QCP Capital: Trump's coming to power may exacerbate inflation concerns, and crypto-friendly attitude may provide price support

QCP Capital posted on its official Telegram channel: "It is less than a week until the inauguration of the 47th President of the United States, Donald J. Trump. Similar to 2017, Trump has already had an impact on global markets before he officially takes office on January 20. Inflation concerns continue to unsettle US markets. The US job market remains strong, with an unexpected increase in non-farm payrolls last week (+256,000 vs. +165,000 expected). Although CPI seems to be recovering modestly, exceeding the 2% target, and PPI data has cooled, market participants still expect CPI to be higher than previous data in December. Trump has publicly stated his plans to impose tariffs on major trading partners, especially China, thus exacerbating inflation concerns. Unlike the initial expectation of large-scale tariffs, it now seems that the new administration will gradually impose tariffs on selected imports. Bond yields have started to climb again due to inflation concerns. The market currently expects only two rate cuts in 2025 and 2026 (the latest Fed dot plot predicts four), with 10-year and 30-year interest rates expected to fall by 10% and 2027, respectively. The 10-year Treasury yield is approaching the 5% level. As Treasury yields rise, the stock market is also hit, with the S&P 500 falling below $5,800. Bitcoin has also followed suit, falling below $90,000. Given recent developments, the macroeconomic environment currently seems unfavorable for risk assets. However, one bright spot is that Trump's actual policies often differ greatly from his public statements. Inflation concerns may not be as severe as the market expects. For cryptocurrencies, there are people in the Trump administration who are friendly to cryptocurrencies. There are rumors that Trump will issue a wide-ranging and crypto-friendly executive order, which will provide a boost in the short term and may support prices. Market volatility increased around the inauguration as the market needs to digest and adjust to the arrival of Trump's new term. We remain cautious on the downside risks as the $90,000 level for Bitcoin has been tested multiple times. The stock market also looks vulnerable, and rising global bond yields may lead to dislocation and jumpy fluctuations everywhere. "