Hello and welcome to Macro Notes, your go-to source for the latest macroeconomic trends, market-moving news, and key indicators to watch. We cut through the noise to bring you actionable insights in just a few minutes.

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The Big Picture

Financial Regulation

U.S. Mortgage Policy Opens Door to Crypto as Recognized Asset 

Federal housing regulators are making a significant move to incorporate cryptocurrency into the foundation of American finance by recognizing digital assets as legitimate for mortgage risk assessments, without requiring borrowers to convert them into cash.

Crypto has long sat outside traditional lending frameworks due to price swings and verification issues.

With this directive, it gains formal recognition within the U.S. housing system.

Only assets stored on U.S.-regulated, centralized exchanges will qualify, and risk adjustments must be built in to address volatility.

What's unfolding is a strategic pivot in U.S. financial policy. Crypto is no longer being treated as a fringe investment.

It's being absorbed into foundational credit systems, such as housing, where household wealth is built, measured, and secured.

By assigning regulatory weight to digital assets, federal agencies are signaling that crypto is here to stay, and the guardrails are beginning to take shape.

Borrowers may soon see their crypto holdings factored into homeownership eligibility, while lenders will need to adapt their underwriting models to reflect new forms of value.

Legal clarity, operational oversight, and volatility management will be key to maintaining lending standards.

The policy is now aligning with the market's gradual adoption of digital finance.

The result may serve as a blueprint for integrating decentralized assets into regulated systems without compromising stability.

GDP

U.S. Trade Deficit Widens as Exports Slide and Economic Signals Dim 

The U.S. goods trade deficit increased by over 11%, reaching $96.6 billion, as exports declined sharply while imports remained steady.

Exports fell by nearly $10 billion, according to the latest data from the U.S. Department of Commerce, a sign that global demand for American-made goods may be weakening under current economic pressures.

This widening gap comes on the heels of a first-quarter trade surge, when businesses front-loaded imports ahead of anticipated tariffs.

That inventory buildup contributed to a drag on GDP, which declined at a 0.5% annualized rate.

Now, with imports stabilizing and exports dropping, trade may flip from a growth drag to a short-term GDP boost in Q2, but without underlying strength.

What matters is the signal behind the numbers.

Export softness undermines hope for manufacturing-led momentum, especially as retail, housing, and labor market data also indicate a broader economic slowdown.

Meanwhile, the artificial spike in imports earlier this year reflects reactive supply behavior rather than real growth.

Economists caution against interpreting a likely rebound in second-quarter GDP as a sign of resilience. The trade shift is more a function of timing than strength.

With tariffs still looming and consumer demand cooling, the next few months may reveal whether the U.S. economy is bending or beginning to break under pressure.

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Life Sciences

Biotech Battle Escalates as U.S. Falters and China Gains Ground 

China is rapidly advancing its biotech sector, posing a growing challenge to U.S. leadership in pharmaceutical innovation and drug development.

Licensing deals from Chinese firms in the U.S. have surged past $30 billion since 2024, a signal that the innovation gap is narrowing.

While the U.S. still holds a dominant position in capital markets and regulatory infrastructure, cracks are beginning to show.

Cuts to NIH research funding and a slowdown in biotech investment have weakened the domestic pipeline.

At the same time, Chinese firms are expanding clinical trials, striking global partnerships, and accelerating their innovation roadmaps laid out nearly a decade ago.

The U.S. risks ceding ground due to a policy vacuum.

Washington has yet to implement strong safeguards, such as the stalled Biosecure Act, which would block federal funding from supporting biotech firms tied to foreign entities of concern.

Meanwhile, American companies are increasingly sourcing early-stage assets from China, a shift that could dilute long-term domestic development capacity.

Federal agencies and lawmakers face a choice: treat biotech as a strategic priority or allow foreign players to fill the vacuum.

China's scale, speed, and coordination make it a formidable competitor, particularly given the current fragmentation of U.S. policy.

Metrics to Watch

• Semiconductor Surge: The semiconductor sector, as measured by ETFs like the iShares Semiconductor ETF (NASDAQ: SOXX), is regaining bull momentum after more than doubling SPX’s performance since mid-April. 

• New Home Sales: The housing market isn’t as strong, however, as new-home sell rates dropped nearly 14% in May. 

• Inflation Forecasts: The Fed revised its inflation forecast to 3% in 2025 (it currently sits just over 2%). 

• “The Buffett Premium”: Berkshire shares are deep into correction territory, losing 10%+ since Warren Buffett announced plans to step down - though if you’re bullish on Berkshire’s underlying principles, it's a steal at just 1.6x book value.

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Market Movers

🏦 Banks Surge on Capital Rule Rollback: U.S. regulators’ proposal to cut the enhanced supplementary leverage ratio by 1.4 points for major banks like JPMorgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS) sparked a modest 1-2% rally in bank stocks. 

The $13 billion capital relief aims to boost lending and Treasury purchases, although critics warn of heightened systemic risks.

The KBW Bank Index (NASDAQ: BKX) hit a yearly high, reflecting optimism for deregulation under Trump.

🪑 Markets Jittery Over Fed Chair Speculation: Trump’s hint at replacing Federal Reserve Chairman Jerome Powell, with candidates like Kevin Warsh and Scott Bessent in the mix, unsettled markets.

Expectations of rate cuts by July, backed by Fed governors Bowman and Waller, add to the uncertainty but could tamp down Trump’s temper.

🤖 Nvidia Bets Big on Robotics: Nvidia’s (NASDAQ: NVDA) stock soared back to all-time high territory, lifting its market cap to $3.75+ trillion, after CEO Jensen Huang touted robotics and self-driving cars as multitrillion-dollar opportunities. 

The company’s automotive and robotics unit, up 72% YoY with $567 million in Q1 sales, is gaining traction with clients like Mercedes-Benz. 

🌍 Defense Stocks Rally on NATO Spending Hike: NATO’s agreement to raise defense spending to 5% of GDP by 2035, driven by Trump’s pressure, boosted shares of Lockheed Martin (NYSE: LMT) and Raytheon (NYSE: RTX) by 2-3%. 

The iShares U.S. Aerospace & Defense ETF (NYSEARCA: ITA) gained 1.5%, as markets anticipate $1.75 trillion in annual spending, though Spain’s exemption (only 2.1% of GDP) may spark trade tensions and put some pressure on European markets.

Market Impacts

NATO’s pledge to hike defense spending to 5% of GDP by 2035 has ignited the Themes Transatlantic Defense ETF (NASDAQ: NATO), up 35% YTD, outpacing the S&P 500’s ~3% gain. 

Tracking the Solactive Transatlantic Aerospace and Defense Index, NATO offers exposure to top-tier defense firms like GE Aerospace (NYSE: GE), Boeing (NYSE: BA), and Airbus, capitalizing on $380 billion in European NATO spending.

Russia’s aggressive stance and Trump’s alliance critiques fuel demand for regionalized military tech, from cybersecurity to weaponry, though diplomatic shifts could temper momentum. 

With a low expense ratio compared to peers, NATO is a cost-effective bet on the transatlantic defense boom, despite concentration risks in a volatile sector.

• Expense Ratio: 0.35%, or $35 per $10,000 invested. 

• Total Assets: $34.7 million.

• YTD Performance: +35%

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Key Indicators to Watch

• 📅 PCE Index (May) – June 27th: Expect Friday’s drop to be the arbiter of whether to expect rate cuts in July (or not). 

• 📅 Personal Income & Spending (May) – June 27th: Income has ticked upward in recent months, and most expect the trend to continue.

• 📅 Consumer Sentiment (June) – June 27th: Recent economic reversals may spark a turnaround for sentiment indices.

Everything Else

• A “Golden Share” sweetened the recent U.S. Steel acquisition, writing the playbook for future buyouts of companies deemed vital to national interests.

• Crypto may count in mortgage creditworthiness assessments after a presidential push.

• Louisiana’s in-progress Meta data center may be a blueprint for future AI and cloud infrastructure expansion.

• Quant funds are cycling back into stocks, indicating the market is back to being fully “risk-on.” 

• Fiber is AT&T’s newest big bet to maintain dominance.