- US stocks finished positive although price action was choppy during the session as markets reflected on the failed Trump assassination attempt which ultimately boosted his election chances and with attention also on comments from Fed Chair Powell who acknowledged more inflation progress and that recent inflation readings added confidence in inflation falling. Nonetheless, he refrained from providing any signals on any particular meeting and said decisions would be made meeting by meeting.
- USD was choppy and ultimately little changed on the session with initial upside following the attempted assassination of Donald Trump which boosted his re-election chances, while the DXY then retreated to a floor at 104.00 after comments from Fed Chair Powell who acknowledged recent inflation data adds to the Fed's confidence that inflation is returning to target, although the move was swiftly pared as he also noted that more data will give them more confidence.
- Looking ahead, highlights include RBNZ Offshore Holdings and Japanese Tertiary Industry Activity Index, Supply from Japan.
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LOOKING AHEAD
- Highlights include RBNZ Offshore Holdings and Japanese Tertiary Industry Activity Index, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks finished positive although price action was choppy during the session as markets reflected on the failed Trump assassination attempt which ultimately boosted his election chances and with attention also on comments from Fed Chair Powell who acknowledged more inflation progress and that recent inflation readings added confidence in inflation falling. Nonetheless, he refrained from providing any signals on any particular meeting and said decisions would be made meeting by meeting.
- SPX +0.28% at 5,631, NDX +0.27% at 20,386, DJI +0.53% at 40,211, RUT +1.71% at 2,184.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed Chair Powell said the economy has performed remarkably well over the last couple of years and he expected the economy to slow and inflation to continue to make progress this year, while he noted that something like that is happening. Powell said Q2 inflation does represent progress with three better readings which add confidence in inflation falling and now that inflation has come down, they will look at both mandates. Powell stated if the US were to see an unexpected weakening in the labour market, that would merit a reaction from them but added he is not going to send any signal on any particular meeting and will make decisions meeting by meeting. Furthermore, he said if the Fed waits for inflation to get to 2% to cut, it has waited too long and the test is that officials want to be confident it is moving down, while more good data will add to confidence and the Fed has been getting that lately. Powell also stated that policy is restrictive, though not severely so, and the neutral rate has probably risen.
- Fed's Goolsbee (2025 Voter) said last week's mild June inflation reading makes him more confident that price pressures are easing in a way that supports lowering interest rates, according to WSJ. Goolsbee is concerned that holding rates steady would contribute to an unduly restrictive policy stance, while he suggested they have tightened a lot since they’ve been holding at this rate and only want to stay this restrictive for as long as needed.
- WSJ's Timiraos wrote "Fed Chair Powell passed on an opportunity to change expectations that the central bank will hold rates steady at its next meeting", while he earlier highlighted that many sell-side economists and other Fed-watcher tip-sheets have converged on expecting two rate cuts this year beginning in September.
- Goldman Sachs note entitled "why wait?" stated in reference to the Fed that while September remains its baseline, it sees a solid rationale for already cutting in July, while it added "if the case for a cut is clear, why wait another seven weeks before delivering it?", according to WSJ.
- US President Biden will reportedly unveil a new proposal in Nevada on Tuesday to cap rental costs nationwide, according to WaPo citing sources. Biden’s plan, which would need to be approved by Congress, calls for stripping a tax benefit from landlords who increase their tenants’ rent by more than 5% per year, while the measure would only apply to landlords who own more than 50 units which represents roughly half of all rental properties and wouldn’t cover units that have not yet been built, in an attempt to ensure that the policy does not discourage construction of new rental housing.
- US President Biden is reportedly on the brink of failing to win a key labour endorsement as leaders of the 1.3mln member Teamsters union consider backing no candidate at all in the presidential race, according to Reuters citing sources.
- Biden leads Trump 46%-44%, according to a New York Times/Sienna College poll of registered Virginia voters that was conducted between July 9-12th and Trump leads Biden 48%-44% in a poll of registered Pennsylvania voters conducted July 9-11th, while the margin of error is +/- 3.7ppt.
- US presidential candidate Trump picked JD Vance as his running mate.
- Judge in the case concerning former US President Trump dismissed the Florida classified documents cases and ruled the US special counsel was unlawfully appointed.
DATA RECAP
- US NY Fed Manufacturing (Jul) -6.6 vs. Exp. -7.0 (Prev. -6.0)
- US NY Fed Manufacturing New Orders: -0.6 (prev. -1.0)
- US NY Fed Manufacturing Prices Paid: 26.5 (prev. 24.5)
FX
- USD was choppy and ultimately little changed on the session with initial upside following the attempted assassination of Donald Trump which boosted his re-election chances, while the DXY then retreated to a floor at 104.00 after comments from Fed Chair Powell who acknowledged recent inflation data adds to the Fed's confidence that inflation is returning to target, although the move was swiftly pared as he also noted that more data will give them more confidence.
- EUR returned to relatively flat territory after trading on both sides of the 1.0900 level against the dollar, while EU Industrial Production was somewhat mixed.
- GBP was pressured alongside weakness in activity currencies and after hitting resistance just shy of the 1.3000 handle.
- JPY marginally softened on the day although saw brief notable strength in which USD/JPY dropped firmly beneath 158.00 before fully recovering shortly after.
FIXED INCOME
- T-notes were lower and the curve steepened after the failed assassination attempt on Trump boosted his re-election chances while Powell noted recent data added to Fed confidence inflation is returning to the target.
COMMODITIES
- Oil prices were lower to start the week, albeit in a choppy session with thin ranges, after recent disappointing Chinese data while Gaza talks took a pause.
- Russian Deputy PM Novak said they could reinstall a gasoline export ban if the domestic market situation becomes tense and a decision on the gasoline export ban could occur at end-July.
- Freeport LNG expects to restart the first LNG train this week after damage from Hurricane Beryl and plans to restart the remaining two LNG trains shortly after the first one.
- Bolivia’s President announced the discovery of a 1.7tln cubic feet natural gas reserve in the north of the department of La Paz.
GEOPOLITICAL
MIDDLE EAST
- Three civilians were reportedly killed and three were wounded in an Israeli strike on a building in Lebanon's Bint Jbeil, according to Reuters citing sources.
- Israeli security cabinet will convene on Tuesday and discuss the Gaza hostage and ceasefire deal, according to Axios/Walla's Ravid.
- Hamas sources stated the movement will not oppose the resumption of prisoner exchange negotiations and noted they will not close any window that may lead to stopping the war, according to Asharq News.
- US State Department said they believe the remaining issues between Israel and Hamas on a ceasefire deal are issues that can be solved.
- Yemen's Houthis said they carried out three military operations in which they targeted the "Bentley I" ship in the Red Sea with ballistic missiles and drones, while it targeted the oil tanker "Chios Lion" in the Red Sea with a booby-trapped boat and along with the Islamic Resistance in Iraq, targeted the Olivia vessel in the Mediterranean Sea.
ASIA-PAC
NOTABLE HEADLINES
- China's MOFCOM requested the WTO to establish an expert panel regarding a dispute against the US Inflation Reduction Act to protect Chinese EV industry.
- Italy reportedly voted in favour of EU tariffs on Chinese EVs via written procedure, according to a diplomatic source cited by Reuters.
- US chipmaking equipment manufacturers have become more dependent on the Chinese market despite Washington's export restrictions on advanced products as they boost shipments of machinery used to make legacy chips, according to Nikkei.
EU/UK
NOTABLE HEADLINES
- ECB is reportedly set to delay leveraged loan probe findings on bank backlash, while it is likely to lower demands for additional loan loss provision and likely to push it back to at least September, according to Bloomberg citing sources.
- Several ECB rate-setters said one of their biggest concerns is the risk of nations such as France and Italy not shrinking their budget deficits, according to FT citing sources. The article also noted that in the context of recent survey data, this is making some of the more dovish policymakers nervous about keeping rates too high for too long.
- German government is to pass its draft for the 2025 budget on Wednesday which includes a record EUR 78bln of investment, while the supplementary budget for 2024 provides for an increase of the previously planned new debt by EUR 11.3bln to a EUR 50.3bln total, according to sources cited by Reuters.
DATA RECAP
- EU Industrial Production MM (May) -0.6% vs. Exp. -1.0% (Prev. -0.1%, Rev. 0.0%)
- EU Industrial Production YY (May) -2.9% (Prev. -3.0%, Rev. -3.1%)
