MARKET COMPASS
Tariffs – Government Expenditures
Two of the key dynamics driving asset prices in global markets have come to the fore in recent days. The first one is, of course, President Trump’s decisions on tariffs. Donald Trump recently announced that automakers will be exempted from the tariffs imposed on Canada and Mexico for one month. However, this decision is far from providing a complete relief to the markets by reducing the risk of a trade war.
Another noteworthy issue is government spending, particularly by the German government. After the CDU/CSU, which emerged victorious from the elections, and the Social Democratic Party, which is expected to form a coalition, agreed to loosen the country’s strict borrowing rules, expectations for increased government spending in Europe’s largest economy are getting stronger. As a result, German bonds have been selling off sharply and yields have been rising. In fact, this is the biggest sell-off in German government bonds since the months following the fall of the Berlin Wall. The parties have proposed a €500 billion off-budget fund to finance infrastructure projects over the next decade. This stimulus is expected to provide a much-needed boost to Germany’s struggling economy. The sell-off in German bonds seems to be spreading to other pro-spending countries around the world. On the other hand, the European Central Bank (ECB) is expected to cut interest rates today.
Digital World
While the stock market and the bond market have been in a downturn around the world, digital assets have been among the asset classes that have been negatively affected by the sharp turns in risk appetite. However, we can say that the flow of news and expectations specific to the ecosystem itself has had a slightly greater impact on the value of cryptocurrencies in the last two days.
In our previous analyses, we said that we think that an important threshold has been crossed after Trump’s detailed social media post about Strategic Crypto Reserves. This statement is a candidate to eliminate the lack of a catalyst. In addition, eyes for digital assets have turned to the Crypto Summit to be held tomorrow at the White House. Expectations are rising that the President may provide important information about the crypto reserve at this event. If we talk about the short-term process ahead, we can state that the dynamics that will determine the direction of the price will be shaped by the topics to be discussed at this event.
The Big Picture
For a long time, in our analysis for digital assets, we have been expressing the following view; “we expect volatility in the short term, pressure in the medium term and bullishness in the long term.” The uncertainty created by Trump in the political environment, especially with the tariff tool, and the roadmap he followed on Ukraine were an important dynamic. However, we can state that the lack of catalyst for the undeniable rise of digital assets has largely ended with the President’s latest crypto asset assessment. Therefore, by adjusting the weighting in our equation, despite the uncertainties that still exist, we change our overall view to “bullish with intermediate corrections“. At this point, it is worth noting that although the first statement on the reserve issue, which the crypto ecosystem is eagerly awaiting, it is necessary to continue to closely monitor political, geopolitical and macro dynamics.
HIGHLIGHTS OF THE DAY
Important Economic Calender Data
| Time | News | Expectation | Previous |
|---|---|---|---|
| 19:20 | FOMC Member Williams 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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