SignalPlus Macro Analysis Special Edition: 15% Floor

15% ------ this seems to become the "new baseline" tariff floor in all future trade agreements of the United States. According to the latest announcement from the U.S. with Japan and the European Union last weekend, the EU now agrees to accept a general tariff rate of 15%, just like Japan, although there are still some unclear details regarding energy procurement and VAT arrangements. Overall, this agreement is expected to bring about $90 to $100 billion in additional tariff revenue to the U.S. and attract approximately $600 billion in new investments from the European continent. If everything is implemented, it would be quite a nice report card for the ruling authorities.

Meanwhile, the U.S. has also announced a 90-day extension of the tariff grace period on China, but the market remains cautious about whether there can be substantial breakthroughs between the U.S. and China, especially against the backdrop of relatively harsh tariff conditions faced by Asia (excluding Japan). This issue is still developing.

On the other hand, the stock market continues to rise strongly, reaching new highs. This is mainly benefited by corporate earnings performance that "just met expectations" (led by Alphabet), as well as a significant easing of relations between President Trump and Federal Reserve Chairman Powell. After a media-covered visit to the Federal Reserve headquarters, Trump stated:

"There is no need to fire Powell, the Federal Reserve will take the right actions."

"Powell told me the economy is doing well."

"Powell is a very good person."

With one of the most influential political uncertainties alleviated, the dollar rebounded, and the yield curve flattened last week. European and Japanese stock market indices also rose due to the "acceptable" trade agreement reached with the U.S., while stock market volatility continued to decline, showing one of the longest downtrends in history.

For short sellers, it is even more unfavorable as momentum indicators are breaking upward across the board, and the market shows good breadth, with both the benchmark index and equal-weighted SPX index reaching new highs last week. The 13-week and 26-week moving averages have formed a golden cross, and bond traders have significantly lowered interest rate cut expectations amid heightened risk sentiment.

The macro and financial situation also remains favorable, with the recent dovish shift of global central banks and a weaker dollar, M2 money supply growth has quietly rebounded, providing positive support for financial assets and fixed assets (including commodities and cryptocurrency assets).

Returning to cryptocurrencies, although Galaxy Digital reported that an investor from the "Satoshi era" took profits amounting to $9 billion, the market was hardly affected, with BTC stabilizing around $120,000 and ETH returning to the $4,000 mark. The selling pressure from this OG exit was offset by record high inflows into spot ETFs, with cryptocurrency assets experiencing net inflows for 14 consecutive weeks, accumulating a net inflow of $27 billion year-to-date, with a single-week net inflow reaching nearly $4.4 billion.

ETF spot trading volume also continues to set new highs, with weekly transaction amounts approaching $40 billion, among which ETH performed the best, with inflows reaching $2.1 billion, nearly double the previous record, and year-to-date cumulative inflows have reached $6.2 billion. Over the past three and a half months, the total asset size of ETH ETFs has increased by nearly 25%.

ETF inflows are still predominantly led by the U.S., accounting for over 97% of the total weekly inflows. The narrative adopted by mainstream institutions remains hot, with Goldman Sachs and Bank of New York Mellon announcing a partnership to use Goldman’s "GS DAP" platform to handle some tokenized BNY funds. While this move is a positive development for the industry as a whole, it is worth noting a statement in the official announcement:

BNY will continue to "maintain the fund's official books, records, and settlements according to currently approved guidelines." -- Bloomberg

This means that the ultimate legal and operational decision-making power still lies with the existing "paper system," which is not entirely consistent with the future envisioned by DeFi / on-chain native users, but this is probably the price that must be paid for mainstreaming.

Looking ahead, the market does seem to be somewhat heated (but which asset class isn't?), Bloomberg points out that an increasing portion of the current BTC rally comes from expectations of "monetary policy," namely a dovish liquidity outlook. We do not have a particularly strong opinion on this dissection, but it is worth noting that gold prices have appeared relatively weak after several failed attempts to rise, and if it falls back to the $3,000 - $3,200 range in the short term, it may exert some drag on BTC.

That said, going with the trend remains the way to go (please do your own research DYOR), and we still recommend avoiding counter-trend operations. Maintain faith and enjoy this summer until new signals arrive. Wishing everyone good luck and smooth trading!