Fed’s Stealth Bond Purchases Hint at Strategic Shift as Gold and Bitcoin Surge

Gerik

Commodity

Cryptocurrency

Bond

Summary:

The U.S. Federal Reserve quietly bought $43.6 billion in Treasury bonds in just four days, signaling a subtle policy pivot that has triggered a surge in gold and bitcoin prices...

Fed's Quiet Return to Quantitative Easing Signals Policy Recalibration

In a move that has escaped broad public attention, the U.S. Federal Reserve recently executed large-scale purchases of Treasury bonds amounting to $43.6 billion over just four days. Notably, $8.8 billion was allocated to 30-year bonds on May 8 alone. This activity diverges sharply from the public narrative of monetary tightening, raising speculation that the Fed may be softening its stance to preempt economic headwinds.

Rather than representing a reversal of official policy, this appears to be a cautious, almost experimental reintroduction of liquidity into the market. For market-savvy investors, the scale and subtlety of these actions serve as an early signal of deeper systemic shifts that could influence global capital flows.

Commodities React First: Gold as the Barometer of Skepticism

Gold, long regarded as a hedge against financial uncertainty, has been among the first asset classes to respond. Since early 2024, gold has appreciated significantly, fueled by growing distrust toward central banks and political actors. Unlike fiat currencies, gold responds primarily to quantifiable shifts in monetary supply and sovereign risk—making it a particularly sensitive gauge in the current macroeconomic context.

The trend is global. China, for example, has expanded its gold import quotas, enabling domestic banks to directly convert U.S. dollars into gold. This maneuver indicates strategic diversification away from U.S. Treasuries, reflecting Beijing’s apprehension about the long-term security of holding $784 billion in U.S. government debt.

If even 10% of that portfolio were redirected into gold, the impact on global financial markets would be profound.

Bitcoin Rises on Institutional Validation and Strategic Accumulation

Bitcoin, often seen as the digital counterpart to gold, has also reacted strongly. After undergoing its latest “halving” event—a reduction in mining rewards that historically precedes multi-year bull cycles—Bitcoin has surged in price and institutional relevance.

In a noteworthy shift, the Trump administration has embraced Bitcoin at a strategic level, establishing a national reserve of the digital currency. This move, alongside growing inflows into Bitcoin ETFs, indicates that the asset is transitioning from fringe speculation to mainstream acceptance. Fed liquidity, whether explicit or implicit, tends to bolster risk-on assets, giving further upside to the crypto market.

Central Banks Quietly Prepare for a Global Financial Realignment

Not only the U.S. and China, but central banks across the globe are increasing their gold holdings and reassessing the composition of their reserves. This coordinated behavior suggests that many monetary authorities are anticipating a systemic recalibration—either from inflation volatility, geopolitical fragmentation, or long-term currency depreciation.

The import of gold by the U.S. itself reinforces the notion that even Washington is hedging against internal fiscal risks, including the expanding debt burden and weakening sovereign credit profile, recently spotlighted by Moody’s downgrade.

Emerging Markets and Resource Economies Enter the Spotlight

While traditional markets brace for turbulence, resource-rich nations—especially in Latin America—are experiencing a wave of investor interest. Brazil stands out. Benefiting from a commodities boom, its financial instruments have soared: the iShares MSCI Brazil ETF and the iShares Latin America 40 ETF have risen approximately 24% year-to-date.

These gains are not random; they reflect a calculated reallocation of global capital toward economies seen as relatively insulated from Western financial fragility. As the dollar softens and global demand for commodities rises, Brazil and similar economies emerge as both safe havens and growth plays.

Early Moves in a Broader Monetary Realignment

The Fed’s discreet re-engagement in bond markets may signal more than tactical liquidity support—it may foreshadow a larger-scale monetary recalibration. As institutional confidence in fiat systems erodes and inflationary pressures remain unresolved, gold and bitcoin are increasingly seen as viable hedges, while Latin America offers geographic and economic diversification.

While U.S. equities have historically benefitted from loose monetary policy, this time may be different. The evolving distrust in central banking, alongside geopolitical instability, is redistributing market confidence toward non-traditional stores of value and emerging market assets. For investors alert to early policy signals, the window of strategic repositioning is already opening.

Source: MorningStar

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Owen Li

Economic

Commodity

Amid the doom and gloom of falling crude prices and weakening demand growth, oil bulls could find one nugget of cheer in the latest report from the International Energy Agency: a modest upward revision to historical consumption.

That may not seem terribly exciting, but it wiped out three years’ worth of apparent global oil stockbuilds and drained an ocean of “missing barrels.”

The world used about 330,000 barrels a day more in 2023 than was previously reported, according to the IEA. Africa accounted for three-quarters of that revision, with higher consumption in Egypt and Nigeria.

Because of the way forecasts are generated, that historical increase gets rolled forward into subsequent years, raising the level of demand for this year and next even if it does nothing for year-on-year growth.

Rather than predicting actual oil consumption for 195 countries, analysts tend to forecast incremental demand by region using assumptions about population and economic growth, and then applying those numbers to “known” historical consumption levels.

Raise the starting point and everything else rises, even as annual growth is unaltered.

At a stroke, the IEA’s revision wiped out all the stockbuilds it saw in 2022, 2023 and 2024.

Rather than adding 220 million barrels of oil to global inventories during those three years, the IEA now says we have drawn them down by nearly 75 million barrels. That swing is equivalent to almost three-quarters of the US strategic reserve.

Before we get too excited, though, the IEA still sees supply running ahead of demand in 2025 and 2026.

Even if OPEC+ pauses its output increases after the big hikes planned for this month and next, supply will still exceed demand by more than 1 million barrels a day in the third quarter, the agency says. And that’s before any possible return of Iranian barrels.

The spare oil will head for storage tanks that are a lot less full than previously believed.

While it’s not a recipe for rising prices, erasure of the missing barrels might help put a floor under them, at least for a little while.

Exports of US crude are tumbling as OPEC+ restores production into a market grappling with weakening demand because of the trade war and reduced refinery capacity. Average US oil exports dropped 10% to 3.76 million barrels a day in the four weeks through May 9, according to Energy Information Administration data. That’s the slowest pace since January and well below seasonal levels from the past two years.

US Treasury officials met with Hong Kong banks in April to warn them against facilitating Iranian oil shipments to China, just a month before sanctioning nine non-bank entities allegedly involved in such trades, people familiar with the matter said.

Canadian oil tycoon Adam Waterous’ Strathcona Resources Ltd. announced plans to make a takeover bid for MEG Energy Corp. that values the oil-sands company at about C$6 billion ($4 billion).

Vistra Corp. agreed to buy seven gas-fired power plants for $1.9 billion, the latest big US generator betting on the fossil fuel to feed the voracious appetite of artificial intelligence.

Taiwan is shutting its last nuclear reactor this weekend, putting pressure on the island’s energy-guzzling chipmakers in the face of soaring demand for their products.

Ice-cream cones will likely cost more this summer as the price of coconut oil, a key ingredient, keeps setting records, Bloomberg Opinion’s Javier Blas writes.

China’s liquefied natural gas demand may see limited benefit from the recent slash in US tariffs, according to BloombergNEF. The existing levies, domestic economic malaise and elevated LNG prices are set to curb Chinese buying interest. Imports may reach 68 million metric tons — 1.1 million tons more than forecast last month during the peak of the trade war. Yet that’s still 8.2 million tons, or 11%, lower year-on-year.

Join us in Doha for the Qatar Economic Forum on May 20-22. Since 2021, the forum powered by Bloomberg has convened more than 6,500 influential leaders to explore bold ideas and tackle the challenges shaping the global economy. Request an invitation today.

Source: Bloomberg Europe

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Gerik

Economic

Weak Q1 Signals Mounting Economic Stress for Russia

The latest data released by Russia’s Federal Statistics Service (Rosstat) reveals that the country’s economic growth slowed significantly in the first quarter of 2025. GDP expanded by only 1.4%, a steep decline from 4.5% in the previous quarter and markedly below the 5.4% growth seen in Q1 2024. The result also fell short of expectations from the Ministry of Economic Development (1.7%) and Bloomberg analysts (1.8%).

This downturn represents the slowest pace of growth in over a year, raising renewed concerns about the sustainability of Russia’s economic trajectory under prolonged geopolitical and financial pressure.

Financial Headwinds and Policy Constraints Deepen Economic Challenges

Egor Susin, an executive at Gazprombank, described the data as indicative of a significant downturn, arguing that Russia is now facing clear signs of economic contraction. Analysts attribute the sluggish growth to several interlinked issues: tight monetary policy from the Bank of Russia, persistent inflation, sanctions-induced supply constraints, and a weakening revenue base from oil exports.

The impact of declining energy income is particularly pronounced. According to Raiffeisenbank, oil and gas revenues fell by 10% between January and April 2025, weakening the fiscal cushion that has historically helped Russia navigate economic shocks. This drop in hydrocarbon earnings is especially damaging given the country’s reliance on energy exports for budget stability and foreign currency inflows.

Sanctions and War Pressure Create a Persistent Drag

In parallel, sanctions stemming from the Ukraine conflict continue to erode Russia’s trade capabilities and investment environment. A recent study by the Stockholm Institute of Transition Economics (SITE) underscores how escalating Western restrictions are compounding internal structural weaknesses, limiting access to critical technology, capital, and markets.

Additionally, the ongoing conflict poses complex future risks. If peace negotiations between Moscow and Kyiv lead to military expenditure cuts, the Russian economy could experience a further contraction due to reduced government spending—currently a key driver of domestic demand. On the other hand, failure to reach a peace agreement may prompt the EU and U.S. to escalate sanctions, deepening financial isolation and curtailing growth prospects.

Outlook Uncertain Amid Policy and Geopolitical Crossroads

The sharp deceleration in Russia’s economic growth illustrates the accumulating toll of international sanctions, inflationary pressures, and energy revenue instability. As the war in Ukraine drags on and oil prices remain subdued, Russia’s macroeconomic stability hangs in the balance. Moving forward, the country’s economic direction will be shaped by geopolitical developments and the government’s ability—or inability—to navigate these challenges with sustainable fiscal and monetary strategies. Without meaningful structural reform or easing of external constraints, Russia may struggle to avoid a deeper slowdown in the coming quarters.

Source: The Kyiv Independent

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Owen Li

Economic

President Trump has departed Abu Dhabi aboard Air Force One, concluding a historic week in the Middle East that saw the signing of more than a trillion dollars in deals aimed at advancing his 'America First' agenda.

Ahead of his departure from the Middle East, President Trump addressed business leaders in Abu Dhabi, stating that his administration will unilaterally set tariff rates for U.S. trading partners within the next two to three weeks.

"We just reached a fantastic trade deal with the United Kingdom. And we have another big one that we reached with China," the president said.

He continued, "At the same time, we have 150 countries that want to make a deal—but you're not able to see that many countries." He added that Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick "will be sending letters out essentially telling people what "they'll be paying to do business in the United States."

"I think we're going to be very fair. But it's not possible to meet the number of people that want to see us," Trump said.

The president did not specify which countries want to make deals, nor the ones that will receive letters.

Talks remain ongoing with top trading partners, including Japan, South Korea, India, the EU, and China, with recent progress...

However, the administration appears to have abandoned comprehensive negotiations in favor of setting terms directly for many countries due to what Bloomberg says "the lack of manpower and capacity makes it impossible to hold concurrent negotiations with all the countries caught up in the president's so-called reciprocal tariffs plan."

Earlier this week, the U.S. and China announced a breakthrough trade agreement that temporarily lowered tariffs on each other's products for 90 days. The U.S. dropped its 145% on Chinese goods to 30%, while China lowered levies from 125% to 10%.

Goldman illustrates the rollercoaster ride of the tit-for-tat trade war between the U.S. and China in recent months, as well as the temporary cooling period aimed at de-escalating tensions.

On Wednesday morning, Goldman analyst Jerry Shen told clients, "We Now Expect the Effective Tariff Rate to increase by 13pp."

Last week, Trump stated, "We have four or five other deals coming immediately. We have many deals coming down the line. Ultimately, we're just signing the rest of them in."

Source: Zero Hedge

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Gerik

Economic

Tariff Easing Triggers Sudden Spike in U.S. Imports

Following a temporary agreement between the United States and China to reduce import tariffs over a 90-day period starting May 14, 2025, U.S. importers are racing to capitalize on the window of lower costs. The accord, negotiated in Geneva, saw Washington lower tariffs on Chinese goods from 145% to 30%, while Beijing reciprocated by slashing tariffs on American products from 125% to 10%.

Almost immediately, U.S. retailers and manufacturers accelerated orders to stockpile goods, particularly in preparation for seasonal demand surges during Black Friday and Christmas. This preemptive behavior illustrates a calculated response to anticipated price increases once the preferential rates expire.

Container Bookings and Freight Rates Soar

The logistical ripple effects have been significant. Data from Vizion shows container bookings from China to the U.S. rose 277% in the week beginning May 5—just a day after the agreement was announced. Similarly, German container carrier Hapag-Lloyd recorded a 50% rise in bookings along the same route compared to the previous week. To manage the surge, shipping lines raised freight rates by 8%, with expectations for further hikes up to 50% within the next 10 days.

This spike in shipping demand has intensified pressure on American ports. Facilities like Los Angeles and Houston are facing congestion and delays, while importers are increasingly using bonded warehouses to delay customs clearance and defer tax liabilities until the goods are released into the domestic market.

A Narrow Window for Trade Gains Amid Long-Term Downturn

Despite the temporary surge in import volume, analysts caution that the broader trade outlook remains bleak. Port of Los Angeles Executive Director Gene Seroka forecasts a 25% year-on-year drop in May imports, while Global Port Tracker projects a 20.5% decline to 1.66 million TEUs—ending a streak of 19 consecutive months of growth.

The anticipated contraction stems from earlier inventory accumulation. After President Trump imposed sweeping tariffs of up to 145% on April 9, many businesses paused or canceled new orders. This led to a sharp 50% drop in container bookings in the final week of April, before the temporary relief was enacted. The retail sector's reaction also reflects this volatility: while sales in March rose 1.7% due to anticipatory buying, April saw a stagnation with just 0.1% growth as consumers pulled back amid price uncertainty and inflation fears.

Policy Volatility Undermines Supply Chain Stability

The fluctuating nature of U.S.–China trade policy is raising red flags among analysts and logistics professionals. Repeated policy reversals—characterized as an on-off switch approach—are undermining supply chain resilience. The abrupt imposition and reversal of tariffs compel businesses to adopt short-term survival strategies rather than long-term planning, increasing vulnerability to price shocks and logistical disruptions.

Experts warn that unless governments and corporations pivot toward more adaptable, long-term frameworks, these policy-driven surges and contractions will continue to destabilize international commerce. Strategic foresight, diversified sourcing, and improved policy coordination are being cited as essential components for mitigating future volatility.

The current surge in imports may offer short-lived benefits for U.S. retailers and logistics providers, but it underscores a deeper issue: the fragility of a trade system beholden to abrupt policy changes. Without structural adjustments in how nations approach trade negotiations and how businesses prepare for regulatory shifts, the global supply chain will remain exposed to recurring cycles of disorder. The temporary reduction in tariffs has offered a window of relief—but also a warning about the cost of reactive trade strategy.

Source: CNBC

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Kevin Du

Central Bank

Switzerland has had productive talks with the US on the central bank’s currency interventions, Swiss National Bank President Martin Schlegel said, rejecting the suggestion that the country manipulates the franc’s exchange rate.

“We are no currency manipulator,” he said in Lucerne on Friday, adding that “we had a constructive conversation with the US authorities” on the topic.

Schlegel declined to further elaborate on the format or content of those talks, though a spokesperson later said that the SNB has an ongoing exchange with US authorities, especially with the Department of the Treasury.

The central bank chief pointed out that historically, the SNB has only ever intervened on the franc to meets its price stability directive.

“We have never influenced the exchange rate to get us an advantage,” he said. “We only acted to ensure we fulfill our mandate under the given global economic conditions.”

The franc is typically seen as a haven currency in times of market stress, with the recent market uncertainty triggered by US President Donald Trump’s tariff policy pushing it to a decade high against the dollar last month and near such a high against the euro.

The SNB’s past interventions earned Switzerland a currency manipulator tag during Trump’s first term, though that label was subsequently removed. Schlegel has repeatedly said that the threat of that classification won’t stop the institution from steering the currency if required.

By selling some of its own reserves in foreign denominations, the SNB can strengthen the exchange rate. In 2022 and 2023, it boosted the franc in this way to dampen domestic inflation by making imported goods cheaper.

For several years before that, it had used the mechanism in the opposite direction to keep a lid on the currency. This has seen the SNB’s balance sheet grow to a size some observers deem dangerous as it can yield large profits — as last year — but also large losses.

The latest data show that the Swiss central bank hardly stepped into currency markets in 2024. First-quarter numbers will be available at the end of June.

The SNB is just a month away from its next monetary policy decision, with markets and economists expecting a 25 basis-point reduction to zero at that meeting. Asked if officials may have to embrace negative rates, Schlegel said that “if the economic situation dictates that the interest rate needs to be at that level, then we will go there.”

Source: Bloomberg Europe

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Jason

Economic

Nvidia (NVDA.O), opens new tab is seeking a site in Shanghai for a research and development centre, three sources close to the matter said, reflecting the strategic significance of the Chinese market where U.S. curbs on advanced chip exports have hit sales.

The U.S. chipmaker began the search in early 2025 and is primarily evaluating locations in Shanghai's Minhang and Xuhui districts, one of the sources said.

The project gained momentum after a surprise visit to China by Nvidia CEO Jensen Huang last month, said two of the sources.

Huang, who has consistently said China is critical to Nvidia's growth, made his visit immediately after the U.S. placed new restrictions on China-bound shipments of its H20 chips, the only AI chip the company can sell legally in China.

Huang met senior Chinese officials, including Vice Premier He Lifeng and Shanghai's mayor Gong Zheng.

Reuters reported earlier this month that Nvidia plans to release a downgraded version of the H20 chip for China in the next two months, as it seeks to prop up sales in the country, where it has been lost market share to domestic rivals such as Huawei.

China generated $17 billion in revenue for Nvidia in the fiscal year ending January 26, accounting for 13% of the company's total sales.

The local government of Shanghai, which hosts China's largest foreign business community, including firms such as Tesla (TSLA.O), opens new tab, has expressed willingness to offer incentives for the Nvidia project, including tax reductions, said two of the sources.

The local authorities are also considering offering a substantial amount of land to Nvidia for its China R&D centre, one source added.

Nvidia declined to comment, while the Shanghai city government did not immediately respond to a request for comment. The sources declined to be named, as the plan is not public.

Following his visit to China, Huang told CNBC that the country's AI market could reach approximately $50 billion within the next two-to-three years.

He said that being excluded from this rapidly expanding sector would represent a "tremendous loss" for Nvidia, especially as competition with Huawei intensifies.

During an earnings call in February, before H20 chip sales to China were restricted, Nvidia executives said the company's sales to China were about half the level before U.S. export controls.

Since 2022, the U.S. government has imposed restrictions on the export of Nvidia's most advanced chips to China, citing concerns over potential military applications.

The Financial Times first reported on Friday about Nvidia's plan to build a R&D centre in China.