Currency and money markets news scan: Banks can now engage in certain crypto activity. Is tariff talk getting tiring?

What we are reading:

Banks. Crypto. “The U.S. regulator overseeing national banks clarified Friday that banks can engage in some crypto activities and removed expectations firms should receive advance permission from regulators before doing so.

The Office of the Comptroller of the Currency said in a statement that national banks are permitted to engage in some crypto activities, such as crypto-asset custody, some stablecoin activities, and participation in distributed ledger networks.” — Reuters.

Banks. Tariffs. “The delays to tariffs this week are a welcome reprieve, but even considering the delays, the effective tariff rate is at its highest level since the 1970s. What’s more, if the tariffs that were delayed this week eventually get implemented, it would increase the effective tariff rate to the highest level since the 1940s. In other words, it has erased nearly eight decades of globalization, which could lead to as much as $2,000 in additional costs for U.S. households.¹” — JP Morgan Chase.

Banks. Europe. Defense trade. “There’s a few net takeaways for investors here. One is a positive for the European defense sector. The combination of tariffs and the evolving U.S. posture on global security has long been part of our thesis on why Europe would eventually chart a new path and step up to spend more on defense. The current situation in Russia and Ukraine underscores this, with potential for another $0.9-$2.7 trillion in defense spending through 2035. Germany’s new ‘whatever it takes’ approach to defense spending is a key signpost in this trend, per our colleagues in European economics, equities, and foreign exchange.” — Morgan Stanley.

Banks. Federal Reserve. “Financial markets spend a lot of time discussing the Federal Reserve. And for good reason. The central bank of the world’s largest economy plays a central role in fighting inflation and setting interest rates. And what they’ll do this year is topical and shifting. At Morgan Stanley, our economists think that US Tariff and Immigration policy will lead the Fed to keep rates somewhat higher, for somewhat longer, than they did at the start of the year.

Yet we think there may be just a little bit too much focus on just how much the Fed changes policy over the course of the year. Indeed, we’d go as far as to say that given the choice, investors should be rooting for less change, not more.” — Morgan Stanley.

Banks. Tariffs. “Tariffs can be disruptive to real economies; however, market participants seem less reactionary to tariff headlines in recent weeks. We believe this is a shift in tariff sentiment, and we now believe “tariff fatigue” is emanating across global financial markets. With market participants less focused on tariff headlines, and maybe only tariff policy implementation, the U.S. dollar can see less support from safe-haven capital flows. While we still forecast dollar strength into mid-2026, we see less dollar strength relative to last month’s forecast.” — Wells Fargo.

The Data:

On 7 March 2025, the two-year, ten-year, and thirty-year Treasury rates moved up between 9:30 am and 4:30 pm. According to data from the U.S. Treasury, the two-year rate climbed from 3.96% to 3.99%. The ten-year rate increased from 4.29% to 4.32%, while the 30-year rate also increased from 4.58% to 4.62%.

Latest data from the Board of Governors of the Federal Reserve System reported the EUR/USD is priced at 1.0402 while the USD/JPY is priced at 150.6400.

There were changes in three reference rates reported by the Federal Reserve Bank of New York. The Effective Federal Funds Rate for domestic unsecured borrowings between commercial depository institutions is at 4.33%. The Overnight Bank Funding Rate, a measure of wholesale, unsecured overnight bank funding costs, also held at 4.33%.

The Secured Overnight Financing Rate, which measures the cost of borrowing cash overnight secured by Treasury securities, came in at 4.35%, up from the previously reported 4.34% while the Broad General Collateral Rate, a measure of rates on overnight Treasury general collateral repurchase agreement transactions, came in at 4.34, an increase from the previously reported 4.33%.

The Tri-Party General Collateral Rate, a measure of rates on overnight, specific counterparty, tri-party general collateral repurchase agreement transactions, increased to 4.34% from the previous 4.33%.

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