The odds of a recession are rising, markets are crashing and President Donald Trump is forging ahead with tariffs.
This volatile playbook is eerily similar to Trump’s first term, which started with a bang before giving way to one of the biggest bull markets in recent history. However, this time, Trump seems to have dropped the stock market as one of his favorite barometers of success, opting instead to focus on the long-term health of the US economy.
Trump has promised to usher in America’s next “Golden Age,” but before that happens, the economy might need a painful dose of medicine. There is growing speculation that Trump is purposely stoking growth fears and crashing the market to force the Federal Reserve to lower interest rates.
It might sound crazy, but there may be a method to Trump’s apparent madness.
A coordinated crash
For decades, there was an unspoken rule in Washington that the president must remain tight-lipped about Fed policy. However, Trump threw that convention out the window when he publicly stated that the Fed should consult the president on interest rates.
In February, Trump took to social media to say, “Interest Rates should be lowered.” When the central bank refused to play ball, the Trump administration took matters “into their own hands [by] crashing asset prices in an attempt to force Jerome Powell to cut interest rates,” according to entrepreneur and market commentator Anthony Pompliano.
Pompliano and others say the Trump administration is intentionally crashing the stock market to bring borrowing costs down before the US government needs to refinance $7 trillion in debt over the next six months.
The plan appears to be working, with the 10-year yield plunging nearly 60 basis points from its peak earlier this year. While the Fed isn’t expected to cut interest rates at its upcoming meeting in March, the odds of a May cut are now above 50%.
Source: Alex Kruger
Recession odds spike to 40%: JPMorgan
The crypto and stock market sell-off on March 10 was largely driven by fears that the US economy was barreling toward a recession. Those fears were echoed in the bond market, with the 10-year yield plunging to the lowest level since Trump was elected.
Against this backdrop, analysts at JPMorgan have upped their odds of a recession this year to 40% from 30%.
Growing recession odds crash the crypto market. Source: CoinMarketCap
“We see a material risk that the US falls into recession this year owing to extreme US policies,” the analysts said.
Goldman Sachs economists also worry that Trump’s trade war could plunge the US economy into a sharp downturn. They raised their 12-month recession odds to 20% from 15%.
According to Goldman, the outlook could worsen if the Trump administration remains steadfast in its policies “even in the face of much worse data.”
BlackRock’s BUIDL enters DeFi
Real-world asset (RWA) tokenization company Securitize has selected RedStone to provide data feeds for its tokenized products, which include BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL). With the partnership, Securitize’s funds can now be used across DeFi products, including Morpho, Compound and Spark. This could expand BUIDL’s use cases into money market exchanges and collateralized DeFi platforms.
BlackRock’s BUIDL is the world’s largest tokenized Treasury fund, reaching $500 million in assets under management in less than four months. It was launched on the Ethereum network and can be accessed through Securitize. The fund invests all of its assets in cash, US Treasury bills and repurchase agreements.
Staking ETH?
Cboe BZX, a leading securities exchange headquartered in Chicago, is seeking approval from US regulators to add staking into Fidelity’s Ether (ETH) exchange-traded fund.
According to a March 11 filing, Cboe is proposing a rule change that would allow the Fidelity Ethereum fund to “stake, or cause to be staked, all or a portion of the Trust’s Ether through one or more trusted staking providers.”
Staking could potentially boost the appeal of Ether ETFs by giving investors access to yields.
In February, the Securities and Exchange Commission (SEC) acknowledged more than a dozen crypto-related ETF filings. Recognizing the SEC’s regulatory pivot since President Trump’s inauguration, Cboe is attempting to strike while the iron is hot.
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