No, With An Explanation

Daily Updates:

Q: “Some people believe the Fed will intervene if the stock market plummets – the so-called Fed Put. Are they correct?”

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Chair Powell: “I’m gonna say no with an explanation”.

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• Yesterday US stocks broke a brief spell of calmness and moved back in a manner more familiar with what markets have experienced since February of this year: the S&P 500 sank 2.2% and the Nasdaq-100 fell 3.2%.
• Treasuries extended a three-day rally however, and other haven assets continued to jump, with gold reaching yet another new all time high.
• The yield on the 10-year tenor fell 5bps to 4.28% and the 5Y yield was down 7bps to 3.9%. As we have highlighted, this week’s rally in treasuries follows some of the steepest losses in the bond market since 2001. 

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• Moves in equities and bonds exacerbated following Chair Powell’s comments at the Economic Club of Chicago. During his speech, the Chairman said that “for the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance”.
• The effects of the new administration’s trade policies “are likely to move” the Fed away from its goals “probably for the balance of this year” and “unemployment is likely to go up as the economy slows in all likelihood and inflation is likely to go up as tariffs find their ways”. 
• Powell added that markets are “still doing what they’re supposed to do” and that despite it being premature to say exactly what’s going on in bond markets, “clearly there’s some de-levering going on among hedge funds in levered trades.”

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• BTC fell from $85K down to $83K immediately following Chair Powell’s speech, however it quickly recovered and is now once again trying to regain the $85K mark it fell from. 
• The entire crypto market is up on the day so far: ETH is trading at $1.6K (+2.14%), XRP +1.18% and SOL is leading the charge +7.36%. 
• If we zoom out slightly, compared to March 17, one month ago, the S&P 500 is down 7%, whereas BTC is holding up much better and is up 1%. 

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• Its term structure of volatility has continued to see a drop in vol across tenors, but recent drops in volatility have been more pronounced in ETH which has now fully completed its disinversion as the 7-day tenor trades nearly 7 points lower than the 180-day. 
• BTC and ETH front-end volatility trade at their lowest levels all month, following a drop in realized volatility for both assets.

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• Despite recent consumer sentiment surveys showing declining sentiment, US retail sales for March rose at their fastest pace in over 2 years, increasing 1.4% month-over-month. 
• That spending frenzy was led by a 5.3% increase in auto purchases, a sign of consumers rushing to purchase cars before Trump’s automobile parts tariffs come into place (25% tariffs on finished vehicles have been in effect since April 3).
• Sales of electronics and sporting goods, products Canada has already applied retaliatory tariffs on the US and also many of which come from China, also climbed up. 
• The March data accounts for spending before Trump’s April 2 tariffs which were subsequently paused and before the increase on Chinese levies to 145%, but show signs of consumers trying to front-run any potential tariff-induced price increases. 

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• The Bank of Canada opted to leave its interest rate unchanged at 2.75%, pausing a run of seven consecutive cuts. Governor Tiff Macklem reiterated that “monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war” and “given this uncertainty, point forecasts for economic growth and inflation are of little use as a guide to anything.”
• That meant instead of providing point forecasts as the Bank usually does in its quarterly meetings, it offered two economic scenarios:

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1. Among other assumptions, here the BoC assumes most of Trump’s tariffs get negotiated away but his 25% levies on steel and aluminum and Canada’s associated 25% retaliation remain. 

• In this scenario “GDP stalls briefly in the second quarter of 2025 and then expands at a moderate pace”. Inflation slows to below 2% due to the weakening in growth outweighing the upward pressure on prices from tariffs.

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2. In scenario 2, the BoC assumes the US imposes a 25% tariff on non-US parts in auto imports, 25% tariff on all goods imported from all other countries and a 15% tariff on all goods imported from China, among other assumptions. 

• Here the economy plunges into a “significant recession” which lasts one year and “inflation temporarily rises above 3% in mid-2026” as tariff inflation covers a much broader range of goods affecting supply chains. 

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• In Defi, Raydium has launched a token creation platform integrated with its DEX, LaunchLab, aiming to counter Pump.fun’s shift to its own PumpSwap. Raydium’s native token RAY is up 12.5% (24hrs) as LaunchLab commits 25% of fees generated to RAY buybacks.

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• MANTRA, real-world assets based Layer 1 blockchain has released further details on the 90% token crash, OM. They attributed it to forced OM token liquidations during low-volume hours on April 13th which triggered a cascade of automated sell-offs. In response, MANTRA plans a buyback and burn program, with CEO John Patrick Mullin committing to burn his team’s token allocation.

This Week’s Calendar:

Charts of the Day:

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