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

• Consumer prices rose less than expected, but it’s going to take a lot more to get stocks to rebound. 

• A $1.5 trillion fund manager plots another altcoin ETF.

• Congress got bipartisan approval to overturn this crypto IRS rule.

Inflation print calms markets, but tariffs still loom

After a tough several weeks, today is a happier day on Wall Street. 

February’s inflation print gave stocks a surprising but welcome boost this morning after prices last month rose less than expected. 

The Consumer Price Index showed prices increased 2.8% year over year — still above the Fed’s 2% target but a decline from the 3% annual increase recorded in January. Economists had projected CPI to come in at 2.9% for the 12 months ended February. 

Month over month, consumer prices were up 0.2% in February, a decline from January’s 0.5% gain. That was just under projections, which called for a 0.3% rise last month. Core CPI (excludes volatile food and energy prices) came in at 3.1% annually last month, the lowest yearly increase in almost four years. 

A key sector pushing inflation lower is housing, which historically tends to be one of the more stubborn components of the print. Easing housing costs have significantly contributed to the slowdown in inflation for the past two years.

Non-housing costs, on the other hand, have eased less consistently. While Core inflation is slowing for now, this sector includes goods likely to be impacted by tariffs. Food and energy costs are also expected to rise, especially given Trump’s new tariff plans for steel and aluminum, which experts say will increase OCTG costs by 15% annually.

US equities rallied Wednesday morning on the inflation print. The S&P 500 gained as much as 0.8% while the Nasdaq Composite surged almost 1.5% early in the session. At 2 pm ET they were trading 0.4% and 0.9% higher, respectively. 

Still, fears over an escalating trade war are weighing on markets. By our estimate, the “tariff trade” is the dominant factor contributing to US equity prices right now, even if a positive inflation print provides short-term relief. 

So far, the Fed seems comfortable continuing its interest rate cut pause. Powell last week said the economy is “fine.” 

“It doesn’t need us to do anything,” he added. 

The latest on the tariff front is more retaliatory efforts against the US. Canada hit the US with a 25% levy on steel while the EU announced additional duties on items including denim, bourbon and poultry. 

Companies are faced with two options: Take the loss or charge higher prices. Although if you ask Karoline Leavitt, the latter is out of the question. We’ve written before about how US firms have been increasing their inventories at the start of the year. So it could take some time to see higher prices reflected on consumers, should companies go that route at all. 

Donald Trump has warned Americans of “short-term pain” but has so far refrained from saying just how high the administration’s pain threshold is. We’ve seen cabinet members attempt what I can only describe as damage control in the past, but today they took a different approach entirely. 

Commerce Secretary Howard Lutnick this morning said tariffs are “worth it” even if they plunge the US economy into recession territory. I guess their pain threshold is pretty high. Sounds like a “Trump put” is out of the question. 

Buckle up, FG readers. I think it’s going to get worse before it gets better.

— Casey Wagner

The net outflows US spot bitcoin ETFs have endured since Feb. 10, Farside Investors data shows.

Yesterday marked 14 months on the market for most of these products. After the category’s inflows peaked around $40 billion roughly a year after launch, a number of investors have exited these funds — at least temporarily. 

Franklin Templeton’s XRP ETF proposal yesterday is just one of several the SEC is weighing. Still, it marks the first filing from a traditional finance giant. 

Crypto and ETF investors alike wait to see what type of spot crypto product the new-look securities regulator could choose to allow through next. 

Bloomberg Intelligence analysts last month put the highest odds (90%) on litecoin ETFs seeing the light of day by the end of the year.

That was ahead of dogecoin (75%), solana (70%) and XRP products (65%). The lower odds for XRP was due to the SEC’s lawsuit against Ripple (one that, unlike others, hasn’t yet been dropped). 

Franklin Templeton’s Tuesday XRP ETF filing joins those of Grayscale, Bitwise, WisdomTree and others. The SEC is reviewing them, delaying its decision on Grayscale’s proposal yesterday.

Franklin manages roughly $1.5 trillion in assets. Yes, “illion” with a “tr.” When a fund group of that size seeks a product, people take notice.

Remember when BlackRock jumped into the bitcoin ETF race in June 2023? It turned heads, spurred optimism and left some wondering if the firm’s clout was enough to get US BTC funds past the SEC. 

What played the larger role was Grayscale’s court victory against the regulator. And Franklin Templeton isn’t exactly BlackRock. But you get the point. 

Franklin Templeton’s Roger Bayston correctly predicted in December that ETF legal staffs would be busy in the first part of 2025. Franklin Templeton last month launched a crypto index fund (so far limited to holding BTC and ETH) and filed for a solana ETF.

BlackRock has not yet entered the altcoin ETF proposal fray. Comments from execs signal the firm is focused on BTC and ETH for now (Rachel Aguirre didn’t exactly give a direct answer to Bloomberg on possibly proposing a SOL ETF). 

The SEC has another seven or so months before it would have to issue a decision on any of the crypto ETFs it’s so far acknowledged. It’ll be interesting to see who could be the next big firm to add to that proposal pile in the meantime.

— Ben Strack

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House representatives yesterday voted to overturn the IRS’ “DeFi broker” rule, which was passed in the final days of the Biden administration. 

The resolution — introduced under the Congressional Review Act — passed in a 292-131 vote. 76 Democrats voted in favor of abolishing the rule. 

The IRS’s rule required DeFi brokers to file 1099-DA forms, which are the newly approved tax forms crypto exchanges must use starting in tax year 2025. Given DeFi companies are not centralized, the requirements were unrealistic, industry advocates have argued. 

Missouri Republican Jason Smith said during yesterday’s floor debate that the crypto firms the IRS is targeting with these guidelines are not capable of supplying the kind of data being requested. 

"DeFi exchanges are not the same as centralized crypto exchanges or traditional banks or brokers,” he said, adding that most of these DeFi platforms “do not and cannot” collect certain user information. 

The resolution passed in the Senate last week in a 70-27 vote and will now be heading to the president’s desk. Trump’s advisers have recommended he sign the resolution. 

The last time both chambers of Congress agreed to nix a federal agency policy was late last session, when a resolution seeking to overturn the SEC’s SAB 121 guidance received bipartisan support. Biden eventually vetoed the matter, but the SEC quickly overturned SAB 121 after Trump took office. 

There’s a new sheriff in town indeed.

— Casey Wagner

• Bitcoin has fluctuated today, but didn’t see a major move. Its price around $82,000 at 2 pm ET was 1% lower than 24 hours ago.

• Sources tell Eleanor Terrett that the SEC’s case with Ripple could be over soon. We’re checking in with sources as well. 

• Ben moderated a Blockworks Roundtable — “TradFi is Ready to Embrace Crypto” — and plans to share his takeaways in a future Forward Guidance edition. You can sign up to watch the replay here.