Market update - July 18th, 2025

The U.S. Monetary policy is challenged by the inflation

As US President Donald Trump’s 90-day trade tariff reprieve comes to an end, markets are bracing for renewed inflationary pressures. While the US economy has shown resilience in recent months, including a stronger-than-expected June jobs report, the risk of a summer inflation spike is increasing. The Federal Reserve remains cautious according to the published minutes, with the majority of FOMC members signalling they can afford to wait before cutting interest rates, despite political pressure and President Trump’s calls for a 200–300 basis point cut.

Tariff-related price increases from earlier trade policies typically take around three months to materialise. This cycle appears no different. Businesses, anticipating new tariffs, stocInflation data continues to pose an ambiguous scenario for U.S. monetary policy. June CPI came in at 2.7%, slightly above the expected 2.6%, with core CPI rising to 2.9%, up from 2.8% in May. Price pressures were broad-based, with goods (furniture and apparel) and energy (oil-related items) showing the most meaningful acceleration. Meanwhile, car prices declined, likely due to demand frontloading ahead of new tariffs. June’s PPI data, however, showed a contrasting scenario, flat month-on-month and up 2.3% YoY, below expectations.

Forward inflation expectations remain elevated. The University of Michigan’s 12-month outlook stands at 5%, likely influenced by rising tariff rates (from 2.3% in late 2024 to 13% now, and expected to reach 17% by August 1). Customs duties collected in June totaled $26 billion, significantly higher than the $6–7 billion monthly average in 2024. A weaker dollar (down 9.3% year-to-date) and firming industrial metal prices suggest continued inflationary risks despite some recent oil softness.

In China, retail sales slowed to 4.8% YoY in June (vs. 6.4% in May), but industrial production accelerated to 6.8%. Exports rose 5.8% YoY despite a sharp 43% drop to the U.S., indicating that trade tensions may have eased following recent bilateral talks.

A crucial week for digital assets

This week marked a pivotal moment in U.S. crypto legislation. The House passed both the Genius Act and the Clarity Act on July 17 after earlier procedural delays. The Genius Act, which regulates stablecoins, will now head to President Trump’s desk and could be signed into law as soon as today. The Clarity Act, clarifying SEC and CFTC oversight of digital assets, will move to the Senate for consideration. Meanwhile, the Anti-CBDC Surveillance State Act has also been passed. These bills should provide a clearer picture for the actors of the crypto industry.

Regarding equities, MicroStrategy (MSTR) has acquired an additional 4,225 BTC, bringing its total holdings to 601,550 BTC. The company continues to fund operations through equity issuance, notably preferred shares under its Strike, Strife, and Stride offerings. However, these now amount to c.$60 million in annualized obligations, and cash from operations has remained negative since Q2 2024.

Cantor Fitzgerald is preparing to launch a second bitcoin treasury company, reportedly involving Blockstream with a proposed contribution of 25,000 BTC (~$3 billion), with Adam Back expected to take a visible leadership role in the new entity.