“No Single Data Point Panic” Warning on Inflation

Scott Bessent emphasized that no single inflation figure should lead to hasty conclusions, stating that “the trend matters.” He underlined that inflation is not currently accelerating. However, according to Reuters, annual consumer inflation rose to 2.7% as of June (with core inflation at 2.9%). This level is above the Fed’s 2% target, but as Bessent pointed out, the overall trend appears resilient.

Confidence in Powell and Leadership Transition

Scott Bessent highlighted that President Trump has reiterated several times that he will not remove Powell from office: “Trump will not fire Powell.” He also announced that the formal process of searching for Powell’s successor has begun, saying “there are strong candidates both within and outside the Fed.” According to BofA analysis, Bessent himself is currently considered the leading candidate with a 26% likelihood.

Highlighting the Fed’s Forecasting Errors

Scott Bessent also pointed out previous misjudgments made by the Fed: “There were major forecasting errors, and they may occur again in this cycle.” These remarks support the Fed’s current cautious stance. Last week, Bessent stated that the Fed may initiate a rate cut as early as September. The current federal funds rate is in the 4.25–4.50% range. Bloomberg also reported that Powell noted the possibility of easing based on incoming data.

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Cautious Tone in U.S.–China Dialogue

Bessent stated that the U.S.–China relationship is “in a good place” and announced plans to meet his Chinese counterpart within the next two weeks. AP News reports that this meeting is expected to be a continuation of the high-level talks held in Geneva.

No Need to Worry About August 12 Markets

Scott Bessent criticized market fixation on specific calendar dates, saying “there’s no need to worry about what’s coming on August 12; we won’t rush any deals under market pressure.” This approach helps reinforce investor confidence.

In light of these themes, the overall structure indicates that inflation risk, interest rate expectations, Powell’s future, the Fed’s independence, the U.S.–China balance, and even market stability were all addressed by the Treasury Secretary.

• Inflation Risk: June inflation rose to 2.7%, but due to temporary stock-related shocks, the Fed continues to monitor the broader trend. This has led to a “wait and see” approach for September.

• Interest Rate Expectations: Bessent’s remarks have strengthened market anticipation for a rate cut in September. Field data reflects expectations of a 100–125 basis point reduction by late October.

• Powell & Independence: Trump’s reassurance that “he won’t fire Powell” and the initiation of a formal selection process for a successor is viewed as a positive signal for preserving the Fed’s independence. BofA surveys show that Bessent, Warsh, and Waller are considered strong candidates.

• U.S.–China Balance: Strengthening diplomatic engagement may reduce uncertainty in both trade and technology sectors. AP data suggests this meeting will mark a significant step toward renewed cooperation between China and the U.S.

• Market Stability: The August 12 reference sends a “no panic” signal to financial players. This stance could reduce volatility and enhance stability in capital flows.

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This development once again highlighted the depth of trade tensions and mutual distrust between the two countries.

Hope Began, Uncertainty Ended

Talks held behind closed doors in Switzerland’s diplomatic capital Geneva were being closely watched due to more than 100% tariffs and disruptions in global supply chains. However, expectations quickly collapsed when the Chinese delegation walked out of the meeting.

Although the exact location of the meeting was kept confidential, the appearance of both delegations leaving the UN Swiss Embassy residence in the morning confirmed that talks had taken place. Just hours later, it was reported that the Chinese delegation returned to their hotel and left the city without further comment.

Washington’s Demands, Beijing’s Reaction

US Treasury Secretary Scott Bessent attended the meeting along with US Trade Representative Jamieson Greer. The US administration is demanding that China shift to a more domestically-driven economy and reduce its trade surplus through significant structural reforms.

Beijing, however, considers these demands as foreign interference and is calling for the US to treat it as an equal partner and to clarify and review the imposed tariffs.

Trump’s Harsh Statement: New Tariff Rate on the Agenda

While the talks were ongoing, President Donald Trump proposed a new 80% tariff on Chinese goods. This statement, introduced in the context of the current 145% tariffs already in place, might have played a role in Beijing’s decision to leave the table.

Trump claimed the talks began at China’s request, whereas Beijing maintained that it was invited by the US, approaching the process with caution.

Switzerland’s Mediation Fell Short

Switzerland, which had recently been in close contact with both Beijing and Washington, played a mediating role in arranging the meeting. Swiss Economy Minister Guy Parmelin described the launch of the talks as “an achievement in itself.” However, this sudden breakdown has weakened hopes for the continuation of dialogue.

Investors Worried, Global Markets on Edge

China’s move may trigger a new wave of uncertainty in global markets. Experts note that the failure of the talks could have negative repercussions, particularly across Asian and European markets.

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Bitcoin’s Price Drop: The Impact of the Fed’s Decision

The drop in Bitcoin’s price came after the U.S. Federal Reserve’s decision to reduce the number of projected interest rate cuts for 2025. The Federal Open Market Committee (FOMC) trimmed its forecast from five cuts to two, creating a less favorable economic environment for risk-on assets like Bitcoin.

The Federal Reserve now expects the federal funds rate to remain near 3.9% in 2025, up from the previous forecast of 3.4%. This has made Bitcoin and similar risk assets less attractive for investors.

Bitcoin’s Recent Performance

Bitcoin’s price had risen in six of the previous seven weekly closes since Trump’s 2016 victory. However, during the week ending December 22, Bitcoin fell by approximately 10% from its all-time high of $108,135, closing at $94,645. The price dropped from $105,185 at the start of the week.

Despite this pullback, asset management firms Bitwise and VanEck forecast that Bitcoin could surge to the range of $180,000 to $200,000 by 2025. This increase could be driven by a U.S. Bitcoin reserve strategy and further institutional adoption.

Trump’s Crypto-Friendly Policies

Donald Trump has formed the most crypto-friendly U.S. administration to date, appointing Scott Bessent as Treasury Secretary and Howard Lutnik as Commerce Secretary. Moreover, Paul Atkins is set to replace Gary Gensler as SEC Chairman, creating an environment more favorable to crypto regulation.

Last year, on Christmas Day, Bitcoin was trading at $43,610, as traders speculated whether the now-approved spot Bitcoin exchange-traded funds (ETFs) would be given the green light.

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