Daily Updates:

• President Trump walked back yet another tariff threat only hours after initially announcing it. Yesterday, the president threatened to increase the tariff rate on Canadian steel and aluminum from 25% to 50% in response to Ontario plans to increase the cost of electricity to 1.5M US homes and businesses by 25%. However, Trump quickly retreated back to the initial 25% rate when the surcharge rate on electricity was suspended. 
• The tariff is not just on Canada however, and is a blanket tariff on all steel and aluminium imports, including from the EU. In retaliation, the European Commission announced “swift and proportionate countermeasures” on €26B ($28B) worth of US goods (including steel and aluminium, as well as additional products such as home appliances and agricultural goods), effective from mid-April.
• Trump changed his tone slightly regarding cracks in the US economy – while on Sunday the President said the US economy is facing “a period of transition”, this time he said “I don’t see it [a recession] at all. I think this country’s going to boom”. He stated the stock market will go up and go down and that it “doesn’t concern” him. 
• The US JOLTS report, the first release under the new administration, provides some strength to Trump’s comments about the economy. Job openings rose in January by 7.74M, above the expected 7.6M, while the layoff rate fell to its lowest since June, and the quits rate ticked up – all three measures an indication of labour market resilience, albeit the JOLTS report having a lag compared to other data releases.  

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• Despite Trump’s resilient outlook, tariffs have been the driving force for recent price action across all markets – unsurprisingly, US equities continued to whipsaw yesterday, with the S&P 500 officially crossing the threshold marking a correction, before paring back some of those losses as Trump downplayed the risks of a recession. 
• Ultimately, the SPX closed the day down 0.76%, making the losses this week alone so far 3.5%. The NDX fell -0.28%.
• BTC experienced more of a relief rally through the day, moving up from $79K to now trading at $83K. ETH and SOL remain flat, losing the minimal gains they made through the day. 

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• At-the-money implied volatility levels across all tenors for BTC have dropped off slightly, but the inversion in the term structure is still in full force. BTC’s vol smiles remain skewed towards puts for all tenors under three months, with the 120-day tenor also trending closer to a neutral level.
• Volatility levels for ETH remain largely unchanged from yesterday at all tenors. 7-day tenors have reduced some of their skew to OTM puts – however unlike BTC, all tenors besides the 180-day assign a downside premium. 
• The intense bearishness priced-in by options at short tenors reflects a similar sentiment in futures markets – futures prices trade below spot for the first time since the US election, eroding the strong and healthy basis of futures prices that had been captured by institutional players for much of the winter.
• Perpetual swap funding rates have turned negative, meaning that short positions must pay long positions for the privilege of leveraged short exposure to BTC and ETH.

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• The US House of Representatives voted 292-132 in favour of removing the IRS DeFi broker rule, which aimed to classify DeFi platforms as brokers. The move must now pass the Senate, followed by the signing of Trump to pass the ruling.

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This Week’s Calendar:

Charts of the Day: