Last Updated:
April 14, 2025
•
2 min read
Nobody Is Off The Hook
President Trump’s mixed tariff signals continue as his administration announced a tariff exemption for an array of consumer electronics before Trump responded on Sunday evening that “NOBODY is getting ‘off the hook’”. The continued uncertainty around tariffs saw the 10Y US treasury yield surge to an intraday peak of 4.56% on Friday and the US dollar is down close to 7% since mid-March. BTC’s term structure of volatility is flat at longer-tenor vol followed the front-end up and the 25delta put-call skew ratio has recovered significantly over the week. ETH futures markets for 1 week expiries are still trading at a discount to spot, albeit that discount has narrowed since April 12 where the annualized yield was -6%.
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Fast-Track Trade Talks
FOMC minutes due at 2 pm ET should clarify the Fed’s May decision to keep rates unchanged as Chair Powell signalled patience, a stance that looks prudent amid volatile trade policy and 30-year yields briefly topping 5%. Hopes of imminent US trade deals with India and the EU lifted equities on the day (S&P 500 +2.0%, Nasdaq 100 +2.4%, Dow +1.8%), with Nvidia up 3% and Apple stabilising despite Trump’s tariff threats. Trump Media secured $2.5B in debt to buy bitcoin, despite rubbishing similar reports just one day before. Circle filed for a NYSE IPO at a $5.65B valuation, and Nasdaq sought SEC approval for a 21Shares spot Sui ETF.
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Derivatives markets remain positive
Despite a rangebound spot, BTC options markets remain bullish, with the 7-day tenor volatility smile skew still in favour of OTM calls by more than 5%. ETH options maintain their volatility premium to BTC's and while ETH smile skews are slightly less bullish for tenors expiring within 30 days, beyond that, ETH skew is more strongly tilted towards calls. JGB bond yields fell today as Japan’s Finance Ministry had reportedly sent out a questionnaire to market participants to gauge their views on the appropriate amount of government bonds issuance, in an attempt to stabilise its bond markets. In DeFi, Bancor has initiated legal action against Uniswap and Trump Media Group has rebuffed a report from the Financial Times of plans to raise $3B to buy cryptocurrencies such as Bitcoin.
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No Question of Stagflation
Minneapolis Fed President has warned that the tariff picture might not be clear enough by September, prompting the Fed to maintain its wait-and-see approach for a longer period, adding that "there's no question that the shock of tariffs are stagflationary". The "uncertain environment" Kashkari highlighted has certainly been on display over the past three days as President Trump went from “not looking for a deal” with the EU to "we had a very nice call" and delaying a potential 50% tariff on EU products to July 9. BTC and ETH derivatives markets maintain their exuberance – volatility smile skews are tilted towards OTM call options for short-tenors by as much as 6% for BTC while, ETH futures-implied yields for the 1–week tenor has surged from 1.77% to 5.95%.