Germany’s Industrial Output Surges Unexpectedly in May Despite Falling Orders

Economic

Summary:

Germany’s industrial production rose by 1.2% in May, beating forecasts, driven by strength in the automotive and energy sectors, even as new orders declined due to weaker eurozone demand...

Surprise Upswing in German Industrial Production Defies Forecasts

Germany’s industrial sector delivered a stronger-than-expected performance in May, with output rising by 1.2% compared to the previous month, according to the federal statistics office. Analysts surveyed by Reuters had anticipated stagnation, with no monthly change. This positive deviation points to resilience in key segments of the German economy, particularly in automotive manufacturing and energy production.

The three-month rolling average, which smooths short-term volatility, further confirmed the trend. Industrial output from March through May increased by 1.4% compared to the previous three-month period, suggesting that the recent monthly gain was not an isolated spike but part of a broader rebound in productive activity.

April Output Revised Down but Does Not Diminish Positive Momentum

While the upward revision in May offers encouraging signs, the statistics office simultaneously revised April’s output drop downward from a provisional 1.4% decline to a more pronounced 1.6%. This adjustment underscores the sector’s recent volatility and the challenges it continues to face from fluctuating external demand and persistent structural pressures. However, May’s rebound more than offsets the revision, indicating a tentative shift toward recovery.

Despite the surge in output, recent industrial order data raises concerns about the durability of this recovery. New orders fell by 1.4% in May, interrupting the momentum built in previous months. The drop was primarily driven by weaker demand from eurozone trading partners, which introduces a potential lagging effect on future production levels.

The divergence between output and order volumes highlights a short-term mismatch: manufacturers may be fulfilling backlogs or ramping up supply in anticipation of delayed demand recovery. However, if the contraction in orders persists, it may eventually translate into lower production in the coming months. This dynamic points to a temporal correlation rather than a direct cause-effect chain, where current output gains reflect past demand, while new orders signal future challenges.

Germany’s May industrial production data suggests a tentative rebound, driven by automotive and energy activity. However, the simultaneous fall in new orders, especially from within the eurozone, tempers enthusiasm and calls for a more measured outlook. For now, the production upswing serves as a positive signal for Europe’s largest economy, but sustained recovery will depend on restoring broader demand conditions across the region.

Source: Bloomberg

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Cryptocurrency

Economic

Ethereum’s Transformation From Experiment to Financial Backbone

Over the past decade, Ethereum has evolved from a developer-focused blockchain experiment into a foundational technology increasingly integrated into institutional finance. At the recent Ethereum Community Conference (EthCC) held in Cannes, this transformation was made visibly and symbolically clear. The conference drew cryptocurrency founders, developers, and institutional players into a venue typically reserved for cinematic premieres now repurposed to spotlight the architecture of Ethereum-based finance.

The choice of Cannes as a venue was more than symbolic. According to Bettina Boon Falleur, the long-time organizer of EthCC, the location’s prestige, paired with the conference’s heightened technical depth, underscored Ethereum’s rising stature in the global financial ecosystem. The event served as a platform not for speculative discussions on price movements, but for strategic deliberations about how Ethereum can modernize back-end systems across financial institutions.

Institutional Embrace Marks a New Phase for Ethereum

One of the clearest signals of Ethereum’s growing institutional relevance came from Robinhood. The firm became the first publicly traded US brokerage to unveil tokenized stock offerings on-chain. This rollout, presented at a Belle Époque-style mansion overlooking the Riviera, outlined a new crypto strategy: allowing European users to trade tokenized US equities and ETFs via Arbitrum, a Layer 2 scaling solution built atop Ethereum.

Robinhood’s announcement triggered a sharp rally in its stock, pushing it past the $100 mark for the first time. The surge, exceeding 30% in a week, illustrates the market’s enthusiastic response to Ethereum-aligned innovation, especially as Robinhood was recently excluded from the S&P 500 rebalancing. Other blockchain-linked firms also experienced strong gains. BitMine Immersion Technologies saw a staggering 1,200% rise following its decision to use Ether as a reserve asset. Bit Digital, which pivoted to Ethereum staking, gained over 34%, while SharpLink Gaming jumped more than 28% after adding $20 million in Ether to its balance sheet.

The upward trend extended into ETF flows. Although Ether-tracking ETFs still lag behind their Bitcoin counterparts with only $11 billion in total assets compared to Bitcoin’s $138 billion they’ve seen renewed inflows, indicating rising institutional comfort with Ethereum. This reaffirms a correlational relationship between institutional product development and investor sentiment, as regulatory clarity and technological utility converge to drive adoption.

Functionality Over Frenzy: Institutions Bet on Infrastructure

Ethereum’s appeal among institutions is not driven by hype but by its proven utility. The blockchain’s integration into core transaction systems is accelerating, enabling faster, cheaper, and more flexible financial mechanisms. Paul Brody, EY’s global blockchain leader, emphasized this point, noting that Ethereum’s growing use in payment rails, savings platforms, and cross-border transfers reflects its real-world utility beyond speculative trading.

This shift from speculative enthusiasm to foundational integration is evident in projects like Deutsche Bank’s new platform on zkSync, another Ethereum-based network focused on tokenizing assets in a privacy-conscious and regulation-compliant manner. These developments demonstrate Ethereum’s ability to support regulatory-grade financial systems, positioning it not as a fringe experiment but as an institutional-grade ledger.

Race for Tokenized Equity: Coinbase, Kraken, and the Expanding Frontier

Other crypto-native firms are also racing to stake claims in this evolving landscape. Coinbase is seeking SEC approval to offer tokenized public equities, aiming to compete directly with traditional brokers. Kraken, meanwhile, plans to introduce 24/7 tokenized equity trading in select global markets. These initiatives reflect the growing belief that Ethereum can bridge the gap between traditional and digital finance, enabling round-the-clock access to legacy assets.

BlackRock’s BUIDL fund, launched on Ethereum, exemplifies this trend. The fund allows qualified investors to earn on-chain yield with real-time USDC redemptions, offering a glimpse of how future financial products might operate in tokenized environments.

Stablecoins and Ethereum’s Core Role in Liquidity Systems

Stablecoins remain central to Ethereum’s role in the financial system. Circle’s USDC, the second-largest stablecoin, continues to account for 65% of transaction volume on Ethereum. Ethereum, despite competition from faster blockchains like Solana, still commands nearly 50% of the stablecoin market. This reflects the blockchain’s long-standing reliability and the trust institutions place in its technical stability.

Vitalik Buterin, Ethereum’s co-founder, addressed this perception at EthCC. He noted that institutions often value Ethereum’s consistency and resilience over raw speed. While newer blockchains boast higher throughput and lower fees, Ethereum’s durability, security, and censorship resistance make it the preferred choice for high-stakes, regulated environments.

Trust Through Stability: What Institutions Value Most

The emphasis on long-term trust and impartial execution was echoed by Tomasz Stańczak, the newly appointed co-executive director of the Ethereum Foundation. Institutions, he explained, are drawn to Ethereum because it guarantees neutral execution, fair treatment of orders, and predictable functionality. These traits become especially important as tokenized assets and stablecoins move closer to mainstream adoption.

Recent legislative support, such as the passage of the GENIUS Act in the US Senate and Circle’s upcoming IPO, have further cemented Ethereum’s infrastructural role. These developments reflect an institutional preference for systems that align with regulatory expectations without compromising decentralization or privacy.

Ethereum’s Core Values as Competitive Advantage

The foundational values of Ethereum neutrality, security, and censorship resistance are becoming its most important features in the institutional race. As Falleur stated, the builders at EthCC are not chasing the next price spike. Instead, they are designing Ethereum to support a future where a billion users interact with financial systems powered by open infrastructure.

The question moving forward is whether Ethereum can scale while preserving its foundational ideals. As Buterin put it, success alone is not enough; Ethereum must also remain worthy of that success by fostering openness, freedom, and universal accessibility.

The week concluded not with another technical keynote but with a symbolic gesture: the rAAVE party at Villa Montana. Overlooking the glittering coastline of Cannes, Ethereum’s founding community mingled with rising DeFi innovators like Stani Kulechov and Sergey Nazarov. In that moment on balconies once reserved for movie stars Ethereum’s institutional future felt inevitable, marking its shift from decentralized experiment to financial pillar.

Source: CNBC

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Economic

Tariff Effects May Prolong Inflation Rather Than Cause a Temporary Surge

Federal Reserve Bank of Atlanta President Raphael Bostic has issued a public warning that recent shifts in US trade policy, particularly the imposition of tariffs, could result in sustained inflation rather than a short-term price spike. According to Bostic, these developments are likely to maintain elevated price levels for a year or more, especially as companies factor in cost adjustments from policy changes and volatile global conditions.

Despite mounting pressure from former President Donald Trump for the Federal Reserve to lower interest rates, Bostic has expressed firm support for Chairman Jerome Powell’s wait-and-see approach. Emphasizing caution, Bostic stated that monetary policy should not be adjusted hastily and that the full effects of tariff-related price changes must first be observed before altering the current policy stance. He reiterated that this period does not justify substantial changes to interest rate settings.

Inflation Figures Remain Above Target but Do Not Yet Fully Capture Tariff Impact

Inflation data from March through May has remained above the Fed’s 2 percent target, but Bostic believes the current numbers understate the long-term effects of trade policies. He explained that many firms are postponing price increases until tariffs are finalized, suggesting that the full inflationary impact may only become visible in the coming months. This cautious interpretation reflects a lag in how cost pressures pass through to consumer prices.

Although Bostic does not hold a voting seat on the Federal Open Market Committee (FOMC) this year, his insights add to the internal Fed discourse, especially as markets continue to speculate about future rate cuts. His comments arrive ahead of the next FOMC meeting scheduled for July 29-30 and just days before a key tariff suspension agreement is set to expire on July 9. The looming expiration of the 90-day delay on retaliatory tariffs injects additional uncertainty into the Fed’s inflation outlook.

Strong Labor Market Data Undermines Case for Immediate Monetary Easing

Hours before Bostic’s statement, the June nonfarm payroll report revealed a significant increase in job creation alongside a declining unemployment rate, which exceeded economists’ expectations. This robust labor market performance further diminishes the likelihood of an imminent rate cut, reinforcing the narrative that the US economy does not currently warrant monetary stimulus despite persistent inflation pressures.

The connection between tariffs and inflation, as emphasized by Bostic, suggests a direct causal relationship. Trade restrictions increase the cost of imported goods and inputs, which then elevate production costs for domestic firms. However, the delay in observable price increases indicates a lag effect, where the initial policy does not result in immediate consumer-level inflation but gradually builds as firms adjust pricing strategies. The timeline and magnitude of this pass-through are critical for policymakers as they evaluate the appropriate timing for any monetary policy adjustments.

Bostic’s remarks reflect the Federal Reserve’s broader effort to remain data-driven and independent from political pressure. While the economy shows resilience in job growth, underlying inflation risks, especially those tied to trade policy, require a longer observation window. The Fed’s strategic patience, as supported by Bostic, underscores the importance of understanding delayed cost transmission mechanisms and their influence on price stability.

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Political

A Clash of Powerhouses: Musk’s Political Gambit Triggers Market Anxiety and Presidential Rebuke

The long-simmering tensions between U.S. President Donald Trump and Tesla CEO Elon Musk reignited this week as Musk declared the formation of a new political force the “America Party.” In response, Trump dismissed the idea as “ridiculous,” reiterating his belief in a two-party system and intensifying a feud that now threatens not only the political landscape but also the financial performance of Musk’s companies.

Musk’s announcement on Saturday came in the wake of Trump’s approval of a sweeping tax-and-spend bill that Musk had publicly opposed. Though Musk provided no specifics or official filings for the new party, he emphasized his intent to disrupt the bipartisan status quo, citing a poll on X (formerly Twitter) showing majority support for a third-party initiative.

Tesla Under Pressure as Politics Overshadow Profits

Markets reacted swiftly to the announcement. Tesla stock, already down more than 20% year-to-date, dropped nearly 5% in Asia’s early Monday trade through alternative platform Blue Ocean. Analysts, including Wedbush’s Daniel Ives, warned of investor fatigue, noting that Musk’s deepening political involvement could pull focus from Tesla’s core business at a time when it faces mounting global challenges.

Ives emphasized that this “political gamble” is likely to add strain to Tesla’s already underperforming stock. The company’s second-quarter global sales fell 13%, and European sales plummeted nearly 30% year-on-year in May, marking five straight months of decline in the region. In China, while Tesla managed a modest monthly delivery gain, domestic competitors like BYD and Xiaomi are rapidly eating into its market share with innovative and affordable electric vehicles.

Trump Strikes Back: From Personal Jabs to EV Subsidy Cuts

Trump wasted no time countering Musk’s political move. On Truth Social, he mocked Musk for “going off the rails” and expressed satisfaction that his latest budget eliminates electric vehicle subsidies hitting Tesla where it hurts. Treasury Secretary Scott Bessent joined the criticism, suggesting that Musk’s business boards were likely “not thrilled” with his political detour and would prefer he return to corporate leadership.

Musk’s departure from Trump’s administration in May, where he briefly led a federal spending reform initiative, marked a dramatic shift in their relationship. While he initially backed off public confrontations, Musk reignited hostilities last week, calling Trump’s spending bill “insane” and detrimental to future-oriented industries.

Third-Party Turbulence: A Political Distraction or Strategic Move?

Despite historical struggles for third parties in U.S. presidential races Ross Perot’s 8% in 1996 being the most recent benchmark Musk sees potential in capturing swing votes in Congress to break legislative deadlock. Critics argue this is a costly distraction for a CEO whose companies require his undivided attention.

However, not all financial voices are alarmed. Jason Hsu of Rayliant Global Advisors praised the move as “genius,” suggesting it may ultimately enhance Musk’s political leverage and shield his companies from political headwinds. Still, he acknowledged that investor nerves are fraying in the short term due to perceived risk and uncertainty.

The Musk-Trump feud underscores a broader trend of billionaire entrepreneurs crossing into political domains. While such moves might strengthen personal influence, they carry tangible risks for shareholders and companies under public scrutiny. With Tesla’s performance under strain and its CEO increasingly embroiled in political disruption, the next steps could redefine both his corporate empire and his political legacy. Whether Musk’s America Party gains real traction remains to be seen, but for now, it’s clear the conflict with Trump is moving markets and not in Tesla’s favor.

Source: Bloomberg

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Economic

Tit-for-Tat Trade Measures Deepen EU-China Tensions Before July Summit

China has retaliated against the European Union by excluding EU-based companies from public procurement of certain medical devices, further complicating already fragile ties just ahead of a high-level summit between both sides. The move, announced by China’s Ministry of Finance on Sunday, comes as the EU continues to crack down on Chinese imports most notably electric vehicles citing unfair state subsidies.

However, Beijing stopped short of applying the procurement ban to European companies manufacturing within China. This exception benefits firms like Siemens Healthineers and Royal Philips, which have heavily localized operations in the country. The Ministry of Commerce confirmed the exclusion would only apply to products physically made in Europe, not to those produced within China, signaling a narrowly targeted response.

Symbolic Retaliation or Strategic Posture?

Experts interpret China’s action as a strategic “tit-for-tat” aimed at signaling displeasure without triggering immediate escalation. Professor Henry Gao of Singapore Management University called it a "narrow response," while Chinese state-affiliated experts described it as a “reciprocal response” meant to pressure the EU toward creating a more balanced market environment.

This move follows China’s recent imposition of five-year anti-dumping duties on European brandy, sparing major cognac producers that agreed to minimum pricing, and its announcement of an ongoing probe into European liquor imports. Such carve-outs raise questions about whether Beijing is primarily seeking to de-escalate or simply applying pressure in a calculated manner.

A Summit Shadowed by Broader Tensions

The timing is sensitive: EU and Chinese leaders are scheduled to meet in Beijing later this month. But the mood is far from cooperative. China reportedly plans to shorten the summit to a single day, in contrast to the usual multi-day format, underscoring the rising diplomatic chill. Beyond trade, the EU has grown increasingly concerned about Beijing’s alignment with Russia since the invasion of Ukraine and China's grip on rare earth exports elements critical to EU industry.

Cui Hongjian, a former Chinese diplomat, noted that while China is still open to diplomatic engagement, it is also signaling that it will respond decisively to any perceived aggression. “It’s not like the past, when China always tried to pursue a fruitful summit,” he said. “Now, China is ready for any kind of summit.”

Electric Vehicle Battle Nears Conclusion

A major flashpoint remains the EU’s ongoing tariff case against Chinese electric vehicle (EV) exports. Brussels argues that Chinese EV makers receive disproportionate subsidies, giving them an unfair edge in global markets. While negotiations are continuing, with China’s Commerce Ministry indicating talks are in their “final stages,” the outcome remains uncertain. A state-affiliated source recently claimed technical negotiations are nearly complete, but no official confirmation has followed.

Implications and Outlook

Beijing’s selective retaliation strategy reveals its desire to strike a balance: signaling resolve without triggering full-scale trade warfare. The exemptions for localized production suggest China still values European investment, but also wants leverage as it pushes back against what it sees as discriminatory policies.

The upcoming EU-China summit will be a critical test of how far either side is willing to go in reconciling economic and political differences. As both powers navigate complex global headwinds including their relationships with the United States this latest trade flare-up adds uncertainty to already precarious diplomatic relations.

Source: Bloomberg

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Economic

Trump Escalates Trade Tensions, Targets BRICS-Aligned Nations with Extra Tariffs

U.S. President Donald Trump has intensified his hardline trade stance by announcing that countries aligning with the BRICS bloc’s “anti-American policies” will be subject to an additional 10% tariff. The declaration, posted on Truth Social late Sunday evening, did not identify specific policies but came as the BRICS summit convened in Rio de Janeiro, Brazil.

This unexpected move adds a new layer of complexity to global trade dynamics, especially as the original wave of Trump’s April tariffs imposing base rates of 10% to as high as 50% is set to take effect on August 1 for countries without a finalized agreement with the U.S.

BRICS Pushes Back Against U.S. Trade Aggression

In a joint communiqué issued over the weekend, BRICS leaders voiced strong opposition to what they called “unjustified unilateral protectionist measures,” condemning the indiscriminate use of tariffs that violate World Trade Organization (WTO) rules. While the statement avoided directly naming the U.S., it was a clear rebuke of Trump’s escalating tariff regime. The leaders warned that such measures could disrupt global supply chains and deepen global inequality.

The bloc also expressed support for Iran, condemning recent military strikes without specifically attributing blame to either Israel or the U.S., further signaling diplomatic friction between BRICS and Western powers.

Who Are the BRICS?

Once comprised of five emerging economies Brazil, Russia, India, China, and South Africa BRICS has expanded to include Saudi Arabia, Egypt, the United Arab Emirates, Ethiopia, Indonesia, and Iran. The bloc positions itself as a coalition of Global South nations aiming to reform international governance, promote multipolarity, and reduce dependence on Western-led institutions. One of its long-term goals includes challenging the dominance of the U.S. dollar in global transactions.

Notably, Chinese President Xi Jinping did not attend the summit in person, instead sending Premier Li Qiang. Russian President Vladimir Putin, facing an ICC arrest warrant, participated virtually.

U.S. Moves Ahead with Country-Specific Tariff Letters

Meanwhile, Trump confirmed the U.S. would begin issuing official letters to its trading partners on Monday, detailing the country-specific tariff rates and outlining any agreements reached. This move aligns with earlier statements from Treasury Secretary Scott Bessent, who emphasized that August 1 marks the official tariff enforcement date for countries that fail to finalize deals.

Rejecting criticism that the U.S. was continually shifting tariff deadlines, Bessent stated, “We are saying this is when it’s happening... If you want to go back to the old rate, that’s your choice.”

Global Markets Brace for Impact

The announcement introduces heightened uncertainty into an already fragile trade environment. Trump’s threat to penalize BRICS-aligned nations some of which are key U.S. trading partners could undermine diplomatic negotiations and stall economic cooperation efforts.

With just days remaining until the July 9 interim deadline and a hard implementation date of August 1, markets are watching closely for potential deal announcements or retaliatory moves. As BRICS pushes back against perceived U.S. economic dominance, a more fragmented and protectionist global trade order may be emerging one that carries significant risks for international growth, investment flows, and geopolitical stability.

Source: CNBC

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Thailand Rushes to Avert US Tariffs with Last-Minute Trade Proposal

Thailand’s Finance Minister Pichai Chunhavajira confirmed on Monday that the country has officially submitted its latest trade proposal to the United States, amid mounting pressure to avoid steep import tariffs. The diplomatic move comes just days ahead of the July 9 deadline when the US is set to enforce new country-specific tariffs unless bilateral deals are finalized.

Washington has warned it will impose a 36% tariff on Thai imports up from the temporary baseline rate of 10% if no agreement is reached in time. This sharp increase poses a significant threat to Thailand, as the United States remains its single largest export destination, accounting for 18.3% of total shipments in 2024, or $54.96 billion in goods.

Minister Pichai, who recently returned from negotiations in Washington, stated that Thailand had taken US concerns seriously and revised its offer accordingly. “We heard their feedback and what they were especially interested in, and we adjusted it,” he told reporters. He also signaled openness to further revisions if necessary.

Bilateral Trade Under Strain

The urgency of the talks is driven by the sheer volume and structure of trade between the two countries. Thailand’s key exports to the US include computers, telecommunication equipment, and rubber products. Meanwhile, its top imports from the US are crude oil, machinery, and chemicals. Washington has cited a $45.6 billion trade deficit with Thailand as justification for the higher tariffs.

One strategic move that may help strengthen bilateral ties is the recent agreement signed in June between Thai state-owned energy conglomerate PTT Group and US-based Glenfarne Group. Under the $44 billion Alaska LNG project, Thailand will import 2 million metric tons of liquefied natural gas annually over 20 years an initiative personally backed by President Donald Trump and aimed at securing long-term energy trade.

Economic Stakes and Fragile Recovery

Thailand’s economy stands on precarious footing as it enters this pivotal negotiation phase. The Finance Ministry has warned that if the 36% tariff is enforced, GDP growth for 2025 could slip to just over 1%. The country is already grappling with sluggish domestic demand, record-high household debt, faltering tourism recovery, and broader trade uncertainty.

Despite slight recovery in 2024, when Thailand posted a modest 2.5% GDP growth, its performance has lagged regional peers. The Bank of Thailand recently downgraded its 2025 forecast to 2.3%, citing the potential impact of US trade measures as a key downside risk.

With the July 9 tariff deadline fast approaching, Thailand is now relying on diplomatic agility and economic concessions to preserve access to its most vital export market. Whether the US finds Thailand’s revised proposal sufficient remains to be seen, but the stakes are high. The outcome will not only affect bilateral trade but also serve as a bellwether for how other Southeast Asian economies manage mounting US protectionism.