, with spot Bitcoin ETF assets under management stagnating at US$151.48 billion despite US$47 billion in corporate purchases. Meanwhile, a shift toward altcoins has seen Bitcoin’s dominance dip 0.51 per cent, as capital flows to riskier crypto assets.

Coinglass data paints a stark picture: in one hour on August 1, US$284 million in liquidations hit the crypto market, with US$276 million from long positions, including US$91.6493 million for Ethereum and US$76.0871 million for Bitcoin. Over four hours, liquidations exceeded US$409 million. The Fear & Greed Index slid to Neutral (57) from Greed (62), capturing this sentiment shift.

To me, Bitcoin’s woes encapsulate the broader market’s struggles. The liquidation wave reflects overleveraged optimism meeting harsh reality, while the technical breakdown and institutional pullback suggest a maturing market reacting to global cues. I see this as a warning sign: if even speculative assets like Bitcoin falter, the risk-off mood may be deeper than it appears.

For me, the key takeaway is adaptability. Investors must brace for volatility, balancing safe havens like gold with selective exposure to resilient sectors. The interplay of inflation risks, trade disruptions, and labor market signals will shape the near-term outlook.

Source: https://e27.co/from-dollars-to-digital-coins-tariffs-shake-the-financial-world-20250801/

Anndy Lian

www.anndy.com

j j j

April 8th, 2025

Trump tariffs shake markets: Why gold soars as Bitcoin stumbles in 2025

Today’s market wrap offers a fascinating snapshot of a world grappling with shifting risk sentiments, trade tensions, and the evolving dynamics of traditional and alternative assets. Global risk sentiment has shown signs of improvement, with Asian shares rebounding after what was described as their worst day on record. Japan, in particular, has taken the lead in early trading gains, buoyed by optimism that it might receive preferential treatment in trade negotiations with US President Donald Trump’s administration.

Meanwhile, Trump’s unwavering stance on imposing additional tariffs—despite pleas from trading partners—has kept markets on edge, with the S&P 500 teetering on the brink of a bear market. This backdrop of uncertainty, coupled with fluctuating performances in Hong Kong and China amid threats of a 50 per cent tariff hike, paints a complex picture of global finance.

Add to that China’s central bank stepping in to bolster its sovereign fund for local stock purchases, and we’re witnessing a multifaceted tug-of-war between policy, sentiment, and economic fundamentals.

Let’s look into the specifics. The US markets have been a rollercoaster, with the MSCI US index slipping 0.2 per cent after a volatile session. Within that, the Communication Services sector stood out, climbing 1.0 per cent and offering a glimmer of resilience amid the chaos.

Treasury yields, which had recently pulled back sharply, rebounded with the 10-year yield rising 18.9 basis points to 4.18 per cent and the 2-year yield up 11.1 basis points to 3.76 per cent. This uptick suggests a market recalibrating its expectations, perhaps anticipating inflationary pressures or a shift in Federal Reserve policy signals.

The US Dollar index, meanwhile, edged up 0.2 per cent, stabilising after recent losses, while gold took a hit, dropping 1.8 per cent to hover around US$3,000 per ounce. This decline in gold, often seen as a safe-haven asset, could reflect profit-taking or a reaction to rising yields, which typically make non-yielding assets less attractive.

On the energy front, Brent crude fell 2.1 per cent to below US$65 per barrel, weighed down by tariff-related demand concerns and OPEC+ members increasing output—a double whammy for oil prices.

Across the Pacific, Asian equities have mostly climbed in early trading, with Japan’s optimism setting the tone. This bounce-back follows a brutal sell-off, and it’s encouraging to see markets attempting to find their footing. US equity index futures are also signalling a positive start, with an implied opening gain of 1.6 per cent. This suggests that, despite the tariff threats and economic downturn fears, investors are willing to bet on a recovery—at least for now.

But beneath this surface-level resilience lies a deeper story, particularly when we zoom in on two assets that have captured the world’s attention in recent years: gold and bitcoin. From November 2022 to November 2024, these two moved in a relatively tight correlation, with gold rising 67 per cent and bitcoin soaring nearly 400 per cent.

Analysts had long argued that their shared appeal as hedges against weak global currency policies would keep them aligned. Yet, in 2025, that relationship has begun to unravel, with gold up 16 per cent since late March and bitcoin down more than six per cent. What’s driving this divergence, and what does it mean for investors?

Bitcoin’s journey over the past few years has been nothing short of remarkable. Its meteoric rise—peaking above US$109,000 in January 2025—can be traced to a surge in institutional adoption. Heavyweights like BlackRock, VanEck, and Fidelity have deepened their stakes in the cryptocurrency market, lending it a level of legitimacy that was once unthinkable. Countries like El Salvador have gone further, integrating bitcoin into their financial systems, while the US government has floated plans for a strategic crypto reserve, signalling a potential shift in how nations view digital assets.

New financial products have also fuelled this growth. Take, for instance, CME Group’s Bitcoin Friday futures, which offer contracts as small as 1/50th of a coin, lowering the barrier to entry for retail investors. And just yesterday, Cboe Global Markets announced its new Cboe FTSE Bitcoin Index Futures, set to launch on April 28.

These cash-settled contracts, trading under the XBTF ticker, are designed to give traders more precise control over their bitcoin exposure without needing to hold the asset itself. Paired with Cboe’s recent options tied to bitcoin ETFs, these innovations are broadening the toolkit available to investors, reinforcing bitcoin’s staying power.

But the road hasn’t been smooth. Bitcoin faced significant sell pressure earlier today, dipping to US$74,604 before rebounding to above US$79,000. Even with this recovery, it’s down 3.1 per cent in the past 24 hours and nearly 30 per cent from its January peak. Analysts at IT Tech recently highlighted a spike in the Exchange Inflow Coin Days Destroyed (CDD) metric, which tracks the movement of older coins that have been dormant for extended periods.

A surge in CDD often signals that long-term holders are moving their assets to exchanges, potentially to sell. This could reflect profit-taking after bitcoin’s massive run-up or a reaction to broader market uncertainty, including Trump’s tariff threats and fears of an economic slowdown. Whatever the cause, this selling pressure underscores bitcoin’s volatility—a trait that sets it apart from gold, even as both assets vie for the “safe-haven” mantle.

Gold, by contrast, has followed a steadier path in 2025. Its 16 per cent gain since late March reflects a flight to safety amid tariff tensions and rising yields. Unlike bitcoin, gold benefits from its centuries-old reputation as a reliable store of value, especially when economic storm clouds gather. The recent drop to US$3,000 per ounce might suggest some profit-taking, but the broader trend points to sustained demand.

Rising Treasury yields, which typically pressure gold prices, haven’t derailed its upward trajectory, perhaps because investors see tariffs and geopolitical risks as outweighing the yield factor. This resilience highlights a key difference: while bitcoin thrives on institutional momentum and speculative fervour, gold draws strength from its stability and universality.

So, what’s my take on all this? As someone who’s spent years dissecting market trends, I see this divergence as a natural evolution of two assets with overlapping but distinct identities. Bitcoin’s pullback doesn’t diminish its long-term potential; the institutional backing and innovative products like the Cboe FTSE Bitcoin Index Futures suggest it’s here to stay.

But its volatility—exacerbated by tariff fears and profit-taking—reminds us that it’s still a young, dynamic asset prone to sharp swings. Gold, meanwhile, is playing its classic role as a steady hand in turbulent times, bolstered by its tangible nature and historical gravitas. The fraying correlation between the two isn’t a sign of weakness but rather a maturation of the market, where each asset is finding its own lane.

Looking ahead, the global risk sentiment will hinge on how Trump’s tariff policies unfold. Japan’s early gains signal hope for targeted trade deals, but the broader threat of levies on dozens of countries could keep markets jittery. The S&P 500’s flirtation with bear market territory is a red flag, and if economic downturn fears intensify, we could see more wild swings across asset classes. For now, Asian shares are offering a glimmer of optimism, and US futures suggest a willingness to rebound.

But with Brent crude sliding and China’s central bank stepping in, the stakes remain high. My job is to keep digging—tracking the data, questioning the narratives, and piecing together the story as it unfolds. Today’s market wrap is just one chapter in a saga that’s far from over, and I’ll be here, pen in hand, to chronicle what comes next.

Source: https://e27.co/trump-tariffs-shake-markets-why-gold-soars-as-bitcoin-stumbles-in-2025-20250408/