Courts Challenge Tariffs

Daily Updates:

• The minutes for the FOMC’s May meeting released yesterday reinforced the Fed’s cautious stance, as participants signalled a clear preference to wait for more clarity on inflation and the broader economic outlook before making further policy moves.
• They acknowledged that risks of both more present inflation and rising unemployment have grown, and almost all commented that inflation may remain elevated for longer than anticipated.
• The committee noted that it could face “difficult tradeoffs”, particularly if inflation remains persistent while growth and employment weakens.
• Meanwhile, the staff lowered GDP growth projections for 2025 and 2026, citing increased downside risks from tariff policies.
• The Committee also voted to renew its dollar and foreign currency swap lines, while some participants pointed to shifts in typical asset price correlations observed in early April. A few noted that a durable change in these relationships – or a weakening of the U.S. assets’ perceived “safe-haven” status – could have lasting implications for the economy.

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• Yet more uncertainty was poured onto Trump’s tariff saga late on Wednesday night as US Court of International Trade judges ruled that the legal foundation (the International Emergency Economic Powers Act) that the Trump administration had used to push through its near-unilateral and reciprocal “Liberation Day” tariffs on Apr 2, 2025 had been misused. This ruling also applies to tariffs earlier levied on Mexico and Canada.
• However, the administration will immediately appeal the ruling, and may still rely on different legal foundations to apply tariffs, such as those levied in Trump’s first term in office. In addition, sector-specific tariffs (such as those on cars) are unaffected.

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• S&P 500 futures are up 1.6% overnight on the news, as  doubts over the Trump administration’s ability to enforce tariff threats lifts growth expectations and risk-on sentiment.
• Tech stock indices were also boosted by Nvidia’s strong earnings with first-quarter revenue of $44.06B, which is driven by a 73% surge in data-centre sales – sending its shares up over 5%.

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• The news has so far had little impact on BTC, which trades within its range over the last week. However, ETH has rallied a little over 5% overnight above $2.7K, to its highest level since Feb 23, 2025.
• The sharp move has once again lifted the front end of the implied volatility term structure, which had never fully normalised after its week-long inversion just days before. Alongside that lift in volatility expectations is a sharp, bullish skew of the one week tenor volatility smile towards calls – which trade at an implied vol of more than 6 points higher than similarly OTM puts.

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• Pakistan’s government announced they are building a strategic Bitcoin reserve at the Bitcoin2025 conference stating, “We will be holding these Bitcoins and we will never ever sell them.”
• This follows their earlier announcement to allocate 2,000 MW of energy for Bitcoin mining and AI initiatives.

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• GameStop has confirmed its first Bitcoin investment, acquiring 4,710 BTC, though specific date and pricing details remain undisclosed. GameStop Corp stock closed 10.85% lower yesterday from May 28th opening price of $35.01 to $31.21.
• Earlier in March, Gamestop announced Bitcoin investment plans, funded via a $1.3B convertible notes offering.

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• VivoPower (VVPR) has raised $121M to launch an XRP digital asset treasury strategy, with investment backing from Saudi Prince Abdulaziz bin Turki Abdulaziz Al Saud, chairman of Eleventh Holding Company. VVPR will become the first public firm to adopt XRP as a reserve asset.

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• Solana treasury strategy, DeFi Dev Corp have launched a Liquid Staking Token SOL token, dfdvSOL which allows users to stake their SOL with DeFi Dev Corp. validators.
• This comes as Defi Dev Corp look to expand their validator business and maximise their $SOL per share (SPS) growth.

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• The SEC has announced the agenda and panelists for its June 9 roundtable, “DeFi and the American Spirit.” hosted by the Commission’s Crypto Task Force.

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• The SEC has once again delayed its decision on Grayscale’s application to launch a spot Colorado ETF ($ADA), extending the review period to 15 July 2025, adding to the growing list of postponed crypto-related fillings. The agency also pushed back a decision on its proposal to launch an Avalanche ETF ($AVAX).

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