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Here’s what you’ll find in today’s edition:

• The Fed opted to hold interest rates, noting the risk of higher unemployment and inflation have increased. 

• Will New Hampshire’s crypto reserve bill signing open the floodgates?

Fed holds rates

The FOMC today, as expected, kept interest rates unchanged. 

Committee members cited a "stabilized" unemployment rate, “solid” labor market and continued elevated inflation. However, they noted there’s now an increased risk that unemployment and inflation will rise in the coming months. 

Stocks were mostly flat on the news. The S&P 500 was up 0.2% on the day, as of 2:30 pm ET. The Nasdaq Composite was trading 0.3% lower. 

“If the tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth and increase in unemployment reflecting a one-time shift in the price level,” Fed Chair Jerome Powell said just moments ago. 

The Fed’s focus on the unemployment rate in today’s statement suggests that a so-called “Fed put” (the central bank stepping in to lower rates and prevent a sharp market decline) will not come until — or unless — the labor market starts to deteriorate. 

In other words, should tariffs spur significant layoffs, we could be looking at an interest rate cut sooner rather than later. 

Committee members did not release projection materials this month, so it’s hard to know how they’re thinking about the impact of new and pending tariffs. In March, FOMC members indicated they still expect two cuts in 2025. 

It’s been a tumultuous six weeks for markets since the Fed’s last meeting in March. Stocks whipsawed along with President Trump’s tariff policies at the beginning of April — rising and falling as optimism over trade deals fluctuated. 

In the past couple of weeks, though, major indexes have erased their “Liberation Day” losses. As of Tuesday’s close, the S&P 500 was up 0.5% from April 2. The Nasdaq Composite gained 2.8% in that period, no doubt benefiting from tech giants’ positive Q1 earnings.

Investors are, apparently, confident that the looming trade war won’t be so bad after all. Pushing the start date for most tariffs on foreign imports and granting exemptions for the select tech and auto levies helped markets rally. 

While fears around tariff impact may be easing, analysts warn that many of the trade policies — and their impact on prices, consumer spending and the labor market — remain to be seen. 

In a constantly changing situation, traders must be cautious to give credence to any single statement. Case in point: Trump just after 2 pm ET said he wasn’t open to lowering the 145% tariff rate on China. This comes hours after China said it agreed to meet with the White House.  

The decision comes after weeks of President Trump urging Powell to cut rates. He quelled fears that he’d attempt to remove Powell, but tension between the two remains. 

Since November, Powell has been consistent in his stance that he will be waiting and watching the data before making any decisions. So don’t expect committee members to cut rates on headlines.

— Casey Wagner

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This is Oppenheimer’s 12- to 18-month price target for Coinbase stock (currently ~$195) ahead of the crypto exchange releasing its Q1 results tomorrow. That’s down 28% from the firm’s previous COIN price target of $388, reflecting “retail pullback and recession risks,” analysts wrote.

The research firm estimates Coinbase’s Q1 trading volume to come in at $380 billion — down 13% quarter over quarter. We’ll get more details on Coinbase’s webcast tomorrow evening.

New Hampshire has won the race among US states mulling laws to allow digital assets investments and/or create reserves.

How quickly should we expect a wave of others to follow suit?

Headed to Arizona Gov. Katie Hobbs’ desk, as of yesterday, was a law to establish a state treasurer-run “digital assets strategic reserve fund.” 

But Hobbs could veto this, given that she rejected a separate bill last week to allow a state public fund to invest up to 10% in “virtual currency holdings.” She called those “untested investments.” 

So if Arizona is not next, who will be? Perhaps North Carolina or Texas, filings compiled here indicate.

North Carolina’s Digital Assets Investments Act would authorize the state treasurer to invest up to 5% of any designated funds in “qualifying digital assets.” That passed a second reading in the House (71-44) on April 30 and moved on to the Senate. 

That bill would also “examine the feasibility” of allowing state retirement income plan members to make such investments (via crypto ETPs) and study a state reserve to hold seized or forfeited crypto.

Looking at Texas, the state’s proposed Strategic Bitcoin Reserve and Investment Act would establish a special fund to invest in crypto assets with a market cap of $500 billion or more (currently only BTC). 

Ishmael Green, a partner at law firm Diaz Reus, said he expects half a dozen or so states to follow New Hampshire in the near-to-medium term — “because states are looking to hedge against inflation, in addition to protecting their balance sheets.”

Indeed, the Texas bill text states the following:

“Long term, these sorts of laws will lead to an upward price pressure and supply shortage, as states and other institutional entities scramble to accumulate more bitcoin,” Green told me.

As for how the North Carolina and Texas governors feel about crypto, if these bills reach their desks? NC Gov. Josh Stein hasn’t said much on the topic, but has indicated support for the legislation.

In a November X post, Texas Gov. Greg Abbott wrote: “Texas is already the home of crypto mining. This session Texas should become the crypto capital.”

FalconX research head David Lawant said he too expects at least a few more states to enact these types of laws in the next six to 12 months. 

But he’s watching out for a Bitcoin Policy Institute framework (set for release in June) that aims to help states craft effective BTC reserve laws.

“A common issue with many of the current proposals is that they’re not as clearly written or thoughtfully structured as they could be,” Lawant told me.

Suffice it to say, there’s plenty more where this came from.

— Ben Strack

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