FOMC pumps USD. Stablecoin developments churn two superstar stocks.
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Welcome to the Saxo Market Call. Before we get started, it's important we emphasize that the views and opinions expressed in this podcast are those of the host and guests and do not constitute investment advice or recommendations. All information provided is for educational and entertainment purposes only.

Okay, it is Thursday, 19th of June, 2025. U.S. markets closed today for the Juneteenth holiday. But a few things to discuss with the FOMC meeting late yesterday and a few interesting developments around that. So the first thing was the monetary policy statement, some very, very minor adjustments there.

They're showing a little bit of a lowering of concern levels. We have to remember that the prior meeting was May 7th, and there was closer proximity to the Liberation Day kerfuffle, if you will, than this meeting where things have calmed considerably. So there was that. That looked like marginally positive concern.

not hawkish, but marginally positive or at least more relaxed about the outlook. But if you looked at the staff economic projections on the economy, you got kind of a different picture. And that was one of increasing concerns of stagflation. So growth projections lowered for this year and next. We saw the unemployment rate projections raised for this year and next, 4.5 from 4.4 this year and 4.5 for next year from 4.3.

That would be very unusual to see these sort of very calm rises with typically if we have a recession, you see a considerable rise, not just these very incremental rises in unemployment levels. That being the case, that was raised. And we had the core PCE also raised for all three of the years forward from here. So this year through 2027. That's stagflation. And then you see what that means for their policy rate projections in the dot plot.

Again, I think we can toss out all of this for what actually happens, but it is, of course, important for what the FED is going to actually do in the coming couple of meetings. But their dot plot projection is pretty much unchanged if you look at the median. But it's kind of interesting to see what we were talking about yesterday, a little bit of a bifurcation in grouping projections.

of how the Fed sees policy developing. So clearly a large group thinking that there will be no change to the Fed policy rate through the end of this year and a significant contingent that believes there will be two or more cuts for the balance of this year. So, and I think that sort of reflects that either we hit a recession and the Fed probably does cut rates, even if inflation is a little bit high, if that unemployment rate is spinning up higher than the

or we just sort of muddle along and things remain unchanged. I think it's a fair either-or type of assessment. So we'll have to see, but the takeaway was very little in terms of U.S. yields. They chopped back and forth and ended up the day pretty much unchanged. And I think with positioning kind of leaning and consensus leaning on this negative dollar story, at least that's my guess, that this is just sort of a disappointment. It's a lack of a strong catalyst, and we have some stale dollar shorts that we're covering. And we've seen a pretty –

Decent backup in the dollar, especially versus the currencies where it had been doing quite poorly against the euro, trading around 114.50 as I'm speaking here, and sterling below 134 versus the US dollar. I think dollar-yen may prove a little bit less effective.

less representative of the broader dollar picture here because the yen has been so weak across the board on a lot of carry trading. So we're seeing the yen actually gaining in things like versus the sterling and versus euro, though dollar yen is above 145. And if it gets significant separation from 145 dollar yen, it could be in for a squeeze higher. Actually, just rounding out the FX space, where do we go from here?

Again, that 145 plus area dollar, yeah, a bit touchy, but there's all kinds of messy range levels above that. Eurodollar as well, it was disappointing that it lost touch with this 115 level and the minor support just below that.

So really, there's just a lot of range here. 114 to 114.50 is arguably a last-ditch, a very local area that if that's taken out, then we're looking deeper into the range. 112.80 is a Fibonacci retracement, and then eventually you have all the way down to 110.65 way down there.

Aussie overnight rallying a bit on a jobs report. I'm not sure why this was a catalyst because the headline figure was slightly disappointing. It came in very slightly negative versus a positive reading expected. I guess the positive spin could have been that the full-time payrolls showed strong growth relative to a bigger payroll.

slightly larger drop in the part-time payrolls. But yeah, whatever it is, we saw Aussie rallying versus the Kiwi, and it could be just a bit more about Kiwi selling in the crosses. I don't know. Aussie Kiwi above 108 for the first time in quite some time, if it closes above that level, I should say. And then we see just looking elsewhere, the things that have been doing so well, gold and silver more recently.

Looking ugly because that recent high, an attempt through $3,400, has been pretty thoroughly rejected here locally in gold. And the new silver highs as well, not holding here and getting a rejection here post-FOMC. So it looks like some sort of gathering of...

gathering of the senses, I guess, in the backdrop here on some of the themes have been running quite hot of late. Very little sort of reaction and resentment, which dipped a little bit late in the session yesterday. Maybe someone wanted to take a few chips off the table with the, who knows, an Iran strike from Israel in the offing or even from the U.S. in the offing on this weird Thursday day off before a final session for the week.

Let's round up a couple of other things that we saw yesterday that are of interest. The jobless claims edging slightly lower to 245K. Tiny revision to the prior week's reading. We have the highest four-week average since – oops, now I'm forgetting. I think it's August 2023 basically. The –

So still remaining elevated. The continuing claims only dipping very, very slightly, 1.945 million. So that's still flashing an amber to slightly red light there. And then as we talked about with housing, I think this is an important data point. We saw the housing starts dip, not just dip, but almost collapse, almost 10% annualized pace of 1.256 million versus 1.5 million.

versus 1.35 million expected. That's the new low. If you don't look at the crazy a couple of months during the pandemic, that's a new low since 2019. I think there's a gathering, gathering clouds over the U.S. housing market will become a significant concern and an aggravator if we are seeing a growth slowdown, an aggravator on the sentiment side and consumption side if this continues and prices start to really, really drop.

And then as alluded to with Iran and Israel, some crazy headlines coming here on Trump saying, well, maybe I'll strike and maybe I won't. Military assets from the U.S. are moving into Iraq.

the Nimitz carrier group moving in there and these crazy B-2 bombers can strike from their Indian Ocean bases at any time if the U.S. decides to move forward with something. The interesting thing being here, besides the idea of the U.S. actually becoming actively involved and not just supporting Israel, is domestically and politically in the U.S., as I've talked about before, Tucker Carlson now with a pretty spectacularly

Well, it was read as quite spectacularly embarrassing for Ted Cruz, clearly taking this isolationist stance against what they described, this backdrop, this support group within MAGA of an isolationist stance against the so-called warmongers, as well as Steve Bannon.

of MAGA fame is saying that a U.S. strike on Iran could tear apart the MAGA coalition. So I think that's one of the interesting angles on this besides, of course, the actual strike itself. Adding a little bit to this, I mean, there's this idea that, by the way, Natanz is one of the, or is the key nuclear energy and nuclear

research, whatever, uh, complex within Iran. But the actual mountain I misnamed yesterday is, is Fordo or however you say this. And that is where the enrichment is taking place deep in underground and with a big concrete shell around it. So the idea is that the U S uh, bunker busters would be needed to destroy that. But Israel is saying it doesn't necessarily need that. It could do so, uh, take out the facility with special forces that would require, uh, some sort of, uh,

nimble operation with troops on the ground, I guess parachute troops. But something to watch there. And again, the concern here is that there's a maximalist view that does, or is there the maximalist view from the Israeli point of view that the end of the nuclear program in Iran can only be achieved by a regime change. If that's the case, this thing drags on for a long time because if there is a regime change,

or the regime is under threat, that could involve significant destabilization. And any circumstance that involves significant destabilization raises the risks to global markets of some sort of disruption of Iranian oil supplies. And we've talked a bit about that, but I think I just want to re-emphasize that point. All right, I'll wrap up with a

discussion of some just I just looked at the biggest movers in the S&P 500 and I saw that on the positive side you had Coinbase up I believe it was 16% while MasterCard and Visa were down more than 5%. I mean those two companies if you'd invested significant funds in those stocks a couple decades ago you would not be listening to this podcast you'd be sipping

pina coladas on a beach somewhere because these have been spectacular performers so very interesting to see the the drivers of what's going on here don't have a lot of details on this but there were apparently two things that were interesting so and the general backdrop is increasing use of stable coins for all manner of uses and specifically here in this case uh coinbase talking about using usdc which is the second largest stable coin

Some I was at 61 billion dollars. I think I saw that it was the the market cap or the reserves in the stable coin and

using it both as collateral with some outfit called Nodal Clear for U.S. futures trading, but also some kind of involvement with this USDC in payments. And I know Shopify has been making headlines for considering use of USDC in payments. So if USDC is dollar good for payments, it could be for collateral. It could be for credit as well. And, of course, it's that credit angle that could be super interesting there.

And these MasterCard and Visa, I mean, they take absolutely insane interest rates. So it seems like there might be some fat margins that might be at risk there. Just an interesting one to flag two super superstar companies there that may be at risk of some kind of disruption. And maybe a story we'll touch on more in the future.

All right, just a quick one today. Some interesting developments late yesterday with the FOMC meeting and the read there. And we saw some follow through into today. I think it's interesting to see where the dollar sits here and gold and silver sit here, as well as risk appetite, really, after tomorrow's session as a setup going into next week. And coming up today, we have three central banks I haven't talked about. I did preview them.

especially on Friday and a little bit yesterday. The S&B, do they go full negative when they meet in just a little over an hour from when I'm recording this? Do they go negative in one swoop or do they wait and do it over two meetings? Is it really that dramatic, but it's still interesting on how firm the signal is from them on the dovish side. A bit less drama certainly from the Norius Bank in Norway.

And the Bank of England could be a snoozer later. But they often surprise the consensus, the Bank of England, maybe a bit more often than some of the other central banks. So worth paying attention to there with Sterling in a pretty vulnerable position here after the recent action. All right. That's it for today. We will be back tomorrow with the Saxo Market Call.