Risk Market and Bitcoin March Summary, April Outlook First of all, the conclusion is that the second quarter may be more difficult compared to the first quarter. Inflation, tariffs, the Federal Reserve's interest rate maintenance, and Japan's interest rate hike may all have an impact on the risk market, but setbacks often coexist with opportunities. After meeting certain conditions, the market will still have opportunities. The main text begins A. Dot matrix diagram The most important macro event in March was the Federal Reserve's interest rate meeting. At that time, the market's expectation for the Fed was to cut interest rates three times and suspend or stop reducing balance sheets. However, in reality, since the first interest rate cut in 2022, the market's game against the Fed has never won, and this time it is the same. The two interest rate cuts in 2025 and 2026 each sent two signals. 1. Inflation is still very stubborn, and the Federal Reserve has not seen a path that can bring inflation back to 2%. 2. The economy remains stable and there is no expectation of entering a recession. Let's start with inflation. Powell has said before that it's not about lowering interest rates when inflation reaches 2%, but about seeing the path of inflation returning to 2%. In other words, as long as inflation continues to decline, the Federal Reserve will use the motivation to cut interest rates. However, the current reality is that, on the one hand, without tariff issues, the core PCE that the Federal Reserve is most concerned about does not show a significant downward trend. The continuous decline since last night is a safe haven for the core PCE. The market expects the core PCE to rise slightly, which also proves the Federal Reserve's expectation of inflation. We have not yet seen the possibility of an inevitable decrease in inflation, let alone the issue of tariffs. Powell also said many times that if the tariff is one-time, then the impact on inflation will not be great, because the one-time tariff impact is also short-term and will inevitably recover, but whether the tariff is one-time or not, even Powell and the Federal Reserve do not know that almost no one can predict when Trump will do anything, so the threat of tariff to inflation is also the reason why the Federal Reserve does not dare to cut interest rates rashly. The new tariff policy will be implemented from April 2nd, and inflation data for April will not be available until May. This means that there is almost no possibility of interest rate cuts in the first half of the year, as the Federal Reserve needs to observe more data to determine the impact of tariffs on inflation. Therefore, unless tariffs are not adjusted, it is highly unlikely that the two interest rate meetings in the second quarter will adjust interest rates. This means that there are almost no expected positive news in the interest rate field in the second quarter. B. Shrink Table At the March interest rate meeting, changes were made to the balance sheet reduction, but it was not a pause or a halt. Instead, the scale of the reduction was reduced from $25 billion to $5 billion per month. The main reason for the reduction was to extend the duration of the reduction, in order to continue the monetary tightening policy in a more gentle manner. This also reveals the Federal Reserve's conservative and controlled tightening of liquidity policy. Although the slowdown in the pace of reducing the balance sheet may seem to alleviate the "blood pumping" pressure on the market on the surface, in essence, the policy of reducing the balance sheet itself has not changed, only from "fast pumping" to "slow pumping". Therefore, the easing effect on market liquidity is very limited and cannot be seen as a true signal of turning or easing. C. Conclusion So from the perspective of the Federal Reserve's monetary policy, the challenges faced in the second quarter may be even more severe than in the first quarter. Inflation and non farm payroll data in the second quarter are still very important, especially since May, inflation data will affect whether the June dot matrix will change. Even though Trump began to call for the Federal Reserve to reduce interest rates, if the inflation problem could not be solved, or the economy was not expected to decline, then the Federal Reserve would still have the greatest probability to continue to wait and see the data. Next, let's talk about economics. This tweet is sponsored by @ ApeXProtocolCN | Dex With Apex