MARKET COMPASS
Trump and Tariffs
Donald Trump’s tariffs continue to top the agenda of global markets. Most recently, after signing presidential decrees at his Florida residence, in response to a question on what the tariff rate on automobiles would be, he said, “I will tell you on April 2nd, but it will be around 25%.” Tariffs on semiconductors and pharmaceuticals will also be 25% or higher, the President said, adding that they will increase significantly throughout the year. On the other hand, Trump said that tariffs will not be applied if companies produce in the US and that he wants to give them time to do so.
Tariffs, Geopolitical Developments, FED
While expectations that Trump’s tariffs will contribute to the rise in inflation in the world’s largest economy continue, statements from the US Federal Reserve (FED) officials continue to remain cautious. Mary Daly, President of the San Francisco Fed , said that the US economy is in good shape and that she thinks policy should remain restrictive until further progress is seen on the inflation front. Also, the US excluding European countries from peace talks with Russia due to the ongoing war in Ukraine also supported the dollar (Finally, US Secretary of State Rubio said, “We’re not sidelining anybody. At some point the European Union will be involved”). Although it declined during Asian trading today, the DXY managed to recover some of its losses yesterday. In the shadow of these developments affecting the expectations for a rate cut by the FED, a new rate cut is expected to be delayed until the second half of the year.
This Morning: Asia
In addition to the two key market dynamics of tariffs and FED expectations, the continent-specific agenda is also being closely monitored in Asia this morning. Tariffs continue to weigh on indices in the Far East, but in China, President Xi Jinping’s meeting with business leaders, coupled with the ongoing positive sentiment brought about by DeepSeek, is creating an equation that is generating positive output. Japan, the world’s third largest economy, is on high alert, especially about the US tariffs on automobiles. In addition, the call for further interest rate hikes from the country’s Central Bank (BoJ) officials put pressure on the country’s stock market.
As We Start A New Day…
Major digital assets managed to quickly shake off the pressure seen during US trading yesterday. Throughout the week, the macro agenda was secondary for asset prices, which were driven by tariffs and geopolitical developments. The minutes of the FED’s last Federal Open Market Committee (FOMC) meeting, which will be released today, may shift the focus a bit more towards macro. We maintain our expectation of flat to volatile in the short term, slightly pressured in the medium term and bullish in the long term.
When is the FED’s Next Rate Cut?
FED Chairman Powell, who made presentations in Congress last week, gave a message that there was no need to rush to cut interest rates. This assessment implies that tight financial conditions in the US economy will continue for now. Following the tariff agenda and the latest macro indicators, markets do not expect another rate cut from the Fed before September, according to CME FedWatch. If the clues between the lines of the FOMC meeting minutes lead to a change in these expectations, markets may move again.
If the Bank maintains its hawkish stance, we think that some of the recent losses in the dollar (the retreat in the DXY around February 12-14) may be reversed and this may put pressure on digital assets. The surprise scenario would be a more dovish tone, and although we think it is unlikely, in such a case, the rise in digital assets may gain ground even in the short term.
From the short term to the big picture.
Trump’s victory on November 5, one of the main pillars of our bullish expectation for the long-term outlook in digital assets, produced a result in line with our predictions. In the aftermath, the appointments made by the president-elect and the increasing regulatory expectations for the crypto ecosystem in the US, as well as the emergence of BTC as a reserve, continued to take place in our equation as positive variables. Then, 4 days after the new President took over the White House, he signed the “Cryptocurrency Working Unit” decree, which was among his election promises, and we think that the positive reflection of the outputs it will produce in the coming days on digital assets may continue.
On the other hand, the expectations that the FED will continue its interest rate cut cycle, albeit on hiatus for now, and the fact that the volume in crypto-asset ETFs indicates an increase in institutional investor interest, support our upside forecast for the big picture. In the short term, given the nature of the market and pricing behavior, we think it would not be surprising to see occasional pause or pullbacks in digital assets. However, at this point, it is worth underlining again that we think the fundamental dynamics continue to be bullish.
HIGHLIGHTS OF THE DAY
Important Economic Calender Data
| Time | News | Expectation | Previous |
|---|---|---|---|
| Tezos (XTZ) London Meetup | |||
| Filecoin (FIL) & Lava Event | |||
| Tribal Token (TRIBL) 9.60M Token Unlock | |||
| 19:00 | FOMC Meeting Minutes | ||
| 22:00 | FOMC Member Jefferson Speaks |
INFORMATION
*The calendar is based on UTC (Coordinated Universal Time) time zone.
The economic calendar content on the relevant page is obtained from reliable news and data providers. The news in the economic calendar content, the date and time of the announcement of the news, possible changes in the previous, expectations and announced figures are made by the data provider institutions. Darkex cannot be held responsible for possible changes that may arise from similar situations.
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