Macroeconomics

Rising oil prices due to the US-Iran conflict are heightening inflation concerns, affecting investor behavior and prompting risk aversion in markets, especially cryptocurrencies. Policymakers remain cautious, suggesting potential delays in rate cuts amid worsening inflation forecasts from the IMF.

The private lending market is expected to see default rates rise to 9.2% in 2025, facing liquidity challenges and elevated borrowing costs. Small business default rates have reached 15.8%, though lenders are controlling losses through restructuring. Market expansion is bringing liquidity risks, and economic deterioration could expose underlying vulnerabilities.

This Friday will see the quarterly derivatives event "Quadruple Witching Day," which may lead to increased market volatility. The current market environment is highly volatile, with the VIX index breaking through 35, and Bitcoin volatility is also likely to rise. Additionally, on March 27th, there is a large-scale derivatives expiration, which will intensify market volatility risks.

Inflation risks remain high due to ongoing geopolitical tensions, especially regarding Iran, contributing to economic uncertainty and influencing potential interest rate cut timelines this year.

Gate News reports that on March 19, Christine Lagarde, President of the European Central Bank (the central bank of the eurozone), delivered a series of economic policy statements. Lagarde stated that longer-term inflation expectations are around 2%, but rising energy prices will push inflation above 2% in the short term. She pointed out that a prolonged war could keep energy prices elevated for longer, eroding incomes. Additionally, Lagarde believes that the economic growth outlook faces downside risks.

On March 19th, gold prices plunged 10%, breaking below $5,000 to $4,500, driven by the Federal Reserve's downward revision of rate-cut expectations for 2026 and a higher-than-expected Producer Price Index, which intensified market volatility. The 10-year U.S. Treasury yield rose to 4.2%, and the U.S. Dollar Index approached 99.9, putting pressure on gold. Currently, market sentiment is bearish, with gold support levels at $4,350.

The U.S. national debt surpassed $39 trillion for the first time, rising by $1 trillion during President Trump's administration, although the exact timeframe for this increase remains unspecified.

Gate News: On March 19, the number of initial jobless claims in the United States for the week ending March 14 was 205,000, lower than market expectations of 215,000, and down from the previous value of 213,000. Initial jobless claims are a key indicator measuring the health of the U.S. labor market, with lower numbers indicating a stronger job market.

On March 19, Pan Gongsheng, Governor of the People's Bank of China, met with Paul Chan, Financial Secretary of Hong Kong, and other senior officials to discuss macroeconomic conditions, financial market connectivity between the Mainland and Hong Kong, and the development of Hong Kong's offshore RMB market.

Gate News has reported that on March 19, according to two sources, Saudi Arabia's Port of Yanbu (an important oil export port on the Red Sea coast in western Saudi Arabia) has suspended oil shipments.

Gate News report states that on March 19, according to Washington D.C. sources, in March 2025, the US dollar maintained resilience with support, as the Federal Reserve is strategically assessing the impact brought by energy shocks.

Trump is calling for the Federal Reserve to immediately convene a special meeting to cut rates, emphasizing that now is the time for action and noting that lower interest rates would help reduce national debt servicing costs and stimulate the economy. Despite his pressure, market expectations for this rate cut remain low, as the Federal Reserve faces challenges from inflation and rising oil prices and may not quickly adjust policy. The crypto market has already priced in expectations of no rate cut, with focus shifting to the Federal Reserve's future policy direction.

The PBOC has committed to stable financial operations, addressing risks in stocks, bonds, and forex markets. Key priorities include managing debt risks and supporting non-bank institutions while ensuring financial stability through macro-prudential tools.

Yesterday, BTC fell from $73,000 to $71,000 due to declining US stocks and deteriorating Middle East conditions, with risk-off sentiment heating up in the market. The Federal Reserve kept interest rates unchanged, with Powell emphasizing that the US employment market and energy crisis make decision-making difficult, indicating uncertain economic prospects ahead that could impact both stock and crypto markets.

The total U.S. federal debt surpassed $3.9 trillion on March 17, reflecting conflicts in government priorities while factors such as wars and tax cuts drive spending growth. The White House states that the conflict with Iran has cost over $12 billion.

Bhutan has recently conducted another large-scale Bitcoin transfer, moving out 973 BTC within the past 24 hours, continuing to reduce its Bitcoin reserves. Current holdings stand at 4,400 BTC. The market is reassessing the impact of sovereign holders on Bitcoin supply and demand, with macroeconomic factors driving volatility.

Due to tensions in the Middle East, short-term ceasefire expectations have declined, affecting global inflation and interest rates, and putting pressure on risk assets like Bitcoin. Analysis suggests that high oil prices and high interest rates will continue to suppress the crypto market, with future market trends closely tied to geopolitical developments.

The Bank for International Settlements report shows that over the past six months, retail investors have significantly increased gold investments, with purchase volumes growing approximately threefold, while institutional investors have continuously reduced holdings, forming a stark contrast. Retail investors' allocation to gold ETFs has reached approximately $70 billion, reflecting strong demand for safe-haven assets. Meanwhile, accelerated institutional position reductions and selling have triggered a pullback in precious metal prices, particularly with silver declining 34%. The strengthening dollar and leveraged capital flows have also intensified market volatility.

On March 19, the cryptocurrency market experienced a pullback due to the U.S. Producer Price Index (PPI) rising and escalating geopolitical tensions, with total market capitalization evaporating approximately $83 billion and Bitcoin declining to around $71,000. Risk-off sentiment increased in the market, altcoins showed weak performance, and LayerZero broke below $2.15. The U.S.-Iran conflict and rising energy prices exacerbated inflation concerns, with the market maintaining expectations for sustained high interest rates. U.S. regulatory advancement in security token offerings represents a long-term positive, but provides limited relief to near-term macroeconomic pressures.