What a week. Markets started in a tailspin and never quite found their footing. The selloff over the past week wasn’t sparked by any single headline—it felt more like a reckoning. A collective realisation that we’re entering a tougher, more uncertain regime. The return of Trump to the policy front has stirred the pot, with markets starting to price in a harder reset: inflation, trade wars, fiscal realignment, and rate volatility. It’s not a comforting backdrop, especially with a Fed that’s clearly not ready to blink.
Stagflation is creeping back into the narrative—growth data is deteriorating, layoffs are accelerating, and unemployment is edging higher. Yet core inflation remains sticky, keeping the Fed firmly in wait-and-see mode as it gauges how Trump’s agenda plays out.
The reaction in equities has been brutal with US markets entering correction zone and even the midweek bounce on soft CPI proved fleeting. The VIX spiked near 30 before settling around 25, a clear signal that fear isn’t far from the surface.
Just as markets tried to stabilise, Trump reignited trade tensions—rolling out fresh tariffs and flagging more to come by 2nd April, including a 10% levy on China and 200% on EU alcohol. Risk assets buckled, with EUR/USD sliding from 1.0940 to test 1.0830. Expect range-bound price action until there’s clarity on the tariff front.
Macro Crossroads: A World in Transition
While this week was full of pain, there are some glimmers forming under the surface.
- USD has eased and bond yields have peaked, with the 10Y dropping another 9bps this week and now hovering just shy of 4.3%.
- Oil prices are falling, easing inflationary pressure.
- Global M2 is starting to rise, signalling early liquidity expansion.
- Rate cuts are being repriced back into the curve
- China and Europe are ramping up fiscal stimulus, with Germany proposing nearly EUR1 trillion in off-balance sheet spending.
- And perhaps most significantly, there’s fresh movement in Russia-Ukraine peace talks: Putin has agreed in principle to a 30-day ceasefire, which could prove to be a major geopolitical tailwind if it sticks.
These dynamics suggest the possibility of a more supportive environment forming—but the path there is anything but smooth. The upcoming FOMC dot plots will be critical in confirming whether this shift is real—especially for crypto. A more dovish tone could be the signal needed to restart risk appetite. But the bigger question remains: how long does it take to materialise—and how much of it is already priced in?
Crypto: Leverage purged, vol tamed
Crypto didn’t escape the carnage from this week. BTC, often the barometer for risk assets, briefly broke below USD80,000 before bouncing back into the USD80–85,000 range. While BTC appears to be stabilising, it’s doing so on lighter positioning—most leveraged longs have been flushed, and vols have come off since the beginning of the week.
ETF flows echoed the shift in sentiment with BTC and ETH ETFs continuing to see majority of outflows this week.
Adding to the gloom, the SEC delayed ETF decisions for XRP, SOL, LTC, ADA, and DOGE until May and announced a regulatory roundtable for March 21. The headlines landed with a thud—more discussion, fewer breakthroughs.
Looking Ahead: Positioning Light, Risk High, But the Setup Builds
The week ends with markets still on shaky footing. Risk appetite has clearly retreated, and with positioning light, the potential for asymmetric upside is rising—especially if macro data continues to soften and geopolitical risk eases.
Crypto looks like it may be entering a period of range-bound consolidation, with BTC supported around USD78,000 and ETH around USD1,800 but flow and sentiment remain fragile. Macro remains in the driver’s seat, with the FOMC on March 19th shaping up to be the key risk event heading into next week—a pivotal moment for markets.
The story of the week wasn’t just about sell-offs—it was about transitions.
A transitioning Fed. A transitioning global order. A transitioning market regime.
And with each shift, a new risk, but also, eventually, new opportunity.
Happy Trading!
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