Circle Aims for $7.2B IPO as Eurozone Inflation Dips and Rate Cuts Loom
Digital Asset Market: Circle Internet, a major stablecoin issuer, is aiming for a $7.2 billion valuation in its upsized U.S. IPO by offering up to 32 million shares at $27-$28 each, seeking to raise as much as $896 million amid strong investor interest in the crypto sector. This move comes as Circle’s USDC, the world’s second-largest stablecoin, stands to benefit from potential legislative support, while the company’s reserve income jumped 55% in the recent quarter. Meanwhile, Tether CEO Paolo Ardoino announced at the 2025 Bitcoin Conference last week that Tether has become a leading force in Bitcoin mining, investing over $2 billion in energy and mining projects, building its Bitcoin holdings to more than 100,000, and planning to become the world’s largest Bitcoin miner by the end of the year, while also unveiling new AI and digital wallet initiatives.
Macro Economics: Eurozone inflation dropped to 1.9% in May, below the European Central Bank’s 2% target, as a sharp decline in service prices helped cool the overall rate, according to Eurostat data. The decrease in services inflation to 3.2% and a fall in core inflation to 2.3% support the idea that recent price spikes were temporary. This cooling inflation, along with steady economic forecasts from the OECD and falling bond yields, strengthens the case for the ECB to consider further interest rate cuts, with markets already expecting a 25 basis point trim at the upcoming meeting. Despite potential global challenges such as US tariff threats, the euro area is still projected to grow by 1% in 2025, while inflation is expected to stay close to target. The Euro currency fell against the dollar after the release of inflation data.
Equities: US stocks are mixed on Tuesday as the OECD issued a warning that President Trump's tariffs could hurt global economic growth, with a particular slowdown expected in the US. The S&P 500 and Nasdaq rose modestly, while the Dow remained flat, as investors monitored progress in trade talks amid stalled negotiations with key partners and ongoing tensions between the US and China. The OECD urged quick action to reduce trade barriers, while concerns also grew over a clause in the tax bill that could deter foreign investment in US assets. The bond market faced uncertainty, with long-term Treasury yields rising due to a combination of expansive fiscal stimulus, such as Trump’s tax bill, and growth-dampening tariffs, all of which have increased worries over deficits and inflation. In the bond market, investors are struggling to interpret mixed signals as pro-growth stimulus measures clash with inflation risks, leading to higher long-term Treasury yields. These gains reflect concerns about the U.S. fiscal outlook, as Trump’s tax legislation, estimated to add four trillion dollars to the national debt, nears Senate passage. In the past, deficits have not significantly lifted Treasury yields, thanks to the U.S.'s status as the issuer of the world's reserve currency; however, that may be changing as investors now demand higher returns to compensate for growing fiscal and policy uncertainties. Further risk comes from new legislative provisions that could deter foreign investment in U.S. assets, which is vital given the country’s large current account deficit.
The Fed and US Treasury: Despite concerns about the economic impact of President Trump's tariffs, job openings rose unexpectedly in April and the labor market remained broadly stable, with little evidence so far that tariffs have pushed inflation higher. After hovering near a four-year low in March, new data from the Bureau of Labor Statistics showed 7.39 million jobs open at the end of April, an increase from the 7.2 million seen the month prior. Atlanta Federal Reserve President Raphael Bostic emphasized that the strong economy allows the Fed to be patient in adjusting monetary policy, though he remains open to the possibility of a single interest rate cut later this year, depending on how trade uncertainties unfold. With inflation still above the Fed's target and ongoing uncertainty from shifting trade policies, the central bank is expected to hold its benchmark rate steady in the 4.25 to 4.50 percent range at its upcoming June meeting as officials monitor economic conditions before making any policy changes.
Geopolitical: The Russian-Ukrainian peace talks in Istanbul made no progress, as both sides remained uncompromising in their military and political goals, resulting only in a prisoner exchange. The impasse is unlikely to break unless the United States steps in to pressure one or both sides into making concessions, either by threatening to cut off support to Ukraine if it refuses to yield on some Russian demands or by ramping up aid and sanctions, risking escalation with Russia. If the US does not intervene, the only other way to resolve the stalemate is through brute force, with Ukraine or Russia attempting to force the other to capitulate by escalating military action, a risky strategy that could easily spiral out of control. Without American intervention, the fighting will likely continue until one side is forced to “escalate to de-escalate,” and current US rhetoric suggests that a peaceful resolution is increasingly unlikely. While the bombing of Russian Airbases using drone swarms by Ukraine yesterday significantly raises the risks of the situation going out of control.
View from our desk
Bitcoin Hovers at $106K as Market Awaits a New Catalyst
Bitcoin has settled around the $106K level following a modest pullback from recent highs, maintaining a constructive tone with signs of continued bullish momentum. The ongoing decline in available supply, supported by long-term holders and tightening issuance, keeps the $150K price target for 2025 within reach. However, a clear catalyst will likely be needed to push prices higher in the near term. Regulatory clarity, political shifts, or fresh adoption from corporate treasuries could provide the next leg of support. In the meantime, stablecoins continue to lead crypto’s real-world use cases, particularly in cross-border payments and settlements. This context helps explain the market’s favorable view on Circle’s valuation.
JOLTS Miss and Tariff Concerns Signal Investment Caution
The latest JOLTS report surprised to the downside, adding to signs that employers are becoming more cautious. A key factor appears to be lingering uncertainty over tariffs, as many businesses had expected a rollback that has yet to materialize. With trade policy still in flux, large capital projects are being delayed or shelved altogether. While these decisions may not immediately impact headline economic data, they will likely drag on future growth and productivity. The broader result is a hesitancy that underscores the fragile state of business confidence in the current policy environment.
Shift to Intermediate Yields Offers Temporary Support
In this complex backdrop, investors are leaning into the intermediate part of the yield curve as a defensive strategy. This segment provides a compromise between safety and return, reducing exposure to long-term volatility while still capturing yield. The pivot may offer some short-term breathing room for the US Treasury, which faces significant refinancing needs. Still, this investor behavior is more of a short-term adjustment than a long-term solution. Unless there is greater fiscal clarity and inflation remains under control, the underlying risks to both bond and equity markets will persist.
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The 1Konto Team
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