Introduction

This report summarizes the Web3 industry’s policy and macro events over the past week: On February 15, Federal Reserve official Logan stated that a cooling in inflation may not necessarily trigger an interest rate cut. On February 18, a New York Federal Reserve survey revealed that U.S. manufacturing costs in February saw the largest increase in two years. On February 19, it was reported that the holdings of the U.S.’s top three foreign creditors decreased in December, with all foreign net inflows exceeding $87 billion. On February 19, U.S. January new residential construction declined by 9.8% month-over-month, worse than the expected 7.3% drop, and a sharp contrast to the previous month’s 15.8% increase.

Summary

• February 15 – Federal Reserve’s Logan stated that a cooling in inflation may not necessarily trigger an interest rate cut.
• February 18 – A New York Federal Reserve survey revealed that U.S. manufacturing costs in February saw the largest increase in two years.
• February 19 – The holdings of the U.S.’s top three foreign creditors decreased in December, with all foreign net inflows exceeding $87 billion.
• February 19 – January new residential construction declined by 9.8% month-over-month, worse than the expected 7.3% drop, and a sharp contrast to the previous month’s 15.8% increase.

Key Focus Events

February 15 — Federal Reserve’s Logan States that Inflation Cooling May Not Necessarily Trigger Rate Cuts

On February 15th, Dallas Federal Reserve President Logan stated that interest rates may already be approaching neutral levels. Even if inflation continues to cool, it might avoid the need for further rate cuts. Logan mentioned that in an environment of strong demand and a stable job market, inflation returning to the Fed’s target suggests that the Fed’s key policy rate might be near neutral. She added that if this trend continues, there will not be “much” room for rate cuts in the short term. A neutral interest rate is a level where a central bank’s policy settings neither stimulate nor restrain economic growth. Logan further noted that the Fed may lower rates if the labor market worsens. Policymakers kept rates unchanged at the January 28th to 29th meeting after reducing the benchmark rate by a full percentage point in three cuts throughout 2024.

Logan’s comments signal that the Federal Reserve might pause rate cuts, meaning the market may not see additional liquidity support in the short term. As a result, global stock markets may face some pressure, particularly for highly valued tech stocks and risk assets. Furthermore, considering the crypto market’s sensitivity to macroeconomic policy changes, investors may adopt a more cautious approach, leading to increased volatility in the cryptocurrency market.[1]

February 18 — U.S. February New York Fed Manufacturing Index at 5.7, Expected -1, Previous Value -12.6

The release of the U.S. February New York Fed Manufacturing Index shows an actual value of 5.7, significantly higher than the previous value of -12.6 and the market expectation of -1. This indicates a notable recovery in manufacturing activity in New York state, surpassing expectations and returning to the expansion zone (above zero). This data may suggest signs of economic recovery in the manufacturing sector, indicating a rebound in demand or increased production activity. This could be a positive signal for the market, indicating that the U.S. economy is maintaining growth momentum to some extent, especially in the manufacturing sector.[2]

February 19 — U.S. Top Three Foreign Holders of Debt Reduced Holdings in December, Total Foreign Net Inflow at $87.1 Billion

On February 19th, the U.S. Treasury Department’s report on international capital flows (TIC) revealed that the U.S.’s largest foreign creditors, Japan and China, reduced their U.S. Treasury bond holdings in December. The report also noted that total foreign inflows in December amounted to $87.1 billion, including long-term securities, short-term securities, and banking flows. Specifically, private foreign inflows totaled $162.5 billion, while official foreign inflows showed a net outflow of $75.3 billion.

This data reflects a decline in demand for U.S. Treasury bonds from Japan and China, possibly influenced by global economic uncertainty and the Fed’s interest rate hike cycle. This could increase market volatility for global capital markets, especially in the bond market, leading to upward pressure on U.S. Treasury yields. At the same time, the reduction in foreign inflows may have some negative impact on the U.S. dollar and U.S. financial markets. Investors should closely monitor the future trends in capital flows and their potential impact on market sentiment.[3]

February 19 — U.S. January residential construction Drop by 9.8% Month-on-Month, Expected -7.3%, Previous Value 15.8%

The U.S. January residential construction data shows a month-on-month decline of 9.8%, worse than the market expectation of a 7.3% drop and significantly below the previous month’s growth of 15.8%. This indicates a substantial pullback in new residential construction, reflecting potential weakness in the real estate market. The sharp decline in residential construction may signal cooling in the U.S. real estate market, influenced by high interest rates and rising construction costs.

This trend could point to a slowdown in the construction sector and related industries for the U.S. economy, which might drag down overall economic growth, particularly in areas like consumption and employment. The sluggish housing market could also further impact consumer confidence and investor sentiment, increasing economic recovery uncertainty.[4]

Conclusion

From February 15 to February 21, 2025, several macroeconomic events influenced the cryptocurrency market’s performance. This report comprehensively analyzes key dynamics in both the cryptocurrency market and the broader economy. On February 15, Dallas Federal Reserve President Logan stated that interest rates may already be approaching neutral levels, and even if inflation continues to cool, further rate cuts might be avoided. On February 18, the U.S. February New York Fed Manufacturing Index was released, showing an actual value of 5.7, significantly higher than the previous value of -12.6 and the market expectation of -1. On February 19, the U.S. Treasury Department’s TIC report revealed that the country’s largest creditors, Japan and China, reduced their U.S. Treasury bond holdings in December. Also, on February 19, U.S. January residential construction data showed a 9.8% month-on-month decline, worse than the expected 7.3% decrease.


References:

1. Jin10,https://xnews.jin10.com/details/162050
2. Jin10,https://flash.jin10.com/detail/20250218213000524800
3. Jin10,https://flash.jin10.com/detail/20250219050002551800
4. Bloomberg,https://www.bloomberg.com/news/articles/2025-02-19/us-housing-starts-fell-in-january-after-december-surge

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