Summer Doldrums Not So Dull - Macro & Markets June 2025

Macro Thematics

As we wade deeper into the summer months, markets have been anything but the dull doldrums of years past. The constant barrage of market developments continues to keep participants honest & questioning. When rate cuts? Is the tit for tatt tariff tantrum all but in the past? Is this yet another Middle Eastern flare up, or the start of something more?

Rate Cuts Looming

The Fed chose not to cut rates at their June FOMC meeting, citing both steady economic growth and persistent inflation concerns as rationale to sit tight. But fed fund futures are putting more weight on cuts starting by September, which has given BTC some more support.

The latest Fed minutes indicate “most Fed officials said they expect rate cuts will be appropriate later this year”, but they’re more divisive on the timing. Wall Street analysts are also a bit scattered on the Fed’s speed and scale.

Goldman Sachs now expects the Fed to begin cutting rates in September — pulling forward its previous forecast by three months — with a total of 75bps of cuts this year.

Morgan Stanley’s chief economist goes a step further, calling for the Fed to deliver 7 rate cuts throughout 2026, bringing the terminal rate down to 2.5-2.75%.

The FOMC’s Summary of Economic Projections (SEP) outlines the median projection for 2025 is 3.9%, implying two 25-basis-point rate cuts by year-end, consistent with March 2025 forecasts.

For 2026 and 2027, median projections are 3.6% and 3.4%, respectively, indicating a gradual easing of monetary policy. The longer-run median rate remains at 3.0%, suggesting a stable long-term outlook. Historically, BTC and crypto assets have performed positively during these types of interest rate regimes.

Middle East Flare Up

In early June, an armed conflict between Iran and Israel ignited when Israel launched surprise attacks on key military and nuclear facilities in Iran.

The aftermath was immediately felt across a variety of markets, with oil rallying (on the back of fears related to a potential closure of the Strait of Hormuz) and risk assets (equities & BTC) fading as investors began grappling with the possible second and third order effects.

Will there be further escalation? Will there be potential inflation pass-through implications, derailing market expectations around the aforementioned rate cute schedule?

Markets hate uncertainty, and the initial uncertainty around these events was palpable.

The fireworks were short lived, however, with de-escalation commentary hitting the news networks almost immediately. Markets wasted little time, retracing the initial move in oil, with both equities and crypto pushing back towards new all time highs.

It is worth nothing that with the mos