Lower rates: Donald Trump's counterproductive strategy

Economic

Summary:

Donald Trump's push for lower interest rates, including threats to replace Fed Chair Jerome Powell, risks undermining central bank independence—potentially triggering higher rates amid inflation and deficit concerns.

This is one of Donald Trump's many obsessions: low interest rates. He talks about it all day long. And the more time passes, the more he demands. A few weeks ago, he called for an immediate 100-basis-point cut. On the day of the Fed's last meeting on June 18 he suggested that he should perhaps appoint himself as head of the Fed and that rates should be "two points lower."

On Friday, he even called for rates to be cut to 1% (bearing in mind that key rates are currently in the 4.25-4.5% range). This is a call that Jerome Powell is not prepared to answer at this stage. "I would love for him to resign, he's done a terrible job," the US president said.

Phantom president

Why this obsession? First, because lower rates are more conducive to growth. And above all because the debt burden is very high. According to estimates by Torsten Slok, chief economist at Apollo Global Management, debt interest payments cost the US $3.3bn every day. And 18% of federal government revenue is spent on this item.

By Jerome Powell's own admission, interest rates are currently in restrictive territory (they are slowing down the economy). But with growth remaining solid and the risk of a return to inflation caused by tariffs, the Fed has every reason to remain on hold for the time being.

Hence Donald Trump's desire to appoint someone more favorable to rate cuts to head the Fed. Although he has repeatedly threatened to fire Jerome Powell, this idea now seems to have been ruled out, and the debate is focused on finding his successor. Jerome Powell's term expires in less than a year (May 2026), although he will remain on the Fed's board until January 2028.

However, the appointment of the next Fed chair could come quickly. Last week, the Wall Street Journal reported that the announcement could be made as early as September. This would create a "shadow Fed chair," who could begin guiding market expectations before taking office.

Don't play with independence

Donald Trump seems willing to do anything to get interest rates down. But does the US president's aggressive strategy really serve his cause?

The threats against Jerome Powell and the desire to appoint someone who will be loyal to him weaken both the credibility of the institution and the person he chooses.

Each attack by Donald Trump fuels doubts about the sacrosanct independence of the central bank. This independence is itself key to the effectiveness of monetary policy in the long term, and therefore to the fulfillment of the inflation mandate.

If the markets start to doubt the Fed's independence, the consequence will be... higher rates.

This is especially true given that every time a new Fed chair is appointed, the market always "tests" them. According to an analysis by Bank of America covering the last seven appointments (since Arthur Burns in 1970), rates tend to rise in the three months following the announcement. On average, 2-year rates rise by 65 basis points and 10-year rates by 49 basis points over this period.

Three months after Jerome Powell's appointment, the 2-year rate had risen by 15 basis points and the 10-year rate was up 7 basis points.

For the next Fed chair, the best way to lower rates will therefore be to distance themselves from President Trump and reaffirm the Fed's independence from political power.

The trajectory of interest rates will mainly depend on inflation in the coming months. Inflation is likely to rebound as the impact of tariffs is felt. Tariffs tend to be inflationary. Higher inflation means higher interest rates.

Finally, long-term rates are sensitive to concerns about the deficit. Congress is expected to pass Donald Trump's tax bill this week. According to estimates by the Congressional Budget Office (CBO), the version of the bill passed by the House last month would increase the deficit by $2.8 trillion over 10 years. And the version expected to be passed by the Senate is likely to cost even more.

In short, while Donald Trump spends all day calling for lower interest rates, his communication and actions could well produce the opposite result.

Source: marketscreener

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Adam

Forex

Sterling was on track for its biggest quarterly rise against the dollar in more than two years on Monday, aided by weakness in the dollar across the board and optimism over a trade deal between the United States and Britain.

The pound has been among the top beneficiaries of the "sell America" narrative that has dominated much of market sentiment over the past six months, as investors worry that U.S. President Donald Trump's erratic style of policymaking could trigger a U.S. recession that hurt global economies.

The British currency is on track for its strongest quarterly performance since October 2022, having gained about 6% against the U.S. dollar. It has appreciated more than 9% during the past six months.

On Monday, the pound see-sawed between marginal gains and losses and was last down 0.1% at $1.3705, having rallied over the past two weeks. Against the euro, the currency slipped, with the euro last up 0.2% at 85.59 pence.

Investors were also looking favourably upon British assets, as Britain was first among global economies to strike a trade deal with the United States.

An agreement to lower U.S. tariffs on some industrial items from Britain also came into effect on Monday.

"The UK was first out of the block in terms of getting a deal signed with the United States, although there is still going to be pockets of uncertainty to some sectors," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"Even so, it has again brought more stability in terms of the relationship that the UK has with the U.S... compared to the European Union, where there (are) still no agreements."

Meanwhile, data confirmed that the British economy grew at its fastest pace in a year in the first three months of 2025, though signs of softening consumer demand could potentially weigh on the economy in the months ahead.

Markets are pricing in the likelihood that the Bank of England could deliver 50 basis points worth of interest rate cuts by December, with the first expected in September, according to data compiled by LSEG.

Other British assets were also poised to finish the quarter on a strong note, with domestically-exposed FTSE 250 mid-cap stocks (.FTMC), opens new tab set for their best quarterly performance since October 2020.

Source: reuters

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Manuel

Central Bank

Political

It’s a widely held belief among economists that President Donald Trump’s tariffs will boost inflation notably over the next few months. But muted price increases so far have called that assumption into question, emboldening the White House and opening up divisions at the Federal Reserve.

Anticipation of firmer inflation has kept the US central bank from delivering interest-rate cuts this year as it waits to see what happens. The Trump administration is applying intense pressure on Fed Chair Jerome Powell to bring down borrowing costs, and two Fed governors in recent days have publicly diverged from Powell by asserting a cut could be appropriate as soon as July.

A pair of key reports in the coming weeks — the monthly jobs report due Thursday and another on consumer prices due July 15 — will be critical in determining the central bank’s next steps. Both are expected to finally begin reflecting the impact of tariffs, but any surprises could change the schedule for rate cuts.

“One of the things that makes it such a difficult situation is that we simply haven’t done this sort of experiment in the past,” William English, a professor at the Yale School of Management and former high-ranking Fed economist, said of the tariffs. “We’re outside the range of experience for a modern US economy, and so it’s very difficult to be confident about any forecast.”

Trump and his allies have escalated attacks on the Fed and Powell in recent weeks, motivated by data showing inflation remained tame through May despite the tariffs put in place. White House Press Secretary Karoline Leavitt told reporters Monday that Trump had sent a note to Powell calling for lower rates. Trump posted a copy of the note to social media, saying Powell and other Fed officials “have one of the easiest, yet most prestigious, jobs in America, and they have FAILED.”

Other Trump administration officials and some congressional Republicans — oftentimes more reticent to weigh in on monetary policy — have joined in as well. Kevin Hassett, director of the White House National Economic Council, said on June 23 that there is “no reason at all for the Fed not to cut rates right now.”

Hassett, who is seen as a possible replacement for Powell when the Fed chair’s term expires next year, emphasized data due in the coming weeks: “I would guess that if they see one more month of data, they’re going to really have to concede that they’ve got the rate way too high,” he said.

And Treasury Secretary Scott Bessent said Monday on Bloomberg TV that Fed officials “seem a little frozen at the wheel here” after having made “a gigantic mistake” letting inflation run too far in 2022.

The debate reflects the delicate situation the Fed is in as it aims to avoid a policy mistake. Should officials cut rates just as tariff-induced price pressures kick in, they may have to resort to more aggressive measures later on. But holding rates at an elevated level to combat inflation that never materializes risks restraining the economy unnecessarily, potentially damaging the labor market in the process.

Forecasters expect inflation to accelerate in the coming months. Powell told Congress in testimony last week he expects “meaningful” price increases to materialize in June, July and August data as the levies work their way through the economy. But he added Fed officials are “perfectly open to the idea” the impact could be smaller than feared, “and if so, that’ll matter for our policy.”

The Bureau of Labor Statistics will publish its report on consumer prices for June on July 15, two weeks before the central bank’s next policy meeting. Fed Governors Christopher Waller and Michelle Bowman — both Trump appointees — have broken step with Powell and their other colleagues to raise the possibility of a rate cut next month if the data cooperate.

“I think we’ve got room to bring it down, and then we can kind of see what happens with inflation,” Waller said in a June 20 CNBC interview, adding the central bank could always bring a halt to rate cuts again if necessary. “We’ve been on pause for six months to wait and see, and so far the data has been fine.”

Still, investors currently see only about a 20% chance of a July move and are instead betting the next cut will come in September, according to federal funds futures.

Tariff Math

Benign inflation readings through May suggest companies are finding ways, at least for now, to avoid price hikes despite Trump’s tariffs on dozens of US trading partners — and widespread uncertainty over how long the duties will last and the level where they’ll ultimately settle.

One potential explanation is companies are working through inventories of imports they frontloaded in the first quarter to get ahead of the levies, said Josh Hirt, a senior US economist at Vanguard Group.

Hirt’s calculations suggest that, on average, importers this year have paid an effective tariff rate lower than what Trump has put in place, largely because so much was brought in before they took effect.

Another source of uncertainty Powell discussed in his testimony is just how the costs of the tariffs will be split between exporters, importers, retailers, manufacturers and consumers.

“In the beginning, it will be the importer that pays the tariff, but ultimately it will be spread out among those five,” Powell said, adding that data suggests at least some of the impact will fall on consumers.

What Bloomberg Economics Says...

“After a brief lull in April and early May, container traffic from China to the US is rising again, with year-to-date import volumes on pace to exceed normal levels at least through summer. If that pace is sustained, US store shelves should be well-stocked at the holiday season. That likely means less need for firms to pass on tariff costs this year.” — Estelle Ou and Andrej Sokol, economists

Before the July 15 inflation report comes equally consequential monthly data on employment, due from the BLS on July 3. So far this year, there’s been little indication that tariffs have put a dent in hiring, which has allowed the Fed chair and many of his colleagues to maintain that a solid labor market means there’s no rush to cut rates.

But as with the inflation data, forecasters have largely maintained that any potential labor-market impact of the trade policy upheaval wouldn’t be visible before the release of the June figures. In a Bloomberg survey, economists said they expect the this week’s report will show the unemployment rate in June crept up to 4.3%, which would mark the highest level since 2021.

Bowman, in a June 23 speech, said Fed officials should “recognize that downside risks to our employment mandate could soon become more salient, given recent softness in spending and signs of fragility in the labor market.”

Monthly consumer spending figures published Friday by the Bureau of Economic Analysis showed a drop in outlays in May as households pulled back on discretionary services like travel and dining, and forecasters warned higher prices in the months ahead would put more pressure on consumption.

English, at Yale, said the impact of tariffs will depend on factors which are difficult to measure. But “the kind of intuition that there’s going to be some pass-through of the tariffs to prices just feels right,” he said. “I am not yet thinking that the basic story is wrong.”

Source: Reuters

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Adam

Bond

Economic

On June 25th, the Federal Reserve quietly announced a significant change to the Supplementary Leverage Ratio (SLR). While the headlines were muted, the implications for the U.S. Treasury market were anything but.

For sophisticated investors, this technical shift marks a subtle but powerful pivot in monetary mechanics. It could create demand for Treasuries, improve market liquidity, and push yields lower at a time when the economy is slowing. As shown in the Economic Output Composite Index (EOCI), which comprises nearly 100 data points, recent reports suggest the economy is weaker than headlines imply. The same is confirmed by the 6-month rate of change in the Leading Economic Index, which remains in contractionary territory.

How the Fed’s SLR Tweak Could End the Bond Bear Market_1

Historically, such readings have coincided with economic recessions. However, this has not been the case since 2022 due to the massive amounts of monetary stimulus that have kept the economy growing. That support is quickly fading, potentially putting the major banks at risk, which brings us to the SLR.

Understanding the SLR and Why It Matters

The Supplementary Leverage Ratio was initially implemented as a post-GFC (Global Financial Crisis) safeguard. The idea was simple: limit the amount of leverage banks could take on by tying it to their capital base, regardless of the riskiness of the assets. That meant a Treasury bond and a junk loan were treated equally for leverage purposes. Unsurprisingly, the rule disincentivized the major Wall Street banks from holding low-risk assets like U.S. Treasuries, particularly in periods of balance sheet stress, in exchange for debts with higher yields.

In a welcome reversal, the Fed announced on June 25th that it, the FDIC, and the OCC are easing that constraint by recalibrating the SLR to reflect a more nuanced risk-based approach. Specifically, the new rule adjusts the enhanced SLR (eSLR) add-on to 50% of the Method 1 Global Systemically Important Bank (G-SIB) surcharge, harmonizing it more closely with international standards. This reduces the leverage burden across the largest U.S. banks and opens up substantial balance sheet capacity.

What does this mean in practice? According to Goldman Sachs’ Richard Ramsden, the proposed changes could unlock between $5.5 and $7.2 trillion in bank balance sheet capacity.

To put that number into perspective, the increase in balance sheet capacity for the banks is equivalent to roughly 25% of GDP.

Unsurprisingly, the Federal Reserve’s member banks, JP Morgan, Bank of America, Wells Fargo, and Citigroup, stand to benefit the most. Most importantly, this opens the door for increased repo financing and direct Treasury purchases, particularly during periods of market dislocation.

While repo and Treasury investments offer modest returns, their low-risk nature makes them ideal candidates for bolstering liquidity and meeting capital requirements. Banks can pivot toward these safer assets in an environment where credit spreads are tight and loan demand remains uncertain without incurring regulatory penalties.

SLR Implications for the Treasury Market

So, what does the SLR have to do with the bond market? We discussed this recently in our Daily Market Commentary when this rule change was first mentioned. To wit:

“Yes, I believe we will. I have, for a long time, like others, been somewhat concerned about the levels of liquidity in the Treasury market. The amount of Treasuries has grown much faster than the intermediation capacity has grown, and one obvious thing to do is to lower, is to reduce the effective supplementary leverage ratio, the bindingness of it. So that’s something I do expect we will return to and work on with our new colleagues at the other agencies, and get done.” – Fed Chairman, Jerome Powell.

Following the 2020 COVID pandemic, bonds have been in a bear market as yields have risen with inflationary pressures and increased Fed funds rates. That yield rise was also compounded by increased Treasury debt issuance in recent years to fund the massive stimulus and spending programs during the Biden Administration. However, the largest Wall Street banks have been reluctant to step in due to regulatory capital constraints. That reluctance keeps yields higher, particularly at the long end of the curve.

How the Fed’s SLR Tweak Could End the Bond Bear Market_4

With the SLR reform, banks can deploy excess capital into Treasuries without running afoul of leverage rules. This newfound demand could absorb a meaningful portion of net new issuance. The result? A downward pressure on yields, particularly during market volatility when banks typically pull back. In effect, this reform could smooth Treasury market functioning and reduce the risk of another episode like the September 2019 repo blow-up or the March 2020 liquidity crisis.

Furthermore, another underappreciated impact of the SLR change is its effect on the Total Loss Absorbing Capital (TLAC) and Long-Term Debt (LTD) requirements. These rules, intended to ensure that large banks can be wound down in an orderly fashion, also tie into leverage ratios.

Under the new proposal, TLAC and LTD requirements would be reduced by ~5% and ~16% respectively, freeing up roughly $95 billion in wholesale debt across the five largest U.S. banks. In a rising rate environment, that’s not just regulatory relief—it’s a cost-saving measure. Lower funding costs will flow through to margins, providing yet another reason for banks to reallocate capital into U.S. Treasuries and repo financing.

Portfolio Strategy: What Investors Should Do Now

From a portfolio management perspective, this shift is another reminder that the regulatory structure matters as much as monetary policy.

While most investors focus on the Fed’s interest rate decisions, regulatory plumbing like the SLR plays a significant role in shaping asset flows, risk preferences, and liquidity conditions. With banks now likely to increase Treasury holdings, investors should prepare for downward pressure on long-term yields, especially during risk-off periods when the bid for safety intensifies.

The substantial short position against US Treasury bonds could amplify the downward pressure if an event forces a rapid unwind. As we discussed previously:

“Short positions in TLT, the popular 20-year US Treasury Bond ETF, have spiked to over 130 million shares, up from 107 million last month. TLT has 541 million shares outstanding. Consequently, the short interest has risen from 20% to 24% of the float. Furthermore, TLT’s days to cover ratio (short position/average trading volume) is nearly 3.5 days. As the graph below shows, that is far and away the most prominent short position in the ETF in at least the last 15 years.”

How the Fed’s SLR Tweak Could End the Bond Bear Market_5

This doesn’t necessarily guarantee a bond rally, but it significantly tilts the risk-reward back in favor of duration, particularly in high-quality fixed income. For equity markets, lower long-term yields are a mixed bag. Lower yields are historically bullish for growth stocks, UNLESS yields are dropping rapidly due to slowing economic momentum or recession risk.

Portfolio construction should always remain anchored in risk management, and the risk of being short Treasury bonds is clearly on the rise.

Bottom Line

The Fed’s proposed SLR reforms are not just regulatory housekeeping—they’re a targeted effort to shore up the financial plumbing of the Treasury and repo markets. The Fed is engineering a quiet but meaningful boost to Treasury demand by giving banks more flexibility to hold safe assets.

For investors, that means better liquidity, lower yields, and perhaps a more stable financial system, as long as the unintended consequences stay in check.

As we’ve said before, the devil is always in the details. And sometimes, those details make all the difference.

Source: investing

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Jason

Economic

The United States will resume trade negotiations with Canada immediately after Ottawa scrapped its digital services tax targeting U.S. technology firms, White House economic adviser Kevin Hassett said on Monday.

"Absolutely," Hassett said on Fox News Channel when asked about the talks restarting.

President Donald Trump had asked the Canadians to take the tax off at the G7 meeting in Canada, he said. "It's something that they've studied, now they've agreed to, and for sure, that means that we can get back to the negotiations."

Canada halted its plans to begin collecting a new digital services tax targeting U.S. technology firms just hours before this was due to start on Monday in a bid to advance stalled trade negotiations with the U.S.

Canada's finance ministry said late on Sunday that Prime Minister Mark Carney and Trump would resume trade negotiations in order to agree on a deal by July 21.

"Thank you Canada for removing your Digital Services Tax which was intended to stifle American innovation and would have been a deal breaker for any trade deal with America," U.S. Commerce Secretary Howard Lutnick responded in a post on X.

Stocks hit record highs on Wall Street on Monday morning as sentiment in the markets rose amid optimism about U.S. trade negotiations with key partners, including Canada.

U.S. Treasury Secretary Scott Bessent also struck an optimistic tone over the potential for "a flurry" of trade deals ahead of a July 9 deadline, after which 10% U.S. tariff rates on imports from many countries are set to snap back to Trump's April 2 announced rates of 11% to 50%.

But Bessent, speaking on Bloomberg Television, warned that countries may not get extensions from that deadline, even if they are negotiating in good faith as he suggested previously. Any extensions would be up to Trump himself, Bessent said.

TRADE U-TURN

Trump abruptly called off trade talks with Canada on Friday over Ottawa's digital services tax, saying it was a "blatant attack." He reiterated this on Sunday, pledging to set a new tariff rate on Canadian goods within the next week, which threatened to push U.S.-Canada relations back into chaos after a period of relative calm.

Item 1 of 2 U.S. President Donald Trump and Canadian Prime Minister Mark Carney attend a meeting with G7 leaders and guests, at the G7 summit in Kananaskis, Alberta, Canada, June 16, 2025. REUTERS/Kevin Lamarque/File Photo

"We have countries that are negotiating in good faith, but they should be aware that if we can't get across the line because they are being recalcitrant, then we could spring back to the April 2 levels," Bessent said. "I hope that won't have to happen."

Trump and Carney met at a G7 summit earlier this month, with the Canadian prime minister saying they had agreed to wrap up a new economic agreement within 30 days.

Canada's planned digital tax was 3% of the digital services revenue a firm takes in from Canadian users above $20 million in a calendar year, and payments were to be retroactive to 2022.

It would have impacted giant U.S. technology firms including Amazon.com (AMZN.O), opens new tab, Meta (META.O), opens new tab, Alphabet's Google (GOOGL.O), opens new tab and Apple (AAPL.O), opens new tab.

The tax collection slated for Monday will be halted, a statement from Canada's finance ministry said. Finance Minister Francois-Philippe Champagne will bring forward legislation to rescind the Digital Services Tax Act.

"The DST was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians," the statement said. "Canada's preference has always been a multilateral agreement related to digital services taxation."

Canadian business groups applauded Carney's decision to drop the tariffs as well as the U.S. Congress' removal of a "revenge tax" provision from Republican tax legislation known as 899.

"The decision to eliminate the DST makes sense. This tax would have fallen on Canadian consumers, businesses, and investors in the form of higher costs and hurt our economy at a critical time," said David Pierce, Vice President of Government Relations at the Canadian Chamber of Commerce

Removing it will move Canada closer to a "renewed, reliable trade deal" with the U.S., Pierce added in a statement.

Canada is the second-largest U.S. trading partner after Mexico, and the largest buyer of U.S. exports. It bought $349.4 billion of U.S. goods last year and exported $412.7 billion to the U.S., according to U.S. Census Bureau data.

The Biden administration had requested trade dispute settlement consultations over the Canadian digital tax in 2024, saying it was inconsistent with Canada's North American trade deal obligations.

Canada had escaped Trump's broad tariffs imposed in April but still faces 50% duties on steel and aluminum exports to the United States.

Source: Reuters

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Adam

Economic

After U.S. President Donald Trump's radical campaign pledges, investors knew markets would get bumpy this year as he returned to lead the world's biggest economy. But almost nobody predicted the outcome so far, especially the dollar's dramatic fall.

Run through the year's numbers without tracking the journey and many key markets look serene.

World stocks (.MIWD00000PUS), are at record highs, benchmark global borrowing costs are down and so-called market "fear gauges" like the VIX (.VIX) barely look like they have moved.

But look closer and the turmoil is clear: all of those markets have seen extreme swings over the last six months - and then there's the dollar. (.DXY), The world's reserve currency is down over 10%. That's its biggest first-half dive since the era of free-floating currencies began in the early 1970s, whereas gold is up 25% in its biggest rise since then, which marked the end of the bullion-linked Bretton Woods System.

Vincent Mortier, chief investment officer at Europe's largest asset manager Amundi, puts this down to Trump's trade war, and particularly to what the president calls his "Big Beautiful" fiscal bill that will keep the U.S. deficit at 6-7% and its $36.2-trillion debt pile ballooning.

"The big event of the first half for the market has been this U.S. weakness and this questioning of what should be the trajectory of the dollar," Mortier said, adding he expected the U.S. currency to keep dropping, albeit more slowly.

Also eye-catching have been the struggles of the "Magnificent Seven" tech giants. They have been a cash cow for portfolios for years, but have been left for dust so far this year by a 20% rally in Chinese rivals (.HSTECH), and a near 70% surge in European weapons makers. (.SXPARO), The latter move has been driven by Trump too. His signal that the U.S. will scale back Europe's military protection is forcing the region - and other NATO members - to rearm.

Germany's historic plan to revamp its self-imposed debt brake to allow higher defence spending initially interested the $140 trillion global bond market, although long-term U.S. debt concerns and record-high Japanese borrowing costs have driven most moves since.

Given the dollar's woes, benchmark U.S. debt will have lost money this year for most who sit outside the country.

Highlighting the volatility, 30-year Treasury yields surged past 5.1% to their highest since 2007 in May, but are already back at 4.8%. Switzerland, meanwhile, took its interest rates back down to zero this month.

Markets in the first half or 2025: Down with the dollar, up with guns_1

GREAT ROTATION?

The dollar's slump also means the euro is up 12.5% , Japan's yen is up nearly 8% and the Swiss franc is up 13.5%. It has also given emerging markets a chance to shine.

Trump's re-engagement with Russian President Vladimir Putin has helped the rouble surge a whopping 40%, although it remains heavily restricted by Western sanctions and still lags the 42% tear in gold producer Ghana's cedi.

In eastern Europe, Poland's zloty, the Czech crown and Hungarian forint are all between 13-17% stronger. Taiwan's dollar jumped 8% in just two days last month and even Mexico's peso and emerging market local currency debt are enjoying double-digit gains for the year, despite all the trade war trauma.

"This is the most prominent capital rotation we have seen for the best part of two decades," said PIMCO's head of emerging market portfolio management, Pramol Dhawan, referring to the move out of U.S. assets into emerging and other markets.

"And we still think we are in the early innings of this."

At the bottom of the FX pile are familiar names like Argentina's peso and Turkey's lira. The latter is down nearly 11% and much of that happened after Turkish President Tayyip Erdogan's main political rival was detained back in March.

Bitcoin has been volatile, as usual. It raced up almost 20% when Trump took office, dived nearly 30% when his plans for a U.S. cryptocurrency reserve failed to impress and has spent the last three months clawing it all back again.

Oil has yo-yoed too. It slumped 30% to below $60 a barrel in April after Trump's sweeping tariff plan fuelled global recession fears, but briefly soared above $80 this month when Israel and the U.S. bombed Iran.

Markets in the first half or 2025: Down with the dollar, up with guns_2

GOOD AS GOLD

Copper has defied the global economy worries to jump 11%, although it's the precious metals that have sparkled. Silver is neck-and-neck with gold, up 24%, while platinum is up nearly 50% after a string of 10-year highs.

There won't be much time for a second-half breather either. Trump wants to ram his "Big Beautiful Bill" though U.S. Congress by July 4's Independence Day holiday, while his ceasefire in the global trade war runs out five days later.

Things are already kicking off with neighbour Canada and as the deadline approaches - and with scant progress so far towards mutually-agreed baseline levies - questions remain how long markets can stay numb to the risks.

Markets in the first half or 2025: Down with the dollar, up with guns_3

Source: Reuters

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Adam

Cryptocurrency

Fundstrat’s Tom Lee is joining a little known bitcoin miner aiming to become the biggest publicly traded holder of ether.

Lee, a high-profile market strategist known for his prescient bitcoin price forecasts and stock predictions, has been appointed chairman of the board of directors of BitMine Immersion Technologies , effective Monday. The company also announced a $250 million private placement to implement a buying strategy around ether, which it aims to make its primary treasury reserve asset while continuing with its core bitcoin mining business.

Lee’s appointment comes amid a groundswell of interest around stablecoins following the successful IPO of stablecoin issuer Circle at the beginning of the month and positive momentum pushing potential stablecoin legislation through Congress.

“The financial services industry and crypto are converging and it really started with stablecoins, which is the ChatGPT of crypto because it’s viral adoption by consumers, business banks and now even Visa,” he told CNBC’s “Squawk Box” Monday. “Underneath the stablecoin industry is Ethereum – that is really the backbone and architecture of stablecoins so it’s important to create a project that accumulates Ethereum to essentially protect and have some influence on the network.”

The company will monitor the value of ether held per company share as a key performance metric going forward, Lee added, similar to MicroStrategy’s bitcoin-per-share metric “BTC Yield.” BitMine can increase the value of ETH held per share “by a combination of reinvestment of the company’s cash flows, capital markets activities, and by the change in value of ETH,” Lee said in a statement.

Companies are increasingly looking past bitcoin for crypto treasury management strategies. BitMine joins the publicly listed betting platform SharpLink Gaming , which initiated an ether treasury strategy in May and appointed Ethereum co-founder Joseph Lubin as chairman of its board of directors. DeFi Development is focused on a similar strategy for the Solana token.

Ahead of this transaction, BitMine had a very tiny market value of just $26 million with lightly traded shares that were down 45% on the year.