Fed & White House Agree on Economy, Split on Rates

SHFE has been taking steps to cool the rally by raising margin requirements in several contracts and placing trading restrictions on certain clients in the tin and silver markets. On Thursday, it said that an unnamed client had violated rules governing abnormal trading in one of its contracts, and urged investors to “further enhance their risk awareness, invest rationally, and jointly maintain the stable operation of the market”.

Fed Chair Powell talked up a “clear improvement” in the US economic outlook as the bank kept borrowing costs on hold on Wednesday. His tenure ends in June, after which Trump may be better positioned to step up his campaign for lower rates.

Source: Bloomberg

U.S. President Donald Trump has consistently defended his use of tariffs as a key tool in his administration's economic and national security strategy.

U.S. President Donald Trump issued a warning on Thursday that tariffs on trading partners could become "much steeper," even as he claimed his administration has been "very nice" in its implementation of the policy so far.

The remarks were made during a White House Cabinet meeting, highlighting the administration's firm stance on trade amid a high-stakes legal review.

"The tariffs are very ... you know ... steep. They could be much steeper," Trump said. "We've been actually very nice about it, but even being nice about it, we've taken in hundreds of billions of dollars."

Tariffs as a National Security Tool

The president reiterated his long-held argument that tariffs have generated "tremendous" national security and strength for the United States.

He also directed criticism at those challenging the policy, labeling them "China-centric."

"These are people that are China (centric), but they are also outside of the United States," Trump stated. "These are countries that have ripped us off for years and years, charging us tariffs."

Supreme Court Scrutiny Puts Policy to the Test

Trump's defense of his tariff strategy comes as the U.S. Supreme Court deliberates the legality of specific tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA). The court is expected to issue a ruling on these country-specific measures in the coming months.

A ruling against the administration could trigger calls for significant tariff refunds. However, the administration is widely expected to seek legal workarounds or alternative measures to maintain its tariff framework.

It is important to note that the court's review does not affect all of Trump's tariffs, such as the sector-wide duties imposed on autos and other items.

The Economic Goals Behind the Tariff Agenda

The administration has consistently framed its use of tariffs as a strategic tool to reshape the U.S. economy. The primary stated objectives include:

• Reducing the U.S. trade deficit.

• Increasing federal revenue.

• Boosting foreign investment and domestic manufacturing.

The Federal Reserve is holding interest rates steady, signaling that policymakers aren't ready to declare victory over inflation. For traders and investors, this means the focus is shifting away from Fed announcements and squarely onto hard economic data for market direction.

From Fed Guidance to Data-Driven Trading

Analysts suggest the Fed's decision reflects a cautious confidence. While restrictive policy has successfully cooled demand without causing significant job losses, the progress on inflation isn't yet enough to warrant a rate cut.

Iliya Kalchev of Nexo Dispatch noted that officials seem comfortable maintaining tight financial conditions until the economy shows more definitive signs of slowing. He pointed to steady jobless claims and resilient consumer spending as evidence that the current policy is moderating demand "without triggering meaningful job losses," aligning with the central bank's goal of a soft landing.

This wait-and-see approach means markets will likely react more to major economic data releases—like inflation and employment reports—than to the Fed's own guidance in the coming months.

Crypto Markets Await Clearer Signals

For the digital asset market, the Fed's decision to hold rates was widely anticipated and already priced in. As a result, market sentiment now hinges on clues about when easier financial conditions might finally arrive.

Javed Khattak, co-founder of cheqd.io, explained that attention has moved beyond the decision itself to the message behind it. "The Fed holding rates was expected and fully priced in," he said, adding that investors are now seeking clarity on whether policymakers are leaning toward looser conditions later this year.

Ryan Lee of Bitget Research added that steady rates help maintain supportive liquidity conditions for risk assets, which sustains appetite for equities, commodities, and crypto.

Bitcoin Struggles for Momentum

Despite the stable policy environment, market dynamics remain cautious. A report from Bitfinex Alpha highlighted that Bitcoin (BTC) and the wider crypto market have struggled to break higher. The primary obstacles are weakening spot demand and outflows from exchange-traded funds (ETFs), which are limiting upward momentum.

The report notes that Bitcoin remains range-bound as institutional flows have slowed. This situation leaves prices dependent on fresh demand catalysts before a sustained rally can materialize and helps explain the muted market reaction to the Fed's announcement.

Powell on the Fed's "Loosely Neutral" Stance

Speaking after the decision, Fed Chair Jerome Powell remarked that recent economic performance makes it difficult to label the current policy as clearly restrictive.

"It's hard to look at the incoming data and say that policy is significantly restrictive at this time," Powell stated. He suggested that the Fed's policy might now be "sort of loosely neutral or it may be somewhat restrictive."

Powell pointed to several key indicators:

• Economic growth remains resilient.

• Labor market conditions appear to be stabilizing, with unemployment at 4.4% in December.

• Core PCE inflation, while down from its 2022 peak, is still running at 3.0% annually—above the Fed's 2% target.

This backdrop reinforces the view that investors should watch the data, as the Fed will be waiting for clearer economic signals before making its next move.

U.S. President Donald Trump announced Thursday that he secured a one-week pause in Russian attacks on Kyiv and other Ukrainian cities from President Vladimir Putin, citing the region's severe cold temperatures. The Kremlin has yet to confirm any such agreement.

The announcement comes as Russia continues its campaign of targeting Ukraine's critical infrastructure, a strategy designed to weaken public resolve by cutting off heat and power during the coldest months of winter.

Figure 1: U.S. President Donald Trump (right) with Russian President Vladimir Putin. Trump announced he personally asked Putin to halt attacks on Ukrainian cities for one week during a severe cold snap.

A Temporary Halt to Hostilities?

Speaking at a White House Cabinet meeting, Trump said he personally requested the pause from the Russian leader.

"I personally asked President Putin not to fire on Kyiv and the cities and towns for a week during this ... extraordinary cold," Trump stated, adding that Putin "agreed to that."

The Republican president expressed satisfaction with the outcome. "A lot of people said, 'Don't waste the call. You're not going to get that,'" Trump remarked. "And he did it. And we're very happy that they did it."

However, details about the timing and scope of this limited ceasefire in the nearly four-year war remain unclear. Trump did not specify when his call with Putin occurred or when the pause would begin, and the White House did not immediately provide further information.

Kyiv's Skepticism Amid Russian Silence

Ukrainian President Volodymyr Zelenskyy had warned late Wednesday that intelligence suggested Moscow was preparing for another major barrage, casting doubt on the pause just as U.S.-brokered peace talks are scheduled for the weekend.

From Moscow, Kremlin spokesman Dmitry Peskov declined to comment when asked earlier on Thursday if a mutual halt on strikes against energy facilities was under discussion.

Ukraine is bracing for a brutal cold front, with temperatures expected to drop as low as minus 30 degrees Celsius (minus 22 Fahrenheit) in some areas starting Friday, according to the State Emergency Service. Ukrainian officials have consistently described Russia's strategy of targeting civilian infrastructure during winter as "weaponizing winter."

The War's Escalating Human Cost

The ongoing attacks continue to discredit the peace process, according to Zelenskyy. "Every single Russian strike does," he said Wednesday.

Last year was the deadliest for civilians in Ukraine since Russia's full-scale invasion on February 24, 2022. The U.N. Human Rights Monitoring Mission reported that intensified Russian aerial attacks behind the front line killed 2,514 civilians and injured 12,142, a 31% increase from 2024.

The daily bombardments persist. Overnight, a Russian drone attack in the southern Zaporizhzhia region killed three people and started a large fire in an apartment building. In the central Dnipropetrovsk region, two people were injured as firefighters battled blazes caused by strikes.

Diplomatic Tracks and Battlefield Realities

While diplomatic efforts continue, international partners remain wary of Russia's commitment. The European Union's top diplomat, Kaja Kallas, accused Russia of not taking the negotiations seriously and called for increased pressure on Moscow.

"We see them increasing their attacks on Ukraine because they can't make moves on the battlefield. So, they are attacking civilians," Kallas said Thursday in Brussels. She insisted that Europe must be fully involved in any talks, expressing concern that European security interests might be overlooked in a settlement process led primarily by the Trump administration.

In contrast, Trump's special envoy, Steve Witkoff, expressed optimism. He noted that "a lot of progress" was made in recent talks and anticipates more headway in the coming days. "I think the people of Ukraine are now hopeful and expecting that we are going to deliver a peace deal sometime soon," Witkoff said.

An international think tank report published Tuesday projected a grim milestone, estimating that the total number of soldiers killed, injured, or missing on both sides could reach 2 million by spring.

The Technological Front: Starlink in the Crosshairs

The conflict is also being fought on a technological front. Ukrainian Defense Minister Mykhailo Fedorov confirmed Thursday that Ukraine is working with SpaceX to address Russia's reported use of the Starlink satellite service for its attack drones.

Fedorov said on Telegram that his team had contacted the aerospace company run by Elon Musk and "proposed ways to resolve the issue." He thanked Musk and SpaceX President Gwynne Shotwell for their "swift response."

SpaceX has navigated a complex position throughout the war. A year after the invasion, Shotwell stated the company was happy to provide connectivity to Ukrainians but also sought to restrict the use of Starlink for military purposes.

U.S. Defense Secretary Pete Hegseth is expected to miss the upcoming NATO defense ministers' meeting in Brussels, a move that is fueling concerns about the United States' commitment to the military alliance. This marks the second consecutive time a top official from the Trump administration has skipped a key NATO gathering, deepening worries among European allies.

The expected absence comes at a time of strained transatlantic relations, recently tested by President Donald Trump's stated desire to acquire Greenland from Denmark, a fellow NATO member.

Figure 1: U.S. Defense Secretary Pete Hegseth speaking at a previous NATO event. His expected absence from the upcoming summit has raised concerns about U.S. commitment to the alliance.

A Pattern of High-Level Absences

Hegseth's decision to miss the February 12 meeting follows U.S. Secretary of State Marco Rubio’s failure to attend the NATO foreign ministers' summit in December. While the Pentagon and NATO have declined to comment, the back-to-back no-shows signal a significant shift in U.S. engagement.

Historically, the absence of a top U.S. cabinet official from a NATO ministerial meeting was highly unusual. As the alliance's primary military and political power, consistent high-level participation from the United States has long been considered standard practice.

Oana Lungescu, a former NATO spokesperson now at the RUSI think tank, warned that the move would have consequences. "If confirmed, it will send a bad signal at a very tense time in transatlantic relations, and will only deepen the concerns of other allies about the U.S. commitment to NATO," she said.

The news also surfaced as the Trump administration weighs military options against Iran, a scenario where close coordination with NATO allies would typically be paramount.

A New Strategy: Limited Support for Europe

This apparent disengagement aligns with a new National Defense Strategy published by the Trump administration last week. The document explicitly redefines America's role, signaling a pivot away from its traditional security posture in Europe.

The strategy states: "In Europe and other theaters, allies will take the lead against threats that are less severe for us but more so for them, with critical but more limited support from the United States."

In place of Hegseth, diplomats expect Elbridge Colby to attend the Brussels meeting. As the Pentagon's policy chief, Colby was a key architect of the new defense strategy.

Analysts Warn of a "Missed Opportunity"

Experts argue that Hegseth's absence is a missed chance to repair and strengthen the alliance at a critical moment. Jamie Shea, a former senior NATO official and a fellow at the Friends of Europe think tank, noted that the timing is particularly poor. Trump and NATO chief Mark Rutte had recently agreed that the alliance should take on a greater role in Arctic security, partly to ease the tensions over Greenland.

"It has to be recognised that Hegseth has criticised NATO more than he has shown a desire to lead it," said Shea. "At a time when transatlantic security consultations at high level are more needed than ever, this is another missed opportunity for the U.S. to show leadership and initiative in the alliance."

A digital euro is essential to guarantee Europe’s economic sovereignty and reduce its dependence on foreign payment providers, according to European Central Bank Executive Board member Piero Cipollone.

"Today, Europe is significantly reliant on non-European payment systems and if we don't do anything this reliance will increase," Cipollone stated in Rome. He described this dependence as a "structural vulnerability" for the region's economy.

Breaking Dependence on Foreign Payment Giants

For years, the ECB has been developing a digital counterpart to cash, aiming to lessen the continent's reliance on US-based firms like Visa, Mastercard, and PayPal for everyday retail payments.

Concerns over this financial dependency have intensified amid recent trade threats from Donald Trump. However, Cipollone emphasized that the initiative is driven by the ECB's core mission, not external politics.

"It's not, however, about reacting to someone, but about acting on our mandate," he said. "The ECB must guarantee the proper functioning of payment systems and such a marked dependency on extra-European systems in such a crucial sector represents a systemic risk."

Project Timeline and Political Hurdles

The ECB's project, launched in 2021, is currently awaiting a solid legal framework. Cipollone reiterated a potential timeline where a pilot phase for the digital euro could begin in 2027, with a full issuance following in 2029.

Progress has been slow. While the European Commission presented a proposal in 2023 and member states reached a common position in December, the biggest roadblock remains the European Parliament, which has yet to finalize its stance. Some lawmakers reportedly favor a private-sector alternative over a public digital currency.

The Stablecoin Threat

Cipollone also addressed the risks posed by stablecoins, which have been championed by figures like Trump. He warned that these instruments could "threaten financial stability" in Europe. The International Monetary Fund has echoed these concerns, noting that stablecoins could disrupt traditional lending, weaken monetary policy, and trigger runs on safe assets.

The ECB official suggested that citizens should be provided with simple and reliable public alternatives. "The response is to guarantee an efficient combination of public and private money in euros," Cipollone explained.

While the primary objective of the digital euro is to serve the domestic economy, he noted that the infrastructure could eventually be expanded for use by countries outside the euro area.