MARKET COMPASS
Trump’s Debates – Inside (Musk) and Outside
Trump remains at the top of the agenda for global markets. The trade wars, which are constantly changing in tone, entered a challenging period for the markets again after the temporary compromise between the US and China, with the parties accusing each other of not complying with the terms of the agreement. Finally, on Friday, it was announced that the leaders of both countries spoke on the phone and moderate statements followed. However, this time the President’s discussions outside the country were marked by a domestic problem. Elon Musk and the President may have fallen out in a way that may never be closed again, judging by the latest exchange of barbs.
The Trump-Musk debate, which quickly took over the agenda, put pressure on digital assets as well as US stock markets and Tesla stocks. The decline in risk appetite with the new uncertainty environment brought sales to a group of financial instruments considered to be relatively riskier. We think that the dangerous side of the issue is that Musk, a former advocate of crypto assets, may cause a perception that his distancing from Trump may cool the President’s recent affinity for digital assets. However, it is worth noting that this is unlikely and that the decline in the value of digital assets can be recovered even regardless of this issue.
As the prospects for peace in Ukraine diminish, it would not be wrong to say that we are following a process in which geopolitical risks are not as effective on prices as before. Besides, this time Trump claims to have resolved the dispute between India and Pakistan. These aside, the trade wars have turned into negotiations and macro variables remain on the blank side of the equation. Especially what the US Federal Reserve (FED) will do with these macro indicators…
Next week, the aforementioned headlines are likely to keep the markets busy. In addition, after the latest employment data, all eyes will now turn to the US inflation data and new clues will be sought on the timing of the FED’s next move. In this context, we will open a separate parenthesis for this data set.
US Consumer Price Index: CPI
One of the important macro indicators that may provide information on the timing of the US Federal Reserve’s (FED) interest rate cut will be May inflation, the Consumer Price Index (CPI) change. In the current difficult conjuncture, CPI data will be closely monitored as it may provide a signal for the course, as it may have an impact on pricing behavior.
The annual inflation rate in the US fell to 2.3% in April 2025 from 2.4% in March, the lowest level since February 2021 and below forecasts of 2.4%. Compared to the previous month, CPI rose by 0.2%, recovering from a 0.1% decline in March but below forecasts of 0.3%. Housing costs rose 0.3%, accounting for more than half of the monthly increase across all items.
Source: Bloomberg
As can be seen in the chart above, core services continue to have the largest share in the overall price level. Our expectation is for a monthly increase of 0.14% and an annual CPI of around 2.13%. Nevertheless, let us remind that the market will react according to the consensus expectation.
A CPI data that will be below the market expectation may mean that the FED’s hand will be relaxed in terms of interest rate cuts and this may have a positive impact on digital assets. A figure that exceeds forecasts would reinforce expectations that the FED will not be in a hurry to cut interest rates again, potentially adding pressure.
Other Macro Indicators and Developments
US Prelim UoM Consumer Sentiment; It is a survey conducted by the University of Michigan (UoM) with approximately 420 consumers, asking respondents to assess the relative level of current and future economic conditions. Financial confidence is a leading indicator of consumer spending, which accounts for a large share of overall economic activity. It has two cycles, 14 days apart, called Preliminary and Revised. The “Preliminary” is usually relatively more influential on prices and is published monthly in the middle of the current month. If the actual data comes in below expectations, it can have a positive impact on cryptocurrencies.
*General Information About Forecasts
In addition to the general market expectations, the forecasts shared in this report are based on econometric modeling tools developed by our research department. Different structures were considered for each indicator, and appropriate regression models were constructed in line with data frequency (monthly/quarterly), leading economic indicators and data history.
The basic approach in all models is to interpret historical relationships based on data and to produce forecasts that have predictive power with current data. The performance of the models used is measured by standard metrics such as mean absolute error (MAE) and is regularly re-evaluated and improved. While the outputs of the models guide our economic analysis, they also aim to contribute to strategic decision-making processes for our investors and business partners. Data is sourced directly from from the FRED (Federal Reserve Economic Data) platform in an up-to-date and automated manner, so that each forecast is based on the latest economic data. As the research department, we are also working on artificial intelligence-based modeling methods (e.g. Random Forest, Lasso/Ridge regressions, ensemble models) to improve forecast accuracy and react more sensitively to market dynamics. The macroeconomic context should be taken into account in the interpretation of model outputs, and it should be kept in mind that there may be deviations in forecast performance due to economic shocks, policy changes and unforeseen external factors. With this set of studies, updated every month, we aim to provide a more transparent, consistent and data-driven basis for monitoring the macroeconomic outlook and strengthening decision support processes.
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INFORMATION:
*The calendar is based on UTC (Coordinated Universal Time) time zone. The calendar content on the relevant page is obtained from reliable data providers. The news in the 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.
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