The tariff gambit: Markets retreat, crypto finds new footing

The tariff gambit: Markets retreat, crypto finds new footing

The United States announced reciprocal tariffs targeting 14 countries ahead of a critical July 9, 2025, deadline. This move, which marks the end of a 90-day grace period, has reignited fears of a trade war, sending shockwaves through equity markets, bond yields, and commodity prices.

At the same time, the cryptocurrency market, particularly Bitcoin and related investments, presents a mixed picture, with stagnation in Bitcoin’s price contrasted with significant gains in crypto infrastructure stocks like Coinbase.

I’ll weave together the facts, data, and market reactions to offer a detailed perspective on these developments and their broader implications.

The tariff announcements: A bold move with global repercussions

On July 7, 2025, President Donald Trump took to social media to announce a sweeping set of reciprocal tariffs aimed at 14 countries with which the United States maintains significant trade deficits. Effective August 1, 2025, these tariffs build upon an existing 10 per cent baseline rate and introduce additional duties on transshipped goods, which are products rerouted through third countries to evade tariffs.

The announcement included a stern warning: any retaliatory measures by the affected nations would trigger a further 25 per cent increase in tariffs. Among the standout figures are the 25 per cent tariffs imposed on imports from Japan and South Korea, two of America’s closest allies and major exporters of automobiles, electronics, and industrial goods.

The list of targeted countries also includes Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, Serbia, Cambodia, and Thailand.

Letters sent to the leaders of these nations outlined the new rates and hinted at flexibility, noting that tariffs could be adjusted “upward or downward” based on future bilateral relations. This ambiguity has only heightened the uncertainty surrounding the policy’s long-term impact.

The European Union emerged as a positive outlier in this saga. Unlike the 14 targeted nations, the EU did not receive a tariff letter, and reports indicate that a preliminary deal may be struck this week to lock in a 10 per cent tariff rate beyond the August 1 deadline. This temporary reprieve, as negotiations for a permanent agreement continue, has offered a glimmer of hope amid an otherwise tense situation.

This tariff strategy reflects a calculated gamble by the US administration to address trade imbalances and assert economic dominance. However, it risks alienating key allies like Japan and South Korea, whose economies could suffer significant blows.

The threat of retaliation looms large, and the potential for a tit-for-tat escalation could unravel years of trade cooperation. The EU’s apparent exemption, meanwhile, suggests a pragmatic approach to preserving critical transatlantic ties, though the outcome of ongoing talks remains uncertain.

Market reactions: A retreat from highs and a flight to safety

The financial markets wasted no time reacting to the tariff news. US tariff hikes spark global market turmoil while crypto infrastructure stocks surge, highlighting shifting investor priorities and risks equities, which had been riding a wave of optimism to all-time highs, pulled back sharply. The S&P 500 and Nasdaq each declined by 0.8 per cent, while the Dow Jones Industrial Average shed 1.0 per cent.

Megacap stocks, think tech giants and multinationals with heavy exposure to global trade, bore the brunt of the losses, reflecting their vulnerability to disruptions in international supply chains and higher import costs.

In the bond market, yields ticked upward as investors reassessed risk. The two-year US Treasury note rose by two basis points to 3.895 per cent, and the 10-year yield climbed 4 basis points to 4.39 per cent. This uptick suggests a market bracing for inflationary pressures, as tariffs could drive up the cost of imported goods and ripple through the US economy.

The US Dollar Index, a barometer of the greenback’s strength against major currencies, gained 0.3 per cent, signalling a flight to safety amid the uncertainty.

Commodities also felt the heat. Brent crude oil prices rose 1.0 per cent to US$71 per barrel, bolstered by Saudi Arabia’s unexpected decision to hike prices for its main crude grade in Asia. This move, combined with geopolitical tensions tied to the tariffs, has stoked fears of tighter energy markets in the near term. Gold, a traditional safe haven, held steady at US$3,337 per ounce, offering a rare pocket of stability in an otherwise volatile landscape.

Globally, the picture was mixed. Asian equity indices edged higher in early trading, buoyed by hopes of additional negotiations to soften the tariffs’ blow. However, US equity index futures pointed to a lower open, suggesting that Wall Street’s retreat may deepen in the days ahead.

These market movements underscore the fragility of the current economic recovery. The tariff announcement has punctured the bullish sentiment that had propelled stocks to record levels, exposing the interconnectedness of global markets. The rise in bond yields and the dollar’s strength hint at investor unease, while the oil price jump highlights the broader inflationary risks at play.

For everyday consumers, this could translate to higher prices at the pump and the checkout counter—a tangible reminder of how distant trade policies hit home.

Bitcoin and crypto markets: A tale of stagnation and surprising resilience

Amid the tariff-induced turmoil, the cryptocurrency market offers a fascinating subplot. Bitcoin, the bellwether of the cryptocurrency world, has struggled to regain its momentum after reaching a peak of US$111,000 in May 2021. Since then, it has hovered stubbornly below the US$100,000 mark, with recent trading showing a 1.5 per cent decline over 24 hours.

Tom Lee, managing partner at Fundstrat Global Advisors, attributes this stagnation to profit-taking by early investors. “We have clients that have bought Bitcoin at US$100,” Lee remarked on CNBC’s ETF Edge. “They don’t care if Bitcoin goes to a million; they are probably sellers at around US$100,000.”

This insight resonates with me. Bitcoin’s meteoric rise over the years has created a cohort of holders sitting on astronomical gains. For them, cashing out at US$100,000—still a staggering return—makes sense, especially in a climate of heightened global risk. The psychological barrier of that six-figure threshold, coupled with profit-taking, seems to be capping Bitcoin’s upside for now.

Yet, the broader crypto ecosystem tells a different story. Coinbase, a leading digital assets infrastructure provider, has defied Bitcoin’s lethargy with a remarkable 40 per cent surge in June 2025—its best month since November 2024.

The stock doubled in the second quarter, making it the only S&P 500 constituent to achieve that feat, and capped the period with its first three-month rally since 2023. Several catalysts have fueled this rally: the Senate’s passage of the Genius Act, the successful IPO of Circle, and growing enthusiasm for stablecoins.

The Genius Act, a bipartisan effort to regulate cryptocurrencies, promises to bring clarity and legitimacy to the industry, potentially unlocking greater institutional investment. Circle’s IPO, which raised US$1.2 billion and valued the company at US$12 billion, has spotlighted the rise of stablecoins like USDC, now boasting a market cap exceeding US$50 billion.

Stablecoins, pegged to assets like the US dollar, offer a hedge against crypto volatility, making them increasingly attractive as Bitcoin wavers.

Then there’s MicroStrategy, the self-styled “largest Bitcoin treasury company.” Between April 7 and June 29, 2025, it snapped up 69,140 Bitcoins for US$6.77 billion, at an average price of US$97,906 per coin. Its total holdings now stand at 597,325 Bitcoins, acquired for US$42.4 billion at an average of US$70,982 each—currently worth US$64.71 billion.

Yet, in a rare break from its aggressive buying, MicroStrategy paused purchases during the week of June 30 to July 6, the first such hiatus since early April. The stock slipped two per cent on July 7 as Bitcoin dipped, but the company signaled its intent to keep betting big, announcing a US$4.2 billion preferred stock offering to fund further Bitcoin acquisitions.

To me, MicroStrategy’s strategy epitomises the polarising nature of crypto investing. Its unwavering commitment to Bitcoin as a corporate asset is bold, even visionary, but the pause in buying hints at caution amid the tariff storm. Coinbase’s surge, meanwhile, reflects a market rewarding infrastructure over speculation—a shift that could redefine the crypto narrative in the months ahead.

Broader implications and my take

The tariff announcements carry profound implications beyond the immediate market gyrations. For Japan and South Korea, the 25 per cent tariffs threaten industries like automotive and tech, prompting responses like South Korea’s US$2 billion auto sector aid package and Japan’s pledge to “take appropriate measures.”

Globally, economists warn of disrupted supply chains, higher consumer prices, and slower growth, with the IMF already downgrading its forecasts. In the US, the Federal Reserve faces a dilemma: tariffs could stoke inflation, necessitating tighter policy, yet economic uncertainty might demand restraint.

In my view, the US is playing a high-stakes game that could backfire. The tariffs may bolster domestic industries in the short term, but the long-term cost, strained alliances, retaliatory measures, and inflation could outweigh the gains.

The crypto market’s resilience, particularly in stablecoins and infrastructure, offers a counterpoint to this chaos, suggesting that investors are seeking stability and innovation amid traditional market upheaval.

In conclusion, the tariff news has thrust global risk sentiment into a tailspin, with equities retreating, yields rising, and Bitcoin stalling. Yet, pockets of strength in the crypto space hint at a shifting financial paradigm.

As this story unfolds, the interplay of trade policy, market dynamics, and digital assets will shape the economic narrative for months to come—a saga worth watching closely.

 

Source: https://e27.co/the-tariff-gambit-markets-retreat-crypto-finds-new-footing-20250708/

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Musk, markets, and money: Trade risks meet crypto rewards

Musk, markets, and money: Trade risks meet crypto rewards

The world is watching as the July 9 deadline for trade deals approaches, casting a shadow of uncertainty over global markets. Meanwhile, a mix of economic data, policy decisions, and influential voices, like that of Elon Musk, are shaping a complex narrative.

Let’s explore what’s happening in the market right now, weaving together the threads of trade tensions, market performances, and emerging trends in crypto, all while offering my perspective on what these developments might mean for investors and the global economy.

Global risk sentiment and the trade deadline

The global risk sentiment is palpably tentative as the July 9 deadline for trade negotiations looms. This date marks the end of a 90-day tariff pause, a period during which the United States and its trading partners have been working to finalise agreements.

On July 7, President Donald Trump announced that the first 12 letters would be sent to these partners, signalling that new tariff rates potentially ranging from 10 per cent to 70 per cent could take effect as early as August 1 if no deals are reached. This wide range of possible tariffs introduces significant uncertainty, as the final rates will depend on the outcomes of these negotiations, which remain fluid and unpredictable.

The threat of tariffs could pressure trading partners into concessions, potentially strengthening the US position in global trade. On the other hand, the prospect of higher tariffs risks disrupting supply chains, increasing costs for consumers, and slowing economic growth, particularly for export-dependent economies.

Markets hate uncertainty, and the lack of clarity around these tariffs is keeping investors on edge, contributing to a cautious global mood. As the deadline nears, every statement from the White House and every response from trading partners will be scrutinised for hints of what’s to come.

US markets: A pre-holiday boost

Turning to the US, equity markets were closed on July 4 for Independence Day, but their performance prior to the holiday offers a glimpse into investor sentiment. On July 3, Wall Street ended in the green, with the S&P 500 rising 0.8 per cent , the Nasdaq climbing one per cent, and the Dow Jones Industrial Average also advancing 0.8 per cent.

This uptick was driven by a stronger-than-expected employment report, which likely bolstered confidence in the US economy’s resilience. Robust job growth suggests that consumer spending, a key driver of economic activity, remains robust, providing a buffer against external pressures, such as trade tensions.

However, the holiday closure meant that US investors couldn’t immediately react to subsequent developments, such as Trump’s trade letter announcement or moves in Asian markets. US equity index futures have since pointed to a lower opening, suggesting that these global uncertainties may temper the optimism sparked by the employment data.

In my view, the US market’s pre-holiday strength is a positive signal, but it’s not immune to the broader risk-off tone emerging elsewhere. Investors will likely reassess their positions as trading resumes, weighing domestic economic health against international risks.

Asian markets: A risk-off tone prevails

Closer to home in Asia, the mood is decidedly more cautious. Major equity indices have posted declines, reflecting a risk-off sentiment among investors. South Korea’s KOSPI fell 1.99 per cent, Taiwan’s TWSE dropped 0.73 per cent, Thailand’s SET declined 0.64 per cent, and Hong Kong’s HSI also shed 0.64 per cent.

These markets, heavily tied to global trade, are particularly vulnerable to the spectre of US tariffs. For instance, South Korea and Taiwan rely heavily on exports of electronics and semiconductors. At the same time, Hong Kong serves as a financial hub that is sensitive to shifts in global capital flows.

Commodities: OPEC+ shakes up oil markets

In the commodities space, oil markets are grappling with their own set of dynamics. Over the weekend, OPEC+, the alliance of oil-producing nations, agreed to boost production by 548,000 barrels per day starting next month, a move that exceeded market expectations.

As a result, Brent crude prices dipped 0.6 per cent to settle at US$71 per barrel. This increase in supply comes at a time when demand uncertainties, fuelled by trade tensions, are already in play.

This production hike is a strategic play by OPEC+ to maintain market share, but it’s a gamble. If global growth slows due to tariffs, the additional supply could outstrip demand, pushing oil prices lower and squeezing revenues for producers. Conversely, if trade talks resolve favourably and economic activity picks up, this move could stabilise prices and prevent a supply crunch.

For now, the drop in Brent crude signals bearish sentiment, and it’s a development that bears watching. Lower oil prices could ease inflation pressures but might also signal broader economic weakness.

Cryptocurrency: Bitcoin bounces back

Shifting gears to the cryptocurrency market, Bitcoin has staged a notable recovery, gaining nearly five per cent. The rally is partly attributed to a weakening of selling pressure from Grayscale, a major institutional player whose actions often sway the market. Beyond Bitcoin, optimism is spreading to smaller cryptocurrencies and crypto-related stocks, with Coinbase shares rising nearly three per cent and MicroStrategy jumping nine per cent.

I see this divergence between US and Asian markets as a telling sign of regional fault lines. While the US benefits from a domestic economy that can weather some external shocks, Asia’s export-driven growth model leaves it more exposed to trade disruptions. The sharp declines in these indices suggest that investors are bracing for a worst-case scenario, higher tariffs, and a potential slowdown in global demand. If trade talks falter, the risk-off tone could deepen, with ripple effects across emerging markets.

What’s driving this resurgence? I’d argue it’s a combination of market-specific factors and broader catalysts. The Grayscale reprieve is a technical boost, but the bigger story is the anticipation surrounding “Crypto Week” in the US Congress, set for July 14 to 18.

Lawmakers are poised to debate several pivotal bills, including the Clarity Act, which aims to define rules for crypto trading and investment, and the Stablecoin Bill (also known as the Genius Act), intended to regulate dollar-backed stablecoins. There’s also the Anti-CBDC Surveillance State Act, which seeks to block government digital currencies that could encroach on privacy.

In my opinion, “Crypto Week” could be a game-changer. Clear regulations have long been the missing piece for institutional adoption of crypto. If these bills pass, they could unlock fresh capital inflows, legitimising the asset class in the eyes of traditional finance.

The recent US$5 trillion debt ceiling increase adds fuel to this fire; more liquidity in the system historically lifts risk assets like Bitcoin. I’m cautiously optimistic that these developments could spark a breakout, especially if the sideways price action we’ve seen lately is indeed a prelude to a larger move.

Elon Musk and the America Party

No market analysis would be complete without mentioning Elon Musk, whose influence continues to ripple across financial landscapes. Musk recently declared that his newly formed America Party will fully support Bitcoin, doubling down with a statement on X that “Fiat is hopeless.”

This follows a public feud with Donald Trump and the launch of his political entity, born from a poll where 80 per cent of his followers backed the idea of a centrist party. Musk’s pro-Bitcoin stance isn’t new, but tying it to a political platform amplifies its reach.

I find Musk’s move fascinating and polarising. His sway over markets, as evidenced by Tesla stock surges or Dogecoin’s pump, is undeniable, and a Bitcoin-friendly party could galvanise retail and institutional interest alike. However, the America Party’s broader impact hinges on its ability to gain traction beyond Musk’s fan base.

If it remains a niche player, its influence on crypto might be more symbolic than substantive. Still, in a market hungry for narratives, Musk’s endorsement is a tailwind that could bolster sentiment, especially alongside regulatory tailwinds from Congress.

Stay nimble! The coming weeks could bring clarity or chaos to this intricate market puzzle.

 

Source: https://e27.co/musk-markets-and-money-trade-risks-meet-crypto-rewards-20250707/

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Stocks, treasuries, gold, oil, and Bitcoin in motion: The jobs and policy effect

Stocks, treasuries, gold, oil, and Bitcoin in motion: The jobs and policy effect

At the heart of this storm is the latest US employment report, which has once again defied expectations, alongside the final approval of President Trump’s US$3.4 trillion tax and spending package. These events have sent ripples across asset classes, influencing everything from stock indices and Treasury yields to the US dollar, gold, oil, and even Bitcoin.

I want to share my perspective on their implications and interconnections, while grounding the discussion in the facts and data provided. My aim is to paint a clear picture of the current market landscape, delving into both the opportunities and risks that lie ahead.

The US employment report: Strength with subtle cracks

The US employment report for June has been a focal point for markets, delivering a headline number that suggests continued economic vigour. Nonfarm payrolls, which track the number of jobs added or lost outside the agricultural sector, rose by 147,000, well above the consensus estimate of 106,000. This marks the fourth consecutive month that the labour market has surprised to the upside, reinforcing the narrative of a resilient US economy.

A strong payroll figure typically signals that businesses are confident enough to expand their workforce, a sign of robust demand and economic health. Paired with this, the unemployment rate, a measure of the percentage of the labour force actively seeking work, eased unexpectedly to 4.1 per cent, better than the anticipated 4.3 per cent. This drop suggests a tightening labor market, which could pave the way for wage growth and bolster consumer spending, both critical drivers of economic activity.

However, the report isn’t without its nuances. Beneath these rosy headlines lies a softening in private activity growth, a detail that tempers the optimism. This softening could indicate that, while headline job creation remains strong, specific sectors —perhaps those tied to private investment or discretionary spending —are losing momentum.

From my perspective, this duality in the data is a reminder that economic strength isn’t uniform. The labor market’s resilience is encouraging, but the cracks in private activity suggest that policymakers and investors should remain vigilant. If this softening persists, it could signal broader challenges ahead, especially as the Federal Reserve weighs its next moves on interest rates.

Broader economic indicators: Signs of resilience

Beyond the employment report, other economic indicators suggest that the economy is holding its ground. Initial jobless claims, which count new filings for unemployment benefits, declined in the latest data, as did continuing claims, which track those receiving ongoing support. These reductions imply that job losses are slowing and that unemployed workers are finding new roles more quickly, both positive signs for labor market stability.

Additionally, the ISM Services index, a key gauge of activity in the services sector (which dominates the US economy), returned to expansion territory. A reading above 50 indicates growth, and this rebound suggests that the services sector is shrugging off any prior weakness, contributing to overall economic momentum.

These indicators bolster the case for cautious optimism. The decline in jobless claims aligns with the strong payrolls data, while the ISM Services rebound hints at broad-based resilience. However, I’d caution that these metrics are snapshots, backward-looking by nature, and don’t fully account for future uncertainties, such as the impact of new fiscal policies or global headwinds.

Still, for now, they reinforce the narrative of a US economy that’s weathering challenges better than many had feared.

President Trump’s tax and spending package: A double-edged sword

Shifting to the political arena, President Trump’s US$3.4 trillion tax and spending package has cleared a significant hurdle, passing the House with a razor-thin 218-214 vote. This landmark legislation blends tax cuts with significant spending increases, aiming to juice economic growth while addressing infrastructure and social priorities.

The tax reductions could put more money in the pockets of consumers and businesses, potentially spurring spending and investment. At the same time, the spending component promises to inject capital into the economy, supporting jobs and public projects.

The package’s passage is a double-edged sword. It’s a win for growth-oriented policies, likely contributing to the upbeat mood in equity markets. On the other hand, its hefty price tag raises red flags about the federal deficit, which is already substantial. Critics argue that this could fuel inflation in the long run, forcing the Federal Reserve to tighten monetary policy more aggressively.

The narrow vote margin underscores the contentious nature of this move—it’s a bold bet on growth, but one that hinges on execution and favorable economic conditions aligning. If successful, it could amplify the current economic momentum; if not, it risks exacerbating fiscal imbalances at a time when resilience is already being tested.

Stock markets: Riding the wave of optimism

The stock market has greeted these developments with open arms. The S&P 500 rose by 0.83 per cent, the NASDAQ climbed 0.99 per cent, and the Dow Jones gained 0.81 per cent. These gains reflect a wave of optimism, likely fuelled by the strong jobs data and the fiscal stimulus promised by Trump’s package.

Investors seem to be betting on higher corporate earnings and consumer demand, both of which could flow from these catalysts. However, early trading signals from Asian equity indices and US futures suggest a potential pullback, hinting at profit-taking or lingering doubts about the sustainability of the rally.

The rally is justified given the data, but it comes with risks. Stocks are sensitive to interest rate expectations, and as we’ll see with Treasury yields, the market is pricing in a shift. If rates rise too quickly, or if global risk sentiment sours, these gains could unwind. For now, though, the upward movement reflects a market eager to embrace good news—a classic case of sentiment driving prices, at least in the short term.

Treasury yields: The bear-flattening signal

The US Treasury yield curve offers a more sobering perspective, undergoing a sharp bear flattening. This phenomenon occurs when short-term yields rise faster than long-term ones, narrowing the gap between them. The two-year Treasury yield jumped 9.5 basis points to 3.880 per cent, while the 10-year yield rose 6.9 basis points to 4.346 per cent.

This shift is tied to the strong jobs report, which has recalibrated expectations for Federal Reserve rate cuts. Investors now anticipate a tighter policy stance to curb potential inflation, pushing short-term yields higher as bond prices fall.

A flatter yield curve can signal mixed messages. Historically, an inverted curve (where short-term yields exceed long-term ones) has foreshadowed recessions, but we’re not there yet. Instead, this bear flattening suggests confidence in near-term growth, hence the rise in yields, but tempered expectations for the longer haul.

I view this as a natural market adjustment to the data. It serves as a reminder that borrowing costs are creeping up, which could eventually weigh on growth-sensitive sectors such as housing or corporate investment.

US dollar and gold: A tale of strength and retreat

The US Dollar Index, which tracks the dollar against a basket of major currencies, rose 0.4 per cent after the jobs report. A stronger dollar often follows robust economic data, as it boosts demand for dollar-denominated assets and signals tighter policy ahead. This strength, however, pressured gold, which slid 0.9 per cent to US$3,326 per ounce. Gold thrives in times of uncertainty or low interest rates, but with yields rising and the dollar strengthening, its appeal as a haven is diminishing.

I view the dollar’s recovery as a logical outcome of the data, though its export-dampening effects could pose challenges. Gold’s decline, meanwhile, doesn’t surprise me. It’s a classic reaction to this environment. That said, if geopolitical risks or inflation fears resurface, gold could regain its lustre quickly.

Brent crude: Balancing supply and demand

Brent crude oil slipped 0.4 per cent to US$69 per barrel, even as OPEC+ prepares to add 411,000 barrels per day in August. This drop likely reflects concerns about demand, possibly tied to global growth uncertainties, outweighing the supply increase for now.

The direction of oil prices will hinge on how demand holds up, especially in key markets like China, and whether OPEC+ adheres to its plan. The modest decline suggests a market in wait-and-see mode, which feels prudent given the mixed signals elsewhere.

Bitcoin: Volatility meets technical headwinds

Bitcoin’s journey has been a rollercoaster, rallying to US$110,500 before hitting resistance at US$110,000. Trading above US$109,000, it’s showing stability, but technical analysis reveals bearish divergences across multiple timeframes—15-minute, one-hour, four-hour, and daily charts.

These divergences, where price rises but momentum indicators like the RSI weaken, suggest a fading bullish momentum and a possible pullback to US$106,000-US$107,500. Despite this, long-term trends remain bullish, buoyed by US$603 million in net inflows into US spot Bitcoin ETFs, with Fidelity’s FBTC leading at US$237.13 million.

Bitcoin is cautiously mixed. The ETF inflows signal strong institutional interest, a bullish undercurrent. Yet, the technical warnings can’t be ignored. US$110,000 feels like a psychological ceiling that needs more conviction to break. Traders betting on US$112,000 might be right eventually, but the selling pressure suggests traps in the near term. I’d watch those support levels closely.

Wrapping up

The global financial markets are at a fascinating juncture. The US economy’s resilience, underscored by jobs data and fiscal policy, is driving risk sentiment forward, yet subtle cracks and technical signals urge caution.

Stocks and the dollar are riding high, but yields, gold, oil, and Bitcoin reflect a more complex reality. In my view, the interplay of these factors points to opportunity tempered by vigilance. Growth is here, but its sustainability depends on how these pieces evolve. For investors, staying informed and nimble will be key in navigating what’s next.

 

Source: https://e27.co/stocks-treasuries-gold-oil-and-bitcoin-in-motion-the-jobs-and-policy-effect-20250704/

 

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