Thoughts for the day NEWS
4 July 25 NOT Recommendations
The upcoming week features significant events such as the Trump Tariff Deadline, OPEC+, and the Fed Minutes.
In the week ahead, several key occurrences are scheduled, including speeches from members of the ECB Governing Council, the BRICS Summit taking place in Rio, and the OPEC+ meeting to discuss the potential increase in oil production for August.
Additionally, economic data set to be published encompasses GDP, CPI, industrial production, and trade statistics from multiple nations, along with various earnings reports.
Trump achieved the final approval of his flagship $3.4 trillion tax legislation after a challenging effort to persuade conservative Republicans.
The United States House of Representatives has cast a vote in favour of the Senate amendments to the "Big Beautiful Bill," thereby moving the legislation forward to President Donald Trump's desk for his signature.
The US Congress has enacted a multitrillion-dollar tax and spending package that prolongs President Donald Trump's 2017 tax reductions, allocates substantial funds for defence and immigration enforcement, and reduces funding for health-care initiatives, food assistance, and clean-energy programs.
This legislation introduces major modifications to the tax code, such as permanently extending individual and estate tax provisions, implementing new tax incentives, and eliminating tax credits for electric vehicles and climate initiatives.
It is projected that the bill will raise federal deficits by $3.4 trillion over the next ten years, with some economists cautioning that it will contribute trillions to the national debt and establish a perilous precedent for future legislative actions, while Republicans argue it will bolster economic growth with $4.5 trillion in tax cuts.
Donald Trump announced that he will begin dispatching letters to trading partners today, establishing unilateral tariff rates. He informed reporters that countries would need to start paying these tariffs on August 1. He suggested that the import duties could vary between 10% and 70%.
Fed's Bostic Indicates Tariff Uncertainty May Affect Prices 'For Some Time' - Atlanta Fed President Bostic, who does not have a voting role, believes there is a risk of price pressure "for some time." He notes that uncertainty persists regarding the ultimate level of tariffs for businesses and that the consumer response to tariff pass-through remains ambiguous.
Trump applies more pressure to Powell.
Scott Bessent dismissed concerns about the dollar’s recent declines.
The Treasury's growing readiness to finance a larger portion of the deficit through bills is expected to result in an in inflation and a decline in long-term real yields. The current level of outstanding bills is already high, and it may soon increase further following Treasury Secretary Scott Bessent's suggestion that he prefers not to fund at the long end of the curve.
Bond yields and the dollar surged following a rise in June payrolls that exceeded economists' expectations, while the unemployment rate unexpectedly declined due to the departure of immigrants and the subsequent filling of their roles by domestic workers. Although the unemployment rate has decreased, it does not obscure the reality that new job creation has been consistently declining, reflecting the anxiety present in the broader economy.
This appears to be partly due to a declining labour force, as participation unexpectedly fell from 62.4% to 62.3%. While this isn't currently inflationary -- wage growth was slightly below expectations -- it importantly gives the Fed justification to keep delaying its assessment of the effects of tariffs. Consequently, this suggests that a July decision is unlikely.
However, Layoffs in the U.S. have reached 744,308 in the first half of 2025 — a number not seen since early pandemic levels — driven by federal cuts, retail weakness from tariffs and inflation, and other factors
Goldman has revised its Treasury yield forecasts downward in light of anticipated earlier rate cuts by the Fed. They now expect the yields on two- and 10-year Treasuries to finish the year at 3.45% and 4.20%, respectively, a decrease from their previous estimates of 3.85% and 4.50%.
The decision comes after economists at Goldman Sachs adjusted their forecasts for Federal Reserve rate cuts, now anticipating reductions in September, October, and December. Strategists point to a favourable trajectory for decreasing short-term rates, which could enhance the attractiveness of holding Treasuries.
The Chinese government intends to call off the second day of a two-day summit with leaders from the European Union, originally set to occur in China later this month.
The decision to cancel is perceived as an indication of escalating tensions between Brussels and Beijing, which have been affected by disputes regarding the war in Ukraine, Chinese industrial policies, and trade matters.
The relationship between the EU and China has been made more complex by China's recent restrictions on the export of rare earth magnets, which have significantly impacted European industries, along with the stagnation in trade and economic discussions.
ECB Minutes Show Concern On Euro Strength. The ECB minutes for the June meeting showed that policymakers remain concerned that the appreciation of the euro could weigh on exports and drag inflation down further
German Factory Orders Decline.
In May, German factory orders fell by 1.4%, marking the first decrease in four months, attributed to businesses' uncertainty regarding trade relations with the US.
However, despite this drop, orders remain 5.3% higher compared to the same time last year, and the Economy Ministry perceives a fundamental upward trend in industrial demand.
The results of Europe's discussions with the US may influence Germany's economy; a successful agreement could result in a notable recovery, whereas a failed negotiation might prolong a phase of sluggish growth.
The Swiss National Bank (SNB) has pivoted and raised the hurdle for negative rates; The SNB is likely to put more focus on FX interventions; The Swiss franc has been on a tear, but its fate is in the hands of the dollar.
The panic surrounding sterling on Wednesday seems to be subsiding, suggesting that the recent turmoil, although intense, was primarily driven by short-term fluctuations rather than a fundamental reassessment. While the political turbulence may have caused some anxiety, the overarching narrative in the foreign exchange market regarding the dollar's decline against the pound remains intact.
Yesterday's trading session was nothing less than a dramatic display of political and market activity for the pound. Cable experienced significant volatility as gilts faced a sharp sell-off, prompting traders to adjust their assessments of fiscal credibility risks.
This unease was triggered by renewed scepticism about Labour's commitment to fiscal discipline following a series of policy reversals, further fuelled by apprehensive discussions regarding Chancellor Rachel Reeves' future. In response, Prime Minister Keir Starmer has intervened to provide reassurances about Reeves' position (kiss of death?), and amidst the surrounding chaos, cable has managed to stabilize.
Hong Kong intervened for a third time in a week to defend its currency peg.
Russia initiated one of its most severe drone assaults on Kyiv in recent weeks following Trump's statement that he achieved no progress "whatsoever" with Vladimir Putin during a discussion regarding Ukraine.
The trade agreement between the US and Vietnam features a tiered tariff structure, imposing a 20% surtax on goods produced in Vietnam and a 40% tax on items that are trans-shipped from other countries through Vietnam, specifically targeting China.
This new tariff framework will compel Vietnamese businesses to enhance their value propositions, increase localization efforts, and diversify their supply chains, with numerous companies already considering Vietnam as a viable hub.
The agreement offers a level of stability for Vietnam.
Apple reported 8% YoY growth in China iPhone sales for Q2 — its first increase there in two years — driven by May discounts and trade-in offers, though it continues to face fierce competition from Huawei.
Del Monte Foods has filed for Chapter 11 bankruptcy and is planning to sell most of its assets. $165M has been secured to continue operations during restructuring.
Ryanair has cancelled over 170 flights, affecting 30,000 passengers, as a French air traffic control strike disrupts travel across Europe.
Tesla announced 384,122 deliveries for Q2, reflecting a 13.5% decrease year-over-year, influenced by competition, political challenges, and postponed orders. Nonetheless, the company noted that electric vehicle sales in China increased by 3.7% year-over-year for the quarter and surged by 59% month-over-month.
The United States has implemented new measures to limit the trade of Iranian oil, maintaining pressure on Tehran, even as President Donald Trump indicated potential relief following the bombing of its nuclear facilities.
The US Treasury and State Departments have declared distinct sanctions against companies and vessels that assist Iran in exporting its crude oil.
The sanctions focus on a network of enterprises alleged to be involved in the purchase and transportation of Iranian oil, with some of the profits supporting Iran's Islamic Revolutionary Guard Corps-Qods Force, which is recognized as a terrorist organization.
The objective of these sanctions is to undermine Iran's oil sector, its primary source of income, in line with the Trump administration's maximum pressure approach.
OPEC+ has begun talks regarding an additional production increase of 411,000 barrels per day for August, according to delegates prior to their meeting on Sunday.
Citi Research global commodities head sees gold tumbling to $2500
Max Layton, global commodities head at CITI Research, predicts gold will trade at about $2,500 to $2,700 in the second half of next year, down about $900 or so less than where it is today.
He however expects a drop in prices due to weakening investment demand, anticipated U.S. interest rate cuts and improved economic prospects. “We’re getting close to this One Big Beautiful Bill Act passing Congress,” said Layton. “We think that is going to mark a shift in sentiment towards U.S. growth and basically a slight reduction, or even a moderate reduction, or even possibly by the end of next year, heading into the mid terms with lower interest rates as well.”
OpenAI has cautioned its customers regarding Robinhood's proposal for access to equity "tokens" related to OpenAI, clarifying that these tokens do not represent company equity and that OpenAI has neither collaborated on nor endorsed this offering.
In response, Robinhood's CEO stated that although the tokens are not technically classified as equity, they provide retail investors with exposure to private assets, and the company will possess the shares that back these tokens.
The introduction of tokenized equity offerings has ignited discussions about the safety and purpose of tokenized equities for retail investors, as well as the true nature of what these tokens signify.
US Treasury Secretary Scott Bessent thinks the stablecoin market could grow to USD 3.7T by the end of the decade: The Trump Administration has taken unprecedented measures to support the crypto industry. These include relatively unexpected measures like lifting sanctions against Ethereum-based mixing service Tornado Cash. These measures are partly driven by the strategic incentives involved with stablecoin proliferation. In this context, blockchains like Ethereum are conducive to the US’ emergent support for stablecoins. This angle also provides additional context for the approval of staking ETFs; via these ETFs, investors can become involved in processing transactions of blockchain-based dollars.
JD.com and Ant Group lobbied the People's Bank of China to authorize offshore yuan-based stablecoins in Hong Kong, according to Reuters. The effort is reportedly motivated by countering the global dominance of US dollar denominated stablecoins, sources said. Both firms already plan Hong Kong dollar stablecoins, with the move described as supporting yuan internationalization.
Ripple filed an application for a national banking license with the US OCC, according to sources cited by the WSJ. The registration would place its stablecoin RLUSD under OCC regulation, and prompt the firm to consider expanding crypto services.
