The Morning Edge: Crypto Reserve, PMI Data

 US President Donald Trump has unveiled plans to incorporate five leading cryptocurrencies into a newly proposed US strategic reserve, triggering a sharp rally across digital asset markets. Bitcoin surged 11%, and Ethereum climbed 13%, with the combined cryptocurrency market capitalisation swelling by $300 billion within hours of the announcement.

A key point of uncertainty is whether the plan will require Congressional approval. Some reports suggest the US Treasury could utilise the Exchange Stabilization Fund to acquire these digital assets, potentially allowing the administration to bypass the need for fresh legislation. If implemented through this route, it would represent a significant departure from traditional reserve management practices, embedding cryptocurrencies directly into national financial strategy.

The proposal raises critical economic and regulatory questions. Adding digital assets to US reserves could enhance diversification and provide a hedge against inflation, particularly at a time of global monetary policy shifts. However, the move would also expose national reserves to the extreme volatility and speculative nature of cryptocurrencies — a risk few major economies have been willing to embrace.

If fully pursued, the US would become the first global power to formally integrate cryptocurrencies into its sovereign reserve framework, marking a potentially transformative shift in both economic strategy and global financial positioning.

Data
The US economy showed signs of strain in January, with consumer spending falling 0.2%—the first decline since March 2023 and the sharpest in nearly four years—despite an upwardly revised 0.8% rise in December. The goods trade deficit also hit a record high as businesses rushed to import goods ahead of tariffs, further dampening growth prospects. These trends suggest the economy could face weak growth or even a contraction this quarter, raising concerns about its resilience amid slowing domestic demand.

Inflationary pressures, while moderating, remain persistent. The 12-month PCE price index eased to 2.5% in January from 2.6% in December, while the core PCE measure, the Fed’s preferred gauge, fell to 2.6% from 2.9%. However, with prices still above the Fed’s 2% target and tariffs likely to push costs higher, policymakers face a challenging balancing act between supporting growth and taming inflation.

Markets
Overnight
US stocks indices closed higher on Friday after a volatile trading session, with tech stocks gaining ground despite a disastrous meeting between US President Donald Trump and Ukrainian counterpart Volodymyr Zelenskiy. The two leaders exchanged heated words at the White House, sparking fresh uncertainty over the Ukraine-Russia conflict. Dell Technologies fell 4.7% after forecasting a decline in its adjusted gross margin rate for fiscal 2026, while HP Inc dropped 6.8% on disappointing profit forecasts. However, Nvidia and Tesla each rose nearly 4%, helping lift the S&P 500. 

The benchmark US Treasury yield dropped to their lowest levels in several months on Friday after a key inflation report signalled cooling price pressures and softer consumer spending, bolstering expectations of Federal Reserve rate cuts. The yield on the benchmark 10-year note fell 6 basis points to 4.227%, while the 2-year yield, which reflects Fed rate expectations, tumbled 8.9 basis points to 3.991%. The data reinforced growing bets that the Fed may ease monetary policy sooner than anticipated, as economic momentum shows signs of slowing.

The US dollar initially slipped on Friday as inflation data met expectations and consumer spending unexpectedly fell, but the dollar index ultimately rose 0.23% to 107.61. While the greenback gained 0.9% for the week, it remained down 0.8% in February, marking its largest monthly decline since September. Expectations for a Federal Reserve rate cut in June edged higher after the data, reflecting concerns about slowing economic momentum and reinforcing bets on potential monetary easing.

Brent crude Oil prices dipped on Friday as concerns over White House trade policies, fresh tariffs, and Iraq’s decision to restart exports from the Kurdistan region weighed on markets. Brent crude futures, which expired on Friday, settled at $73.18 a barrel, down 1.16%, reflecting growing uncertainty over global supply dynamics and demand outlooks. The combination of geopolitical and economic headwinds has left traders cautious, with oil markets navigating a complex landscape of risks. 

 

 

 
 
 
 
 

Day’s Ledger
Economy

• India Manufacturing PMI for February
• Eurozone February Core CPI data 
• US S&P Manufacturing PMI for February
• US ISM Manufacturing PMI for February
• US Atlanta Federal Reserve Jan-Mar GDP Nowcast

Companies

• GTT Data Solutions board to consider preferential issue of share
• RDB Real Estate Constructions board to consider increase in authorised capital and preferential issue of share 
• Wherrelz IT Solutions board to consider right issue of equity shares

Policy

• Maharashtra, Bihar, and Jharkhand governments to present Budget for FY2025-26

Tickers

• BAJAJ AUTO has received a tax demand order amounting to ₹1.39 billion for FY21 from the Deputy Commissioner of State Tax, Pune. 
• EICHER MOTORS February Royal Enfield sales soar 19% to 90,670 units
• Indian Overseas Bank has received a demand from the Deputy Commissioner, Large Taxpayers Unit, Chennai, for a GST liability of ₹7 billion .
• MAHINDRA AND MAHINDRA February Tractor sales increase 18% to 25,527 units
• MARUTI SUZUKI INDIA February total sales increase 1% to 1,99,400 units
• NLC INDIA has received a Letter of Award for a 200 MW wind power project from SJVN at a tariff of ₹3.74 per kWh.
• ONE 97 COMMUNICATIONS (PAYTM) has received a show cause notice from the Directorate of Enforcement for alleged contraventions of certain provisions of the Foreign Exchange Management Act (FEMA) between 2015 and 2019. 
• PIRAMAL ENTERPRISES has received a tax demand order from the GST Department amounting to ₹15 billion.
• TATA MOTORS February total sales decline 8.2% on year to 79,344 units
• TECH MAHINDRA has approved the merger of Comviva Technologies USA Inc. with its parent company, Comviva Technologies Americas Inc. 
• UJJIVAN SMALL FINANCE BANK has completed the sale of a stressed loan portfolio, including a written-off loans pool with an outstanding value of ₹3.65 billion, to an Asset Reconstruction Company (ARC) for ₹342.6 million.

Must Read

• Piyush Goyal's US visit for trade talks to start on Monday
• India needs 80-90 hour workweeks to reach $30 trillion economy: Amitabh Kant
• Rabi crop yield may be hit above-normal temperature in March: IMD
• Sebi's combo mutual fund-insurance plan likely to hit a roadblock
• SEBI, BSE to challenge court order for FIR against Madhabi Puri Buch and other officials
• Piramal to sell stakes in Shriram insurance firms
• Paytm gets ED notice for FEMA violations in acquisition of 2 firms
• Adani revives US investment plans as Trump moves fuel hopes
• Trump names cryptocurrencies in strategic reserve, sending prices up
• UK's Starmer calls on Europe to step up to secure Ukraine peace 

 

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