Futures Flat As Tech Stocks, Dollar Rise

July 17, 2025

US equity futures are flat, trading in a narrow range overnight, with SPX unchanged, while Nasdaq futs rise after TSMC beat on sales guidance. Since yesterday’s close, incremental macro headlines were muted, but earnings reports were solid (TSM, UAL). As of 8:00am ET, S&P futures are unchanged, Nasdaq futs are up 0.1% boosted by a positive outlook from TSMC, and Rusell 2000 futs are down 0.4%. European stocks also advance with the Stoxx 600 up 0.7%, led by gains in industrial, construction and auto sectors. In Pre-market trading, megacap tech is higher, with NVDA (+0.8%) leading gains, followed by META (+0.7%) and AAPL (+0.3%) as TSMC’s raised outlook is a good sign that spending on AI is holding up; on sector basis, Health Care and Real Estate are outperforming. Yields are 1-2bp higher and the dollar staged a comeback as dip-buyers stepped in, following Wednesday’s brief bout of panic over the future of Powell. Commodities are mixed, with oil and iron ore higher, while base and precious metals are lower. Today, markets will focus on Retail Sales (8:30am), Jobless Claims (8:30am), Philly Fed Business Outlook (8:30am), NAHB Housing Mkt Index (10am), Fed speakers Kugler (9:15am), Daly (12:45pm), Cook (1:30pm), Waller (6:30pm). We also get earnings from ABT, CFG, CTAS, ELV, FITB, GE, MAN, MMC, PEP, TRV, USB before the market; while after the close we get: IBKR, NFLX, SFNC, WAL.

In premarket trading, Magnificent Seven are mixed (Nvidia +0.5%, Meta Platforms +0.4%, Tesla +0.2%, Apple +0.1%, Amazon +0.1%, Microsoft -0.5%, Alphabet -0.4%). Here are some other notable premarket movers:

Archer-Daniels-Midland (ADM) falls 6% after President Trump said Coca-Cola has agreed to use “real cane sugar” in Coke soda in the US.
General Electric Co. (GE) rises about 1% after the company boosted its full-year financial guidance and topped Wall Street’s profit estimates for the second quarter as rebounding demand in the aviation market softened the impact of a global trade war.
MP Materials (MP) falls 5% after the rare-earth producer said it was offering $500 million in common stock to fund its expansion.
PepsiCo Inc. (PEP) rises 2% after maintaining its annual outlook and reporting sales growth that beat Wall Street estimates, citing strong international growth.
Sarepta Therapeutics (SRPT) surges 30% after the company said it was cutting more than a third of its workforce and that its gene therapy for a fatal muscle disorder would stay on the market with warnings about the potential for liver failure.
United Airlines (UAL) slips 1% after the carrier narrowed its profit range for this year, saying the outlook has become more predictable than in the first six months, a period punctuated by flight disruptions, trade tensions and fighting in the Middle East.
Union Pacific (UNP) falls 2% after Semafor reported that the railroad is working with investment bankers at Morgan Stanley to explore an acquisition of an unknown rival, citing people familiar; CSX (CSX) rises 6%
US Bancorp (USB) drops 3% after the lender reported net interest income that missed analysts’ estimates in the first earnings report under new Chief Executive Officer Gunjan Kedia.

Speculation over Powell’s future rattled markets on Wednesday before US President Donald Trump downplayed the prospect of replacing him. Trump, who has long pushed for lower interest rates, has made no secret of his frustration with the Fed Chair. Overnight newsflow returned focus back on tariffs, after Trump said “we could possibly make a deal with the EU… The European Union has been brutal, and now they’re being very nice.” He also said he would send letters to more than 150 countries notifying their tariff rates maybe 10% or 15%. New York Fed President John Williams said he expects tariffs to have a bigger impact on inflation in the months ahead, making the Fed’s restrictive stance “entirely appropriate.” And yesterday’s headlines on Powell prompted several top Wall Street bank CEOs to emphasize the importance of an independent central bank. A record share of American firms in a recent survey froze investments in China as trade ties worsened. Fewer than half of the companies surveyed by the US-China Business Council between March and May said they plan to invest in China in 2025, a drop from 80% last year.

“It’s a clear symptom of the resistance developed by markets for the roller coaster of headlines that have characterized Trump’s term so far,” wrote Francesco Pesole, a currency strategist at ING Groep NV. “After yesterday’s scare, the bar will be even higher to take Fed independence threats seriously.”

Meanwhile, Trump softened his rhetoric toward China in hopes of arranging a summit with President Xi Jinping and reaching a trade agreement with the world’s second-largest economy. He also said he would send letters to more than 150 countries to notify them about tariff rates that could be 10% or 15%. “Markets have learned to largely ignore what Trump says,” said Francois Rimeu, strategist at Credit Mutuel Asset Management in Paris. “Markets believe that he wants them to rise and as long as it remains the case, the trend is higher. The only possible problem coming forward in this favorable macro backdrop is inflation.”

Elsewhere in micro Taiwan chip giant TSMC rose +3.8% pre mkt, after printing better 2Q results along with a better guide for Q3/FY25 citing stronger than three months ago data-center/server/sovereign AI orders; as Goldman notes, this “should help AI spend narrative stay intact.”

Attention now shifts to Retail Sales this morning which will give clues about how tariffs are affecting demand for various goods. The headline number was likely flat in June, after a 0.9% drop in May, due to a slower decline in auto sales. “What we are hearing from JPMorgan, from Goldman Sachs, from most of US investment banks, is that the US economy is holding up,” Emmanuel Cau, head of European equity strategy at Barclays Plc, told Bloomberg TV. “Despite all this uncertainty, we have corporate resilience acting as a backstop to the equity market.”

We also get another slew of earnings reports: Pre mkt we get earnings from ABT, CFG, CTAS, ELV, FITB, GE, MAN, MMC, PEP, TRV, USB; while after the close we get: IBKR, NFLX, SFNC, WAL. Focus today will be on Retail Sales (8:30am), Jobless Claims (8:30am), Philly Fed Business Outlook (8:30am), NAHB Housing Mkt Index (10am), Fed’s Kugler (9:15am), Daly (12:45pm), Cook (1:30pm), Waller (6:30pm). What to watch into NFLX eps: NFLX: according to Goldman, positioning skews (very) long and feels like Bulls are in set-and-forget / do-no-harm mode. Investors looking for a beat on quarter with FY guidance raise, especially given FX tailwinds. Other focus items will be capital return pacing and future strategic commentary (Ads, Live, Sports, EU/TF1).

Elevated US valuations, a depreciating dollar and rising volatility suggest it may be time to look abroad for high-quality growth, according to Bloomberg Intelligence. BI’s analysis shows 27 stocks that screen better than the Mag 7 on growth, value and quality and have significantly outperformed US stocks this year.

European stocks also advance with the Stoxx 600 up 0.7%, led by gains in industrial, construction and auto sectors. Most major markets are higher with tech stocks leading the advance after Taiwan’s TSMC reported strong earnings. This morning, UK Unemployment Rate prints 4.7% vs. 4.6% survey vs. 4.6% prior. Thematically, Electrification, AI Datacentre and semis are among the best performing baskets. Among individial movers, many significant advancers are triggered by earnings, including Ocado and ABB, as well as decliners such as Nordea and Wise. Here are the biggest movers Thursday:

ABB shares soar as much as 8%, the most in over three months, after the Swiss company posted record orders with strength in US, particularly in process automation unit
European semiconductor stocks rebound from Wednesday’s selloff after TSMC raised sales outlook for the year, seeing resilient demand for chips used for AI computing workloads
AAK shares rise as much as 12%, the most since October 2023, after the Swedish vegetable oil manufacturing firm reporting second quarter operating profit that beat the average analyst estimate
Ocado shares soar as much as 13% after the grocer and technology company posted sales that beat expectations, while reiterating its guidance. Earnings from its Technology Solutions segment were also comfortably ahead of consensus
Swatch shares rise as much as 5.4% after the Swiss watchmaker pointed to “first positive signs of improvement” in China in an otherwise worse-than-expected first-half results statement
Legrand shares are trading at a record high this morning after jumping as much as 8.4% as the electrical device specialist posted organic growth well ahead of expectations in the second quarter and raised its outlook for the full year
Evolution shares rise as much as 7.8%, to the highest intraday level since April. The casino operator reported second-quarter results which were better than expected, analysts note, and maintained its margin forecast for the full year
Assa Abloy gains as much as 7.3%, the most since April, after the Swedish lock and entrance systems group impressed the market, with its key Global Technologies division a key outperformer
Wise shares drop as much as 10% after the payments software firm posted results that fell short of expectations in the first quarter, which analysts blamed on foreign exchange headwinds and light payment volumes
DKSH shares drop as much as 5.2% after the market expansion specialist reported sales slightly below expectations, which Vontobel blamed on challenging market conditions
EasyJet shares slide as much as 8.1%, the biggest drop since July 2024. Analysts cut their estimates on the travel firm due to headwinds from French air traffic control strikes and higher fuel costs
Nordea Bank declined 3.4%, the worst performer among European lenders, after the Nordic bank reported a slight miss on net interest income for the second quarter and a capital headwind, according to Morgan Stanley
Ashtead Technology shares fall as much as 26%, the most since its initial public offering in 2021. The British industrial equipment company cut its earnings outlook, citing disruption in the US market and foreign-exchange moves
Coats Group tumbles as much as 12%, the most in over five years, after the textile company sold £246m of stock at a discount to help fund the acquisition of insole maker OrthoLite
Frasers Group shares drop as much as 5.7%, the most since April 7, after the UK owner of retail outlets such as Sports Direct and House of Fraser reported revenue for the full year that missed the average analyst estimate

Earlier in the session, Asian stocks traded in a narrow range as investors weighed ongoing US tariff risks and uncertainty around Federal Reserve leadership. The MSCI Asia Pacific Index rose as much as 0.3%, with Samsung Electronics and Sony the biggest boosts. Seven & i slid after Couche-Tard abandoned its $46 billion bid for the Japanese 7-Eleven operator. Benchmarks climbed in Thailand and Indonesia, while Australian stocks hit a new record after the latest jobs data bolstered the case for further interest-rate cuts. Volatility remains muted as traders await further trade developments. President Donald Trump said he plans to send letters to more than 150 countries, outlining prospective tariff rates of 10% or 15%. Uncertainty around the Fed also lingers, as tensions flared again between Chair Jerome Powell and Trump. Chinese onshore stocks climbed as Trump softened his tone amid an effort to secure a summit with President Xi Jinping. Meanwhile, the government continues to seek ways to boost consumption while also curbing destructive price wars spreading through various industries. Notable Asian movers:

Seven & i shares sank in Tokyo after Alimentation Couche-Tard withdrew the buyout offer. Mitsui E&S shares soared after SMBC Nikko upgraded to outperform.
Thailand’s benchmark SET Index rises as much as 2.9%, to the highest since May 21, as foreign investors begin pouring money back into the nation’s stocks as sentiment improves ahead of the central bank governor nomination.
Akeso leads Chinese biotech stocks higher after the company announced some positive results from its clinical trial for a cancer drug. Electric vehicle shares like Geely rise as authorities pledge to rein in “irrational competition” in the sector undergoing an intense price war.
Tech Mahindra’s stock falls as much as 2.2% after the company’s reported net income for the first quarter missed the average analyst estimate. Analysts said they remained apprehensive of meaningful growth in the current industry environment.
Seven & i shares fell as much as 9.6%, the most since April 7, after Alimentation Couche-Tard withdrew its ¥6.77 trillion bid to buy the convenience store operator.
Baidu drops in Hong Kong on Thursday, after Morgan Stanley said the firm’s core ads may see further downside in 2Q given limited monetization from AI search and the drop may widen further.
Mitsui E&S shares climbed as much as 19%, the most since May 13, after SMBC Nikko raised its rating to outperform from neutral on expectations rising shipbuilding demand from the US will boost profit growth.
Singapore Telecommunications’ shares rise after a consortium led by the company won a contract from NEC Corp. for a submarine cable system.
Naver shares fall as much as 2.4% in Seoul, as Goldman Sachs downgrades the stock to neutral from buy, citing more conservative outlook for the company’s most profitable business, Search.
CAR Group shares drop as much as 5.8%, the most since April 7, after the Australian online auto retailer announced that CEO Cameron McIntyre will be stepping down and reported preliminary profit for the full year that missed the analyst estimate.

In FX, the Bloomberg Dollar spot index rose 0.3%, paring declines seen on Wednesday after President Donald Trump downplayed the prospect of replacing Federal Reserve Chair Jerome Powell amid speculation over Powell’s future. EURUSD dropped as much as 0.6% to 1.1573, erasing Wednesday gains; the euro headed for its sixth daily drop in seven as interbank demand to fade its latest retreat was offset by real money selling. The Aussie dollar is the weakest of the G-10 currencies, falling 0.9% after Australian unemployment unexpectedly climbed to a four-year high in June.

In rates, treasuries dip, pushing 10-year yields up 1 bp to 4.47% while 2-year yields rose the same amount to 3.90%, bouncing of 3.86% touched on Wednesday, its lowest in nearly a week, as investors continued to signal that the Fed’s wait-and-see approach to policy easing is likely to prevail. Swaps are pricing fewer than two quarter-point cuts this year, down from the possibility of three at the start of the month as US policymakers continue to argue for a patient approach to further easing. Traders are betting that the Fed will deliver a total of 44bps of cuts by year-end, little changed from levels in late US trading. New York Fed President John Williams said he expects tariffs to have a bigger impact on inflation in the months ahead, making the central bank’s current restrictive stance “entirely appropriate.” Short-end Gilts lead a selloff in European government bonds after some mixed UK jobs data. UK 2-year yields rise 3 bps to 3.89%, limiting losses in the pound against the greenback to just 0.2%.

In commodities, oil prices are treading water with Brent near $68.50 a barrel. Spot gold falls $18 to around $3,329/oz. Bitcoin dropped ~1% to near $119,000.

Looking to the day ahead now, retail sales for June, import and export prices for June, weekly jobless claims and Philadelphia Fed index for July are all scheduled for 8:30am ET, followed by NAHB housing index for July at 10am. Central bank speakers include the Fed’s Kugler, Daly, Cook and Waller, along with the ECB’s Villeroy. Finally, earnings releases include Netflix, General Electric, PepsiCo, and Abbott Laboratories.

Market Snapshot

S&P 500 mini little changed
Nasdaq 100 mini +0.2%
Russell 2000 mini -0.2%
Stoxx Europe 600 +0.7%
DAX +0.9%
CAC 40 +0.9%
10-year Treasury yield +1 basis point at 4.47%
VIX little changed at 17.14
Bloomberg Dollar Index +0.3% at 1207.9
euro -0.4% at $1.1598
WTI crude +0.3% at $66.61/barrel

Top Overnight News

Trump said he’d send letters to more than 150 countries notifying them their tariff rates may be 10% or 15%, though claimed he’s “indifferent” to a trade deal with the EU. BBG
Trump says would love if Fed Chair Powell resigns and noted it would disrupt markets if he removed Powell.
The House late Wednesday advanced a trio of cryptocurrency bills and a 2026 Defense spending measure after a group of GOP hard-liners dropped their opposition to the effort following a chaotic day of turnabouts and negotiations with Republican leaders. Politico
The Senate passes a bill codifying some DOGE cuts, sending it to the house: BBG
Trump said in an interview that the US is very close to a trade deal with India, while an agreement could possibly be reached with Europe as well, but it is too soon to say whether a deal can be agreed with Canada. RTRS
US lawmakers are introducing a bill to nearly double the number of export control officers stationed around the world, according to Punchbowl. Punchbowl notes: “The bill comes during a heightened focus on export controls of American-made AI chips. While the Trump administration is relaxing some of those restrictions, many on Capitol Hill want to see a tougher approach regarding U.S. technology going to geopolitical rivals.” The bill would mandate that there be at least 20 export control officers globally. There are currently 11 stationed in consulates across Asia, Europe and the Middle East.
US intelligence found that US strikes against Iran’s nuclear facilities mostly destroyed the Fordow site and only partially damaged the other two at Natanz and Isfahan. BBG
The Chinese government is reportedly threatening to block the sale of over 40 ports to BlackRock (BLK) and Mediterranean Shipping Co by CK Hutchinson (0001 HK), unless Cosco is an equal partner and shareholder, via WSJ citing sources.
Japan’s mounting debt burden and pending election are fueling debate over whether its sovereign credit rating may be cut before long.
Japan’s opposition parties played down concerns over plans to cut taxes that have contributed to recent rises in bond yields ahead of Sunday’s upper house election. BBG
TSMC (+3.8% premkt) boosted its revenue growth outlook for the year to 30% and reported second-quarter earnings that beat, highlighting resilient AI spending. BBG
UK unemployment rose to a four-year high of 4.7% in the three months through May. Separate tax data showed the number of employees on payrolls dropped by over 41,000 in June, worse than the expected decline of 35,000. The pound fell. BBG
NY Fed President Josh Williams suggested he is reluctant to support lowering interest rates ahead of the central bank’s next meeting this month, arguing that tariffs are likely to driver further inflation. Williams said that price data are already showing that new trade barriers put in place by the Trump administration are lifting the cost of some consumer goods. WSJ
Fed’s Williams (Voter) said current modestly restrictive monetary policy is appropriate and the current state of interest rate policy allows Fed time to analyse data, while he added that the tariff impact is modest so far but will increase over time and tariffs should boost inflation by one percentage point for the rest of 2025 into 2026. Furthermore, he said they will need to watch data to understand tariff impact he still needs to see more data before deciding what’s next for policy.
BofA Institute total card spending (w/e July 12th): +4.5% Y/Y (vs +0.2% June avg.); notes online retail saw largest Y/Y spending growth due to Prime Day timing shift.

Trade/Tariffs

US President Trump said they are very close to an India tariff deal and could possibly make a deal with Europe, while he stated regarding Canada tariffs that it is too soon to say, and he will probably put 10% or 15% tariffs on smaller countries.
US Treasury Secretary Bessent to pay visit to Japanese PM Ishiba on Friday, according to Japanese government.
EU is reportedly preparing a list of potential tariffs on US services alongside export controls, via FT citing sources; in the scenario that trade talks with the US fail. Brussels is also considering export controls if trade talks with Washington fail. One official made clear that the list would not only focus on US tech firms.
Japanese trade negotiator Akazawa spoke with US Commerce Secretary Lutnick by phone, while Japan and the US reconfirmed each side’s position on US tariff measures and engaged in deep interaction, according to Japan’s government.
Japanese Government says Top Tariff Negotiator Nakazawa is to travel to Osaka to host US delegation at expo on Saturday.
EU reportedly stalls probe into Elon Musk’s X amid US trade talks, according to FT.
UK is said to be pushing the US to drop a key sticking point in the steel deal, according to FT.
Canada is to lower tariff-rate quota levels from 100% to 50% of 2024 volumes for steel products from non-free trade agreement countries.
Chinese Foreign Ministry says the responsibility with Fentanyl lies with the US itself, tariffs seriously impacted China’s dialogue with the US on drug control.
China-linked hackers are increasingly targeting Taiwan’s chip industry, according to cybersecurity firm Proofpoint.

Earnings

TSMC +4% pre-market: Q2 beat/above prior. Q3 Guide: Revenue 31.8-33.0bln (exp. 30.7bln), Operating Margin 45.5-47.5% (Q2 49.6%), Gross Margin 55.55-57.5% (Q2 58.6%). FY25 Guide: Revenue increase of +30% (prev. exp. mid 20s%). Commentary: more conservative about Q4 due to tariffs and other uncertainties; no change in customer behaviour so far, there is risk and uncertainty from tariffs, demand for chips will continue to be robust.
ABB +6.4%: Rev. beat, guides strong growth.
Volvo Car +5.5%: Rev beat, new EVs expected to have better margins, turnaround plan on track.
Novartis -1.6%: Strong results, CFO to retire & Cosentyx misses sales exp.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were somewhat mixed following the two-way price action stateside where the major indices ultimately gained, although price action was choppy amid Fed independence concerns due to reports regarding a potential firing of Fed Chair Powell, which President Trump refuted. ASX 200 advanced with gains seen in nearly all sectors while stocks were unfazed by disappointing Australian jobs data. Nikkei 225 declined at the open amid currency- and data-related headwinds but gradually clawed back its losses as the JPY resumed its weakening trend. Hang Seng and Shanghai Comp lacked conviction in the absence of any pertinent fresh macro catalysts.

Top Asian News

Chinese electric vehicle shares mostly rise as authorities pledge to rein in “irrational competition” in the sector undergoing an intense price war. Analysts remain divided over the effectiveness of such regulatory scrutiny.
Shares of Chinese companies related to the low-altitude economy rise after a report that local electric vertical takeoff and landing (eVTOL) maker TCab Technology signs a $1 billion deal with UAE-based Autocraft.
SK Hynix Inc. shares declined Thursday after Goldman Sachs Group Inc. downgraded the Korean chipmaker for the first time in over three years, on expectations it may suffer as competitors make advances.
Chinese retailer stocks advance as the government vows to boost consumption and fully unleash the potential of domestic demand.
Chinese shares connected to Tesla’s suppliers such as Tuopu rise after the electric vehicle maker confirmed its upcoming release of Model Y L — a longer, six-seat version of its Model Y sport utility vehicle — in China in the autumn.
Chinese biotech stocks rise, led by Akeso after the co. announced the successful enrollment of the first patient in the registration Phase III clinical trial of ivonescimab in first-line treatment for advanced metastatic colorectal cancer.

European bourses (STOXX 600 +0.6%) opened firmer across the board and have traded sideways at elevated levels throughout the morning. European sectors hold a strong positive bias, with only a couple of industries holding marginally in negative territory. Industrials take the top spot, lifted by post-earning strength in ABB. Followed closely by Autos (post-earning strength in Volvo Car) and then Tech (TSMC results).

Top European News

Pantheon Macro, on the UK labour market data, “So we shift our call. We now look for a one-and-done cut in August. We are still torn.”.
Germany’s VCI reports H1 production down 1% Y/Y. Sales decline 0.5% to EUR 107 bln. Producer prices remain flat Y/Y. VCI maintains 2025 outlook. Lack of orders continues to pose a significant challenge for the chemical industry amid ongoing market tension, with no signs of recovery emerging this year.
Citi now expects the ECB to lower rates in September and December (vs. previous view of July and September).

After a volatile session on Wednesday, USD is attempting to recoup lost ground and resume its broader recovery seen since early July. A soft PPI report and sources that President Trump is set to fire Fed Chair Powell sent the Dollar lower; investors feared 1) the perceived likelihood of a lower FFR going forward and 2) the subsequent credibility loss in the US. Attention today will turn back to the data slate with retail sales and weekly claims both on deck. Elsewhere, TIC data due at 21:00BST will be eyed for any signs of foreign investors shunning US assets. Fed speak also on the agenda.
It remains the case that the USD leg of the pair is providing the bulk of direction for EUR/USD with incremental drivers from the Eurozone on the light side. Traders await any breakthroughs in EU-US trade talks after US President Trump threatened a 30% tariff on the EU over the weekend. On the fiscal front, Germany has rejected the EU’s proposed EUR 2tln budget, setting up a negotiation phase with the European Parliament and European Council. EUR/USD has slipped onto a 1.15 handle but remains within Wednesday’s 1.1562-1.1772 range.
After some fleeting upside vs. the USD on account of the Trump-Powell drama seen yesterday, USD/JPY has resumed its recent uptrend. The latest reporting noted that Japanese trade negotiator Akazawa spoke with US Commerce Secretary Lutnick by phone, while Japan and the US reconfirmed each side’s position on US tariff measures and engaged in deep interaction. USD/JPY is currently tucked within Wednesday’s wide 146.91-149.18 range.
GBP softer vs. the USD but to a lesser extent than most peers. Macro focus for the UK has been on the labour market with the latest jobs data showing an unexpected uptick in the unemployment rate to 4.7% from 4.6%, another contraction in the HMRC payrolls change and stubborn wage growth. Cable has slipped back onto a 1.34 handle but is holding above Wednesday’s low at 1.3365.
Antipodeans have both have fallen victim to the USD with greater losses seen in AUD following the latest Australian jobs data. The release showed an unexpected jump in the unemployment rate to 4.3% from 4.1%; highest rate in 3.5 years. Accordingly, AUD/USD has slipped back onto a 0.64 handle and moved back below its 50DMA at 0.6491 with a session low at 0.6462.
PBoC set USD/CNY mid-point at 7.1461 vs exp. 7.1703 (Prev. 7.1526).

Fixed Income

USTs are lower by a handful of ticks. Gradually drifting overnight after being driven to a 110-21+ peak in the US afternoon, a high that occurred in a continuation of the post-PPI move and as USTs picked up after the Powell reporting and subsequent pushback by Trump. Thus far, down to a 110-13 base which takes them back to roughly where they were before the first Powell reports hit. Today’s focus will be on US data (Retail Sales, Jobless Claims, Atlanta Fed will update its GDPNow tracker), and a number of Fed speakers.
Bunds are modestly lower. Slipped earlier doors, hit marginally by TSMC’s Q2 report and then more significantly when the name provided strong guidance for Q3 (see Equities) as the broad risk tone picked up. Over the early European morning, Bunds fell from the c. 129.60 level that they had been meandering around overnight to a 129.47 low before the European cash equity open and since to a 129.38 base. Supply from Spain passed without reaction as is usually the case, though the b/c for the 2048 line was weaker than normal. France, was strong overall though some modest pressure was seen in OATs on the results, potentially driven by the sub-3x b/c for the 2031 line.
Gilts are underperforming. Hit at the open given the bearish bias from peers (see above), and also the morning’s jobs data. In brief, the series showed that the labour market is continuing to weaken with the Unemployment Rate unexpectedly ticking higher and another negative print for the HMRC Payrolls Change. However, this is caveated by a significant revision to the prior HMRC figure. Opened at 91.33, 20 ticks below yesterday’s close, and then slipped further to a 91.14 trough. No move seen on the DMO’s 2030 sale, results broadly in-line with the last outing.
Spain sells EUR 5.7bln vs exp. EUR 5.0-6.0bln 2.70% 2030, 3.20% 2035 & 2.70% 2048 Bono.
France sells EUR 12bln vs exp. EUR 10-12bln 2.40% 2028, 2.50% 2030 and 2.70% 2031 OAT.
UK sells GBP 4.75bln 4.375% 2030 Gilt: b/c 3.12x (prev. 3.26x), average yield 4.078% (prev. 4.06%) & tail 0.2bps (prev. 0.2bps)

Commodities

WTI and Brent are trading on either side of the unchanged mark, but have held a negative bias throughout the European morning, up until a geopolitical update. Al Arabiya reported of a drone attack on the Taouki oil field (80k bpd) in Iraq’s Kurdistan region. An update which has lifted the crude benchmarks more concertedly into the green, albeit did respect earlier highs. Brent Sept’25 currently trades around USD 68.50/bbl in a USD 68.34-69.01/bbl range, which is well within the prior day’s confines.
Precious metals are broadly in the red, with losses all generally to a similar extent as each other. Spot gold traded rangebound overnight, finding some footing after extending higher on Wednesday amid reports that US President Trump would fire Chair Powell. This morning, the yellow-metal has traded with a downward bias thanks to the firmer Dollar and positive risk-tone across European equities. Currently in a in a USD 3,325.10-3,351.11 range.
Base metals hold a negative bias, in part due to the firmer Dollar. 3M LME Copper posts very mild losses, in continuation of the rangebound trade seen overnight amid the somewhat mixed risk appetite in APAC trade. 3M LME Copper is incrementally in the red and trades in a USD 9,593.05-9,643.9/t range.
Qatar set August-loading Al-Shaheen crude term premium at USD 2.48/bbl and raised September Al-Shaheen crude term price to USD 3.33/bbl above Dubai quotes, according to sources cited by Reuters.
“March attack targeting the Taouki oil field in the Kurdistan Region of Iraq”, via Al Arabiya.
Indian oil minister sees potential for fuel price cuts if crude remains at current levels for next 2-3 months.

Geopolitics: Middle East

Senior US official said they are very close to an agreement that will lead to halting the escalation between Israel and Syria, according to Axios’ Ravid.
New US assessment finds US strikes destroyed just one Iranian nuclear site, according to NBC; strikes degraded two other sites. One of the three sites was mostly destroyed, setting work there back significantly. The two others were not as badly damaged and may have been degraded only to a point where nuclear enrichment could resume in the next several months if Iran wants it to. Officials believe the attack on Fordo, which has long been viewed as a critical component of Iran’s nuclear ambitions, was successful in setting back Iranian enrichment capabilities at that site by as much as two years, according to two of the current officials. Trump rejected a military plan for more comprehensive strikes that would have lasted for weeks.

Geopolitics: Ukraine

Russia’s Deputy Chairman of the Security Council Medvedev says Russia should respond to West to full extent, with preventative strikes in needed, via Tass
Russian air defence units downed two Ukrainian drones headed for Moscow, according to the city’s mayor. It was also reported that Russian air defence systems destroyed 122 Ukrainian drones overnight, according to RIA.
NATO’s Top Military Commander Grynkewich says even if there is a peaceful solution in Ukraine, Russia will remain a threat.

US Event Calendar

DB’s Jim Reid concludes the overnight wrap

Central bank independence was back in the spotlight yesterday, with a huge market reaction after several outlets reported that President Trump might be about to fire Fed Chair Powell. That led to a major selloff for long-end Treasuries and the US Dollar, but the moves mostly unwound after Trump said that he was “not planning” on firing Powell and that it was “highly unlikely”. So despite all the volatility in the middle of the session, the 30yr Treasury yield (-0.7bps) ultimately saw a marginal decline on the day to 5.01% and the S&P 500 (+0.32%) closed less than -0.3% below its record high last week. Even the dollar index (-0.23%) recovered most of its intraday losses, and is up +0.15% this morning, so it’s clear that Powell’s removal is still a prospect that markets view as unlikely for the time being.

The question of Powell’s removal had risen up the agenda over recent days, particularly given Trump’s regular calls for lower rates. But for the most part, this really wasn’t being priced in much, particularly given Trump himself had said on several occasions that he wasn’t planning to do it. However, that changed yesterday after CBS reported that Trump had indicated to Republican lawmakers that he’d remove Powell. So that triggered a more meaningful market reaction, which got further momentum after Bloomberg reported that a White House official said Trump was likely to fire Powell soon. Then shortly after that, the reaction became even more aggressive as the New York Times said that Trump had drafted a letter to fire Powell and waved a copy in front of lawmakers in the Oval Office.

Very soon after that NYT report, Trump spoke in the Oval Office and said that he wasn’t planning to fire Powell. So that quickly unwound the market reaction, even though he still left the door open to Powell’s removal, saying “I don’t rule out anything, but I think it’s highly unlikely, unless he has to leave for fraud”. So for about an hour we had a brief glimpse of the likely market reaction as investors started to view Powell’s removal as a serious prospect. Notably, there was a huge steepening in the yield curve as investors ramped up the prospect of a near-term rate cut. Indeed at one point, a rate cut by September was priced as an 80% chance, having been at 57% the previous day. And at the lows, the 2yr yield was down -8.2bps on the day at 3.86%, whilst the 30yr yield surged by over 10bps in under an hour to an intraday peak of 5.07%. Meanwhile, the dollar index slumped too, down -0.91% at the lows.

Ultimately, the bulk of those moves unwound after Trump’s comments. But the extent of the unwind varied across asset classes, and there were still clear jitters in markets that lingered after Trump’s remarks. While the S&P 500 (+0.32%) posted a full recovery, the dollar index closed -0.23% lower, its first decline in two weeks. The Treasury curve saw a sizeable bull steepening, as 2yr yields closed -4.8bps at 3.89%, while the 10yr (-2.6 bps to 4.46%) and 30yr (-0.9bps to 5.01%) yields saw more modest declines. And in a sign of the rising risk premium for long-term Treasuries, the 5s30s curve steepened to 102bps, its steepest level since October 2021. For more thoughts on the issue, our US economists published a note yesterday evening.

It feels like ancient history now, but before the Powell story, markets had seen some positive momentum after the US PPI report was softer than expected. So that helped to ease fears about inflation, and investors viewed the release as enough to keep Fed rate cuts in play for this year. Specifically, headline producer prices were unchanged in June (vs. +0.2% expected), which meant the year-on-year rate fell back to a 9-month low of +2.3% (vs. +2.5% expected). Moreover, core PPI was also subdued, and came in unchanged on the month as well (vs +0.2% expected). So the release pushed back against the more inflationary narrative from Tuesday’s CPI print, where strength among certain core goods led to fears that the tariff impact was becoming more obvious on inflation.

Inflation was also in the spotlight in Europe, as the UK CPI print was notably higher than expected, which led to an underperformance for UK gilts. The release showed headline CPI moving up to +3.6% in June (vs. +3.4% expected), whilst core CPI also rose to +3.7% (vs. +3.5% expected). So that was the fastest headline CPI print since January 2024, and it led investors to dial back the likelihood of rapid rate cuts from the Bank of England. For instance, the amount of cuts priced in by the November meeting came down -3.1bps on the day to 43bps. And it meant yields on 10yr gilts rose +1.5bps, in contrast to the declines elsewhere in Europe, which meant yields on 10yr bunds (-2.5bps), OATs (-2.7bps) and BTPs (-3.0bps) all moved lower. For more on inflation, I put out a note yesterday on how markets are still underestimating the risk of a further rise (link here).

For equities, it was also a volatile session, with the S&P 500 down -0.68% at the intraday low around the Powell news. But those losses were then pared back and the index ultimately closed +0.32% higher. Banks had been particularly hit by the initial Powell headlines, with the KBW bank index falling as much -1.51% but this also recovered into positive territory (+0.30%) by the close. The small cap Russell 2000 (+0.99%) outperformed while the Magnificent 7 (+0.27%) posted a 6th consecutive advance for the first time this year. And there was also decent economic data, with industrial production up +0.3% in June (vs. +0.1% expected). In Europe, the STOXX 600 (-0.57%) fell for a 4th consecutive session, but the index closed right before Trump’s comments about not firing Powell, so that came before the recovery in US equities. Indeed, European equity futures are clearly positive this morning, with those for the DAX (+0.41%) and FTSE 100 (+0.40%) both rising.

Overnight in Asia, the major equity indices have all posted modest gains, with advances for the Nikkei (+0.16%), the Hang Seng (+0.07%), the KOSPI (+0.03%) and the Shanghai Comp (+0.09%). Meanwhile, the CSI 300 (+0.31%) has been one of the stronger performers, and is currently on track for its highest closing level of 2025 so far. Another has been Australia’s S&P/ASX 200 (+0.68%), which comes after some disappointing labour market data overnight, with employment up just +2k in June (vs. +20k expected), and the unemployment rate also up to 4.3% (vs. 4.1% expected). So that’s led investors to price in a growing probability of rate cuts from the RBA this year, and the country’s 10yr government bond yield is down -4.6bps as well. The Australian Dollar is also the weakest G10 currency this morning, having fallen -0.64% against the US Dollar. Looking forward, US equity futures are pointing to a somewhat more negative performance, with those on the S&P 500 down -0.19% this morning.

To the day ahead now, and data releases include US retail sales for June, the weekly initial jobless claims, the NAHB’s housing market index for July, and UK unemployment for May. Central bank speakers include the Fed’s Kugler, Daly, Cook and Waller, along with the ECB’s Villeroy. Finally, earnings releases include Netflix, General Electric, PepsiCo, and Abbott Laboratories.

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