Today's Update 07-07-2025
Key Points and Metrics
Key Points and Metrics:
Escalation of Trade Tensions:
Tariff Announcements: President Trump has threatened to impose unilateral tariffs on additional countries, particularly targeting those aligned with the BRICS nations (Brazil, Russia, India, China, South Africa). An additional 10% tariff may be levied on these nations.
Timeline: The U.S. will begin issuing tariff letters and announcing trade deals starting Monday at 12 PM ET.
Market Impact: This announcement has heightened investor concerns, leading to fluctuations in global markets.
U.S.-China Relations:
Upcoming Meetings: U.S. Treasury Secretary Bessent stated plans to meet with his Chinese counterpart in the coming weeks to discuss issues beyond trade.
Currency Observations: Bessent noted the depreciation of China's currency and suggested that the Euro is expected to appreciate.
Currency Movements:
U.S. Dollar: The Dollar Index rose by 0.4%, marking its largest gain in three weeks.
Emerging Markets: Emerging-market currencies weakened; the South African Rand fell by 1% following tariff threats.
Currency Strength Chart: Ranked from strongest to weakest — USD, EUR, CHF, GBP, CAD, JPY, AUD, NZD.
Bond Markets:
U.S. Treasuries: The 10-year Treasury yield remained steady at around 4.35%.
Japanese Bonds: Japan's 30-year government bond yield increased by 10 basis points to 2.96%.
Secured Overnight Financing Rate (SOFR):
July 3rd: 4.35%
July 2nd: 4.40%
Oil Prices:
Brent Crude: Prices fluctuated, ending up 0.6% at $68.70 per barrel.
OPEC+ Decision: The group agreed to a larger-than-expected output increase for the next month, impacting price movements.
European Central Bank (ECB) Updates:
Financial Stability Risks: The ECB warns of increased risks to Eurozone financial stability due to heightened geopolitical uncertainty.
Policy Outlook: ECB's Centeno mentioned that the amount and timing of further rate cuts are uncertain.
Guidance to Banks: The ECB's Governing Council calls on national authorities to maintain the resilience of the banking system.
Economic Indicators:
Eurozone:
Retail Sales (May 2025):
Month-over-Month: 0.7% (Forecast: -0.6%, Previous: 0.1%)
Year-over-Year: 1.8% (Forecast: 1.4%, Previous: 2.3%)
Sentix Investor Confidence Index:
Actual: 4.5 (Forecast: 1, Previous: 0.2)
Germany:
Industrial Production (May 2025):
Month-over-Month: +1.2% (Forecast: -0.2%, Previous: -1.4%)
Year-over-Year: +1.0% (Forecast: -0.3%, Previous: -2.02%)
United Kingdom:
Halifax House Prices (June 2025):
Month-over-Month: 0.0% (Previous: -0.4%)
Year-over-Year: +2.5% (Previous: +2.5%)
Japan:
Leading Indicator Change: +1.1% (Previous: -4.2%)
Preliminary May Leading Index: 105.3 (Estimate: 105.2)
Preliminary May Coincident Index: 115.9 (Estimate: 115.9)
Overtime Pay: +1.0% (Previous: 0.8%)
International Relations:
U.S. Secretary of State Visit: Secretary Rubio will travel to Kuala Lumpur from July 8-12 to participate in ASEAN meetings.
European Union Trade Talks: The EU aims to reach an agreement with the U.S. before July 9th regarding ongoing tariff discussions.
Financial Reserves and Indices:
Swiss Foreign Currency Reserves: Increased to $713 billion (Previous: $703.6 billion).
China's Forex Reserves: End of June reserves at $3.317 trillion.
China's Yuan: The mid-point set by PBOC at its strongest level since November 8, 2024, but the CFETS RMB index fell by 0.05 points over the week.
Upcoming Earnings Estimates (July 15th):
BlackRock (BLK):
Expected EPS: $10.68
Expected Revenue: $5.38 billion
JPMorgan Chase (JPM):
Expected EPS: $4.43
Expected Revenue: $44.1 billion
Wells Fargo (WFC):
Expected EPS: $1.40
Expected Revenue: $20.78 billion
Citigroup (C):
Expected EPS: $1.65
Expected Revenue: $20.77 billion
Trade Tensions:
Trump threatening additional 10% tariffs on BRICS-aligned nations
Treasury Secretary Bessent indicating trade announcements in next 48 hours
July 9th deadline approaching for tariff negotiations
Upcoming Earnings (July 15th):
BlackRock (BLK): EPS $10.68, Rev $5.38B
JPMorgan (JPM): EPS $4.43, Rev $44.1B
Wells Fargo (WFC): EPS $1.40, Rev $20.78B
Citigroup (C): EPS $1.65, Rev $20.77B
Final Thoughts
The markets are clearly in "risk-off" mode as Trump's trade rhetoric intensifies ahead of the July 9th deadline. What's fascinating is how quickly sentiment can shift - we've gone from record highs fueled by tariff extension hopes to genuine concern about escalating trade wars.
The dollar strength tells the whole story here. When uncertainty rises, money flows to safety, and despite all the political noise, the greenback remains the world's safe haven. The emerging market currency selloff, particularly the rand's 1% drop, shows investors are pricing in real economic disruption.
OPEC+'s decision to increase output by more than expected is interesting timing - they're essentially betting that demand will hold up despite potential tariff-induced slowdowns. Oil's volatile reaction (down 1.6%, then up 0.6%) shows the market is genuinely confused about the supply-demand balance.
The German industrial production surprise (+1.2% vs -0.2% expected) and strong Eurozone confidence data suggest Europe's economy might be more resilient than feared. This could give EU negotiators more confidence in their talks with the US.
Watch Treasury Secretary Bessent's comments closely - he's been the voice of reason in this administration, and his hint about "several trade announcements in the next 48 hours" could be market-moving. The fact that he's meeting with Chinese counterparts "in the next few weeks" suggests there's still room for negotiation.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.
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Harry