US Equities Delivered Their Strongest Quarter Since 2020

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In Today's Note

• US equities closed out their strongest quarter since 2020, S&P 500 +14.9%, Nasdaq +21.4%, but BTC slipped to a new YTD low near $57,700 amid nine straight days of spot ETF outflows, with ETH at ~$1,570.
• Taiwan passed its Virtual Asset Service Act to regulate crypto service providers, while the launch of Open USD backed by 140+ companies including Visa, Stripe and BlackRock sent Circle shares down 17.5%.

Market Snapshot: Overnight Moves

Macro & Markets

• Despite the Iran war and a more recent selloff away from big-tech, US equities delivered their strongest quarter since 2020. 
• The S&P 500 and the tech-heavy Nasdaq Composite added 14.9% and 21.4% in the three months ending June 30; a run that was last beaten in Q2 2020 when markets recovered from the Covid-19 crash. 
• The closely tracked gauge of chipmakers, the Philadelphia Semiconductor Sector index, closed up 4% in trading yesterday, putting the index’s quarterly performance to over 80% ,  its best ever. 
• Meanwhile, oil prices continued to waver around pre-conflict levels of $72 a barrel. 

• Part of the equities rally was attributed to consumer confidence edging higher in June amidst lower gasoline prices. The Conference Board reported yesterday that its consumer confidence index edged up by 0.6 points to 91.2 in June. 
• Dana Peterson, the Conference Board's chief economist said, "Consumer confidence inched up in June as falling oil prices in recent weeks provided some relief to consumer inflation fears.”

• Still, as we have continuously highlighted, the optimism in US stock markets has not fed into crypto markets. 
• Bitcoin fell as low as $57,700, marking not only a new year-to-date low, but the lowest level price has changed hands since September 17, 2024. It has since only modestly rebounded back above $58K. 
• Spot Bitcoin ETFs currently provide little confidence too with nine straight days of outflows ($222.6M in withdrawals yesterday). 

• Cleveland Federal Reserve President Beth Hammack warned yesterday that she could advocate for higher interest rates should inflation pressures not moderate soon.
• Speaking on CNBC, she reiterated her longheld view that "We've got inflation that's ‌too high and it's been too high for the past five years”, claiming, "When I look at policy, if that continues, it may mean that we need higher interest rates to bring inflation back down ​to target”.
• Regarding the labour market, Hammack said the US economy is doing well and the job market is consistent with full employment ,  "I'm ‌not seeing a lot of restraint in the economy, I'm not hearing from these businesses that ​interest rates or credit spreads are a reason why they're holding back from investment and growth".

• Her comments follow those provided by her Richmond Fed counterpart, Tom Barkin who warned inflation is too high despite signs of moderation from the drop in oil prices. 
• Speaking in an interview with Bloomberg, when asked about the 4.1% headline PCE inflation figure he said, "Those numbers are too high … It's hard to have confidence that you're headed back to 2% without any more influence from the fed funds rate or the labour market or some other feature that creates disinflation the other way”. 
• Barkin showed concern about how businesses are operating in the current inflationary environment ,  "Businesses, when they set prices, take today's inflation as a factor, and so I think there's some persistence to inflation. I do worry about that, and that's part of why I think being modestly restrictive is a reasonable place to be."

• On the geopolitical front, according to a senior administration official, US negotiators Jared Kushner and Steve Witkoff had positive talks with leaders in Qatar and that technical talks with Iran are moving forward. 
• The two US negotiators were in Doha as part of ongoing indirect talks between the US and Iran, following the interim peace deal signed in June. That deal opened the door to a 60-day negotiating period, which was complicated in recent days after weekend tit-for-tat strikes between the two countries.

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DeFi / Web3 / Altcoins / Crypto3

• Taiwan’s parliament has passed the Virtual Asset Service Act, a dedicated crypto law aimed at regulating virtual asset services, supporting industry development and protecting customers, with the Financial Supervisory Commission named as the lead regulator.
• The draft framework requires virtual asset service providers to obtain regulatory approval before operating and covers exchanges, trading platforms, transfer providers, custodians, underwriters, lending firms, crypto financial services providers and other approved virtual asset businesses.
• The law also sets rules for customer asset segregation, cybersecurity, internal controls, advertising and KOL promotions, exchange listings, custody, industry association membership and stablecoin issuance, with stablecoin issuers required to receive approval from the FSC after consultation with Taiwan’s central bank.

• The SEC requested public comment on “Novel ETFs,” including funds that seek exposure to crypto assets, commodity-focused instruments, single-stock strategies, heightened leverage, blockchain-enabled opportunities, private assets, event contracts or combinations of those strategies.
• The agency is asking whether some Novel ETFs should qualify as investment companies, whether ETF rules should be changed to address new asset classes or strategies, and whether investors need clearer disclosures distinguishing these products from traditional ETFs.
• The SEC also asked whether automatic registration timelines for Novel ETFs should be extended beyond the current 60- or 75-day periods, including whether the agency should be able to delay effectiveness when legal issues or unresolved staff comments remain.

• A new stablecoin, Open USD, or OUSD, was announced Monday by Open Standard, as a new dollar-backed stablecoin designed for businesses and expected to launch later this year.
• More than 140 companies, including Visa, Stripe, Mastercard, BlackRock, BNY, Standard Chartered, Google, Shopify, Coinbase, Ripple and Galaxy, joined the initiative, which will let businesses mint and redeem OUSD without fees or volume limits.
• Unlike stablecoins where reserve income is mainly kept by the issuer, OUSD is designed to share most reserve earnings with participating businesses after a small management fee, while Tempo, a payments-focused blockchain network developed by Stripe and Paradigm for stablecoin transactions, said the stablecoin will be natively issued on its network from day one.
• Circle (CRCL) shares fell 17.5% following the Open USD announcement, extending a broader selloff that has erased more than 40% of the stock’s value over the past month.

• President Donald Trump’s annual financial disclosure showed hundreds of millions of dollars in crypto-related income tied to his family’s DeFi company World Liberty Financial, including more than $65.6M from equity sales in WLF Holdco and $236.25M in token-sale proceeds.
• The filing also listed World Liberty Financial-linked cold-wallet holdings in bitcoin, ether, USDC, LINK, AAVE, ENA, MOVE and ONDO, along with about $1.8M in ether staking rewards.
• Trump also disclosed investments of up to $100,000 in Coinbase and multiple investments in Strategy, while Vice President JD Vance reported holding up to $500,000 worth of bitcoin.

• OKX AI, a beta agentic marketplace from crypto exchange OKX, launched to let autonomous AI agents find work, complete tasks and get paid in USDT or USDG stablecoins.
• The platform includes an Agent Marketplace, where builders can list AI agents, set services and pricing, and earn automatically when work is completed, and a Task Marketplace, where agents can post work, hire other agents and pay only after results are delivered.
• OKX said the platform uses a shared agent identity so each AI agent can build reputation across different workflows, with launch support from AWS, CertiK, the Ethereum Foundation, the Solana Foundation, AltLayer, DAPPOS, Opentensor Foundation and StraitsX.

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