Risk Assets Entering the Final Leg of the Rally — FOMO Season Begins

As the suggests, we foresee three major bullish catalysts in the next two months that the market has yet to price in. In our view, with no storm clouds in sight, the rally in risk assets is entering its final euphoric leg — investors can still ride the summer bull wave before the season ends.

1. Trumps “Big Beautiful Bill” Is Coming

The proposed legislation bundles tax reform, defense spending, AI regulation, and immigration policy. If passed, it could significantly boost confidence among corporations and high-net-worth individuals.

2. July FOMC Meeting

Should the Fed deliver a dovish tone, it may reignite rate-cut expectations for this year, pushing equities and risk assets higher.

3. Jackson Hole Symposium in August

Historically a pivotal event for policy shifts, this years meeting is expected to offer key insights into future rate and inflation strategies.

Gold Outlook: Cautiously Bearish

While we remain bullish on risk assets, our outlook on gold has turned cautious, if not mildly bearish. The game-changer is the Senates recent approval of the GENIUS Act, a bill that formally regulates U.S. dollar-pegged stablecoins with strict reserve and compliance requirements. This development strengthens the structural linkage between stablecoins and U.S. Treasuries, further legitimizing crypto as a new class of risk assets.

As stablecoins gain legitimacy, they also support U.S. dollar hegemony. In an environment of soaring deficits and ballooning Treasury issuance, stablecoins effectively become “shadow buyers” of U.S. debt — helping to stabilize yields and contain fiscal risk.

However, every regulation has two sides. While the new framework boosts demand for Treasuries and reinforces the dollar system, it also raises systemic concerns. During periods of crypto market panic, a wave of redemptions may force stablecoin issuers to sell large amounts of T-Bills, pushing short-term rates higher.

This dynamic could deepen the yield curve inversion — where short-term rates exceed long-term ones — particularly during a late-hiking cycle or economic turning point, leading to potential mispricing of recession risk.

More critically, should confidence in short-term Treasuries waver or liquidity dry up under redemption stress, a breakdown in bond pricing (price dislocation) could occur. The strong bond-stablecoin correlation, intended to reduce volatility, might instead amplify systemic risks.

Stablecoin Backing: U.S. Dollar and Short-Term Treasuries

The dominant reserve assets for stablecoins are USD cash and short-term government debt, implying sustained demand for Treasuries in the years ahead. According to the Treasury Borrowing Advisory Committee (TBAC), the market cap of stablecoins could expand from $250 billion today to $2 trillion by 2028 — an 8x surge.

This rising tide of “digital dollars” may trigger a capital reallocation wave. Recall in 2021 when Bitcoin and other digital assets drained capital from gold — we believe a similar rotation could pressure gold prices again.

Gold Technical Analysis

![Gold Price Chart – 1H Timeframe]

Gold has broken below the key $3,350/oz support and dipped to test $3,300/oz — another critical level. After stabilizing at $3,300, prices rebounded, suggesting potential range-bound movement. We recommend a “buy-low, sell-high” strategy for now.

• Resistance: $3,350/oz

• Support: $3,300/oz

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