US Trade Deficit Narrows Sharply in April; Imports Post Record Drop

The peak occurred around March 2020, when over 17.2% of the BTC supply was held on exchanges. Since then, over 6% of the total supply, or roughly 1.26 million BTC, has been withdrawn from exchange wallets.

BTC percent balance on exchanges. Source: Glassnode

The ratio, measuring the volume of BTC flowing to exchanges relative to onchain network activity, has fallen to its lowest reading since early 2023, signaling subdued exchange deposits despite rising prices.

Bitcoin exchange flows to network activity ratio 30-day moving average. Source: CryptoQuant

The Coinbase crypto exchange, on the other hand, witnessed over $500 million worth of BTC outflows in the same quarter.

BTC balance on the Coinbase exchange. Source: Glassnode

The outflows have continued into the second quarter, including 761 million worth of withdrawals witnessed on June 5.

Source: André Dragosch

The net worth of assets managed across spot Bitcoin ETFs was $44.54 billion as of June 5, up from around $1 billion at their launch in January last year.

Spot Bitcoin ETF cumulative flows. Source: Farside Investors

Following the collapse of FTX in late 2022, Bitcoin experienced a dramatic shift in exchange flows, as seen in the Glassnode chart.

BTC net transfer volume from/to exchanges. Source: Glassnode

Source: Cointelegraph

"A broad pause is not a good thing, and the uncertainty that precipitated this pause has not shown any signs of lifting," Simons wrote.

"We're in a situation now where businesses are facing a level of paralysis," RBC Capital Markets economist Carrie Freestone told Yahoo Finance on Wednesday. "Nobody is wanting to ramp up hiring when they don't know what's going to happen down the line."

Source: YahooFinance

Donald Trump picked up the phone and called Xi Jinping on Thursday, and the Chinese president finally answered.

The conversation, reported by Xinhua and confirmed by Beijing’s foreign ministry, was initiated by Trump, who had been pushing for direct talks after weeks of rising trade tension between the US and China.

But details of the chat were not shared.

This was only their second call of the year, the first being on January 17, before Trump returned to the White House. In recent days, Washington has accused Beijing of dragging its feet on following through with trade promises, especially around critical mineral exports.

Those promises came from talks in Switzerland, where both sides had agreed to temporarily lower tariffs. But that deal started falling apart fast. Trump’s administration wasn’t seeing the deliveries it expected, and China wasn’t happy about the new waves of restrictions coming from Washington.

Trump pushes Xi on trade slowdown and new export blocks

During the call, Trump raised issues over China’s delay in exporting key minerals that were part of the post-Geneva understanding. He also brought up semiconductors, where his administration had just issued fresh export bans and advised US firms to avoid relying on Chinese chips.

The White House claimed the decision was for national security, but Beijing called it punishment disguised as protection. Adding fuel to the fire, China was already frustrated by a new rule tightening visa access for Chinese students, something it viewed as politically motivated.

Officials in Beijing said the US was “undermining recent progress” by targeting young people and education exchanges. Trump didn’t back down. The administration believes these moves are necessary to protect American strategic interests.

The economic impact of all this was already showing. On the day of the call, US stock futures climbed. The Dow went up 89 points, while S&P 500 and Nasdaq-100 futures both gained 0.2%. Investors reacted quickly to any hint that the two countries were at least talking again, even if the problems weren’t solved.

Meanwhile, new numbers showed the US trade deficit had dropped to $61.6 billion in May, its lowest point since September 2023. That’s a $76.7 billion drop from April, and the fastest monthly decline since 1992.

Exports were up $8.3 billion, while imports had collapsed by $68.4 billion, a 16.3% slide. Companies had rushed to bring goods in ahead of Trump’s April 2 “liberation day” tariffs, knowing costs were about to go up.

Source: CryptoSlate

The European Central Bank slashed interest rates at its latest policy meeting on Thursday as expected, bringing its key deposit rate down by 25 basis points to 2.0%, although officials did not provide outright guidance for changes later this year.

In a statement, the ECB said its decision to lower borrowing costs for the eighth time since last June comes as the euro area economy faces waning inflation but persistent uncertainty around the impact of global trade tensions.

Thursday’s cut was widely anticipated by markets, meaning that much of the debate among analysts heading into the announcement swirled around the central bank’s plans for rates over the rest of the year. Particularly with inflation easing back down to the ECB’s 2% target, some investors have bet that policymakers will push pause on the rate-reduction cycle in July and potentially roll out one more drawdown before the end of 2025.

"We forecast one more rate cut in the second half of the year with risks skewed towards deeper cuts," said Jack Allen-Reynolds, Deputy Chief Euro Zone Economist at Capital Economics, in a note following the decision.

Officials did not provide any specific rate guidance in their statement, but ratcheted down their expectations for future price gains. Estimates for headline inflation in 2025 and 2026 were lowered to 2.0% and 1.6%, respectively, a drop of 0.3 percentage points compared to the ECB’s projections in March. Inflation is seen returning to 2.0% in 2027.

Speaking at a press conference, ECB President Christine Lagarde added that the ECB is "not pre-committing to a particular rate path".

Consumer price inflation in the 20 countries using the euro eased to 1.9% in May, thanks to sliding energy prices and declining services costs. In the prior month, the figure came in at 2.2%. So-called "core" inflation, which strips out volatile items like food and fuel, decelerated to 2.3% from 2.7%, data from Eurostat, the European Union’s statistics agency, found.

The ECB also left its growth projections for 2025 unchanged, anticipating average gross domestic product expansion of 0.9%. While the first quarter was stronger than expected, the central bank flagged that the euro zone’s prospects for the remainder of the year are "weaker".

Murkiness is also surrounding the impact of U.S. President Donald Trump’s tariff plans. The White House has especially targeted the European Union -- which includes several euro zone countries -- with elevated so-called "reciprocal" levies. The ECB warned that the uncertainty may weigh on business investment and exports in the short term, although medium-term growth is tipped to be bolstered by increased government spending on defense and infrastructure.

"Inflationary pressures in the euro zone are receding faster than expected. Not only did [...] Trump make the European economy great again -- for one quarter, as frontloading of exports and industrial production boosted economic activity -- he also made inflation almost disappear," said Carsten Brzeski, Global Head of Macro at ING, in a note.

Trump referenced the ECB’s rate-cutting campaign earlier this week in a social media post urging Federal Reserve Chair Jerome Powell to bring borrowing costs down at a faster pace. The Fed drew down rates by one percentage point in 2024, but has left them unchanged since December, noting that the tariff turmoil could place renewed upward pressure on inflation in the U.S.

Source: Investing

Change in policy rates by 10 major developed central banks since March

A line chart comparing inflation metrics over the past five years.

The BoC has held rates for a second time in a row after an aggressive cutting cycle which shrunk rates by 225 basis points over nine months. Markets price in a roughly 85% chance of another quarter-point cut by September.

A line chart comparing inflation metrics over the past five years.

Money markets expect the Reserve Bank of New Zealand to hold steady on July 9 after a 25 bps rate cut to 3.25% in May to protect the China-focused economy. The RBNZ also warned that global trade uncertainties made future moves unclear.

A line chart comparing inflation metrics over the past five years.

Sweden's central bank left its key rate unchanged at 2.25% in May but with on-again-off-again U.S. tariffs now having contributed to an economic contraction in the first quarter, the Riksbank has signaled more easing ahead. Its next rate decision is on June 18.

A line chart comparing inflation metrics over the past five years.

It has lowered rates eight times in the last year, and markets price in one more rate cut by year-end.

A line chart comparing inflation metrics over the past five years.

The Fed has held rates in the 4.25%-4.5% range since December, following 100 bps of cuts last year. Money markets price roughly 50 bps of further easing by year-end.

A line chart comparing inflation metrics over the past five years.

Governor Andrew Bailey says the BoE was staying cautious amid unpredictable global trends. Traders expect no move in June and a 60% chance of a cut by August.

A line chart comparing inflation metrics over the past five years.

The RBA cut rates by 25 bps to 3.85% in May and traders see borrowing costs dropping to about 3% by year-end.

A line chart comparing inflation metrics over the past five years.

The Norges Bank kept rates on hold at a 17-year high of 4.50% in May, and markets anticipate no change at the June 19 meeting.

A line chart comparing inflation metrics over the past five years.

A line chart comparing inflation metrics over the past five years.

Source: Reuters

Canada's trade deficit in April widened to an all-time high of a whopping C$7.1 billion ($5.2 billion), data showed on Thursday, as tariffs imposed by President Donald Trump sucked out demand for Canadian goods from the United States.

Its exports to the rest of the world rose, but could not compensate for the drop in exports to the U.S., data from Statistics Canada showed.Exports to the U.S. shrank by 15.7%, a third consecutive monthly decline, Statscan said, adding that exports south of the border have fallen by over 26% since the peak seen in January.Analysts polled by Reuters had expected the trade deficit to widen to C$1.5 billion for April. Statistics Canada also made a big revision to the trade deficit recorded in March to C$2.3 billion from C$506 million.

Canada shipped 76% of its total exports to the U.S. last year and the trade between the two countries exceeded a trillion Canadian dollars for a third consecutive year in 2024.

But a barrage of tariffs from Trump on Canada and its C$90 billion worth of retaliatory tariffs on U.S. imports have started disrupting trade between the two.

Total exports in April plunged by 10.8% to C$60.4 billion, the lowest level seen in almost two years, Statscan said. This was the third consecutive monthly decline and the strongest percentage decrease in five years, it said.While exports to the U.S. led the drop, lower crude oil prices and a stronger Canadian dollar also contributed.

The Canadian dollar was trading up 0.17% to 1.3651 to the U.S. dollar, or 73.25 U.S. cents. Yields on the two-year government bonds were down 0.4 basis points to 2.613%.

Exports to the rest of the world were up 2.9% and in volume terms total exports registered a big decline of 9.1% in April.

The biggest drop in exports came from motor vehicles and parts which lost 17.4% of trade in April from March and was almost entirely attributable to exports of passenger cars and light trucks, which fell 22.9% in April, Statscan said.

Imports were down 3.5% in April to C$67.58 billion, but were partly offset by imports of unwrought gold.

Due to the sharp decline in exports to the U.S., Canada's merchandise trade surplus with the United States narrowed to C$3.6 billion, the smallest surplus since December 2020, the statistics agency said.

The deficit with rest of the world marginally increased to C$10.7 billion in April from C$9 billion in March.

Source: Kitco