Futures Rise, Nvidia Spikes After Trump Greenlights Selling any Chips To China

US equity futures are higher, led by Tech with the biggest overnight news being that Trump is allowing NVDA to resume its (less advanced) H2O chip sales to China; there had been chatter of a chips-for-rare earths pact to thaw US/China trade relations. As of 8:00am ET, S&P futures rose 0.3%, while Nasdaq futures rose 0.5%, with NVDA jumping another +5.3% in pre-market trading, while AMD +3.5%, MRVL +2.85, AVGO +1.4% also gained. The balance of Mag7 is mostly higher; semis are poised to be the best sub-group, and cyclicals are higher with banks with a mild bid into earnings this morning. Bond yields are lower as the curve bull flattens into CPI with JPM noting that some FICC client convos are pointing to a dovish CPI print. The USD is weaker and commodities are declining across all 3 complexes though precious, crude, and sugar remain bid. Today’s focus is the unofficial kick off 25Q2 earnings and Banks have a low bar to cross and CPI is not yet expected to reflect the expected inflation from the trade war.

In premarket trading, Mag 7 stocks were higher: Nvidia rose 4.4% as the company planned to resume sales of its H20 AI chip in China after securing Washington’s assurances that such shipments would get approved (Meta +0.6%, Apple +0.3%, Alphabet +0.2%, Amazon +0.2%, Tesla +0.2%, Microsoft -0.1%).

• Semiconductor firms also gain alongside Nvidia, including AMD (AMD) +5% and Broadcom (AVGO) +1.5%.
• Makers of wound-care products are falling after the US government proposed to change how skin substitutes are paid for.
• MiMedx (MDXG) tumbles 17% while Organogenesis (ORGO) sinks 25%
• BlackRock (BLK) falls 1.9% after the investment firm’s net inflows missed analyst estimates in the second quarter. The company’s reported assets under management beat the average analyst estimate.
• MP Materials (MP) gains 7% after Fox Business reported that Apple is set to announce a $500 million deal with the company for rare earths produced in the US, citing people familiar with the matter.
• Trade Desk (TTD) rallies 14% after S&P Dow Jones Indices said the advertising technology company will join the S&P 500 Index before trading opens on July 18.
• Wells Fargo & Co. (WFC) falls about 2% after lowering its full-year guidance for net interest income, after another quarter of tepid growth amid the ongoing trade war.

Outside of earnings, micro focus this am is on NVDA (+5%) with the company planning to resume H20 chip sales to China after assurances from Washington that shipments will be approved. After the White House banned exports in April, it’s a surprise reversal that may add billions to Nvidia’s revenue this year. The move may help spur easing tensions between US-China trade negotiations/furthers the „TACO” trade. TTD (+15%) set to replace ANSS in S&P 500.

For Nvidia, the approval of export licenses for the H20 chip not only boosts its earnings prospects but also bodes well for progress in trade talks between the White House and key partners. With stocks trading near record highs, investors will also gain a clearer read on corporate health as major banks mark the unofficial start of earnings season.

“The US policy reversal on selling AI chips to China clearly constitutes good news for the industry,” said David Kruk, head of trading at La Financiere de L’Echiquier. “Other than that, the upward trend is still being fueled by investors riding the TACO trade — there are threats but they have yet to materialize.”

CPI is the big macro event for today: economist estimates for m/m change range from 0.1% to 0.4%, with the median 0.3%. June report is first of three to be released before Fed’s September meeting, for which traders have priced in 15bp of easing (see our CPI preview here). Goldman warns to watch for: 1) weakness in used cars, 2) modest increase in car insurance, 3) modest rebound in airfare, 4) +0.08pp increase on core inflation from tariff pressures. After months of seeing little inflation, CPI probably experienced slightly faster growth in June as companies started to pass along higher costs of imported merchandise associated with tariffs. The options market is betting the S&P 500 will swing 0.6% in either direction after the release.

It’s still too early to gauge the impact of the Trump administration’s tariff agenda on inflation, said Arend Kapteyn, UBS Group AG’s global head of economic and strategy research. He noted that July’s data, set to be released next month, would likely provide the earliest indication of any clear effect. The lag is helping to underpin the Federal Reserve’s wait-and-see approach to cutting interest rates, with swaps pricing in less than two quarter-points of monetary easing this year.

“We’re about to go into a five- to six-month period of accelerating inflation,” Kapteyn told Bloomberg TV. “It’s a trade-off between when does the labor market starts to ease, starts to crack — and we’re already seeing some signs of that — versus how quickly is the inflation data increasing.”

The latgest Fund Managers Survey by Bank of America showed that fund managers are rushing back into risky assets at a record pace on optimism over economic growth and strong corporate profits. The share of investors taking a higher-than-normal risk level in their portfolios registered the biggest increase over a three-month span going back to 2001, the poll showed. It also pointed to strong increases in allocations to US and European stocks, as well as tech shares.

“We are still far from levels where we would advocate a short, but given valuation and positioning, it makes sense to take some chips off the table,” he said.

European stocks advance with the Stoxx 600 up 0.2%. Technology, media and auto shares are leading gains as Nvidia plans to resume sales of its H20 AI chip to China. Among individual stocks, B&M sinks to a record low following a weak first quarter. Here are the biggest European movers:

• European semiconductor stocks are gaining ground on Tuesday as Nvidia plans to resume sales of its H20 AI chip to China.
• Experian shares advance as much as 5.2%, touching a new record high, after the UK credit services firm reported first-quarter organic revenue growth that beat estimates.
• Orsted climbs as much as 6.4% after Morgan Stanley upgrades the Danish offshore wind developer to overweight from equal-weight, saying in note that an improving risk/reward makes it “worth a fresh look.”
• Accelleron shares jump as much as 13% to a record high after the Swiss engine parts maker raised its guidance.
• Trustpilot Group shares rise 12% to the highest since March after the British holding company’s preliminary first-half revenue beat the average analyst estimate.
• TomTom shares rise as much as 11% on Tuesday after the GPS-maker narrowed its revenue forecast for the full year by lifting the bottom rung of the range.
• Ericsson shares fall as much as 4.4% after the telecom equipment maker said sales growth in 3Q is expected to be below average seasonality over the past three years.
• B&M shares plunge as much as 14%, hitting their lowest level on record, after posting weaker topline growth than anticipated in the first quarter despite weak comparatives and favorable weather.
• Barratt Redrow shares plummet as much as 13%, after the property developer said it built fewer houses than hoped in FY25 and posted disappointing guidance for FY26.
• Solvay falls as much as 4.2% as JPMorgan says it “joins the profit warning party,” with the Belgian firm becoming the latest in the European chemicals space to cut its guidance.
• AFRY slumps as much as 9.2% after its second-quarter results, the Swedish engineering consultancy’s biggest decline since its previous quarterly statement in late April.
• Azoty shares drop 3.1% to the lowest since June 24 after Orlen indicated it’s not interested in buying the Polish chemicals producer’s polymers project.

Earlier in the session, Asian stocks also advanced as Nvidia’s plan to resume some chip sales to China stoked optimism over geopolitics. Chinese shares were mixed as the latest economic data raised concerns over pressure on domestic consumption. The MSCI Asia Pacific Index gained as much as 0.7% after Nvidia said it plans to restart sales of its H20 AI accelerator to China. Alibaba, Tencent and TSMC were the biggest boosts to the gauge. Benchmarks in Hong Kong, Taiwan and South Korea advanced. Mainland Chinese shares fluctuated after macro numbers showed an uneven recovery. While economic growth exceeded expectations in the second quarter thanks to strong exports to markets outside the US, consumer demand at home remained weak. That’s bound to keep investors cautious after a recent equity rally. Elsewhere, traders are positioning for the weekend upper house election in Japan. Sentiment is cautious, as a surge in bond yields underscored mounting worries about the nation’s fiscal situation. Markets are watching the JGB yield breakout ahead of upper house elections & potential pressure on US rates.

In FX, the Bloomberg Dollar Spot Index falls 0.2% ahead of US inflation data that is forecast to show an acceleration in CPI for June. The euro and pound both add 0.2%.

In rates, Treasuries climb, pushing US 10-year yields down 2 bps to 4.41% ahead of June CPI data, supported by bigger gains in European bond markets, where curves are similarly flatter. European government bonds rise with little reaction seen in bunds to stronger-than-expected German ZEW data and a beat for euro-area industrial production. Short-dated US government bond yields rose after Treasury Secretary Scott Bessent said it would be confusing for Federal Reserve Chair Jerome Powell to remain at the central bank after his term ends, adding that a “formal process” has already begun to identify a potential successor.

In commodities, oil prices are little changed, paring earlier losses with WTI near $67 a barrel. Spot gold climbs $18 to around $3,362/oz. Bitcoin retreats 3% to near $117,000.

Looking at today’s calendar, US economic data slate includes July Empire manufacturing and June CPI (8:30am). Fed speaker slate includes Bowman (9:15am), Barr (12:45pm), Barkin (1pm), Collins (2:45pm) and Logan (7:45pm).

Market Snapshot

• S&P 500 mini +0.3%
• Nasdaq 100 mini +0.6%
• Russell 2000 mini little changed
• Stoxx Europe 600 +0.2%
• DAX +0.1%, CAC 40 little changed
• 10-year Treasury yield -2 basis points at 4.41%
• VIX -0.4 points at 16.8
• Bloomberg Dollar Index -0.1% at 1200.91
• euro +0.2% at $1.1682
• WTI crude little changed at $67.03/barrel

Top Overnight News

• Fed Chair Powell responded to Senate Banking Chair Scott and Senator Warren regarding building renovations in which he stated the inspector general had full access to project information and receives monthly reports, while he has asked the board’s inspector general to take a fresh look at the project, according to Politico and Reuters
• Stocks advanced after Nvidia Corp. secured US assurances to resume sales of some artificial intelligence chips to China, lifting sentiment on a busy day that also features inflation data and big bank earnings.
• Gold advanced, recovering from Monday’s modest drop, as investors digested mixed messages from the US regarding the progress of trade negotiations.
• Japan’s long-term government debt yield touched the highest level since 2008, as a raft of election tax-cut pledges puts investors on edge and risks higher costs all around in the country.
• Liquidity in sovereign bond markets is falling and term premium is rising. With little sign of budgetary restraint almost anywhere, a fiscal crisis in a developed bond market is not inconceivable.
• Euro hedging costs are subdued ahead of key US inflation data, as summer trading conditions and a shift in market focus toward labor metrics dampen demand for short-dated gamma.
• Stocks traders appear to be looking past the possibility of a stronger-than-expected inflation reading on Tuesday, putting them in a vulnerable position if President Donald Trump’s trade war leaves its mark on US consumer prices.
• US President Donald Trump’s latest threat of 100% tariffs on Russia would risk complicating relations with two nations crucial to his economic and strategic goals: China and India.
• Kevin Warsh, a top contender to replace Jerome Powell as chair of the Federal Reserve, is finally ready to cut interest rates. As a governor at the US central bank from 2006 to 2011, Warsh called for higher rates even in the depths of the financial crisis, warning often of impending inflation. That’s a concern he’s reiterated as recently as last year. But this year, Warsh has become an enthusiastic supporter of lower borrowing costs.

Trade/Tariffs

• US Department of Commerce announced it is withdrawing from and terminating the 2019 agreement suspending anti-dumping duty investigation on fresh tomatoes from Mexico, while it is issuing an anti-dumping duty order, resulting in duties of 17.09% on most imports of tomatoes from Mexico.
• Mexico’s Economy Ministry rejected the US decision on tomato duties which it considered unfair and against the interests of both Mexican producers and US industry, while it will support local tomato producers to seek a deal under which the duty is suspended.
• EU draws up retaliatory tariffs for US goods in case a trade deal is not reached with aircraft and booze among imports targeted as EU debates how to respond to Trump’s latest trade threats, according to WSJ.
• Japanese PM Ishiba and trade negotiator Akazawa are to meet with US Treasury Secretary Bessent during his trip to Japan, while the meeting is being considered for July 18th in Tokyo, according to Yomiuri.
• Japan’s Economy Minister and trade negotiator Akazawa said Japan is still arranging the makeup of attendees for the US National Day at Osaka Expo, while he added they will continue dialogue through various channels to seek an agreement with the US on tariffs.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately mixed with the region indecisive in the aftermath of the latest Chinese GDP and activity data, while participants also awaited CPI data and the start of earnings season stateside. ASX 200 gained with strength in tech and some defensive sectors, while the positive sentiment was also facilitated by an increase in Consumer Confidence and as Australian PM Albanese met with Chinese President Xi. Nikkei 225 traded indecisively following recent currency weakness and rising JGB yields. Hang Seng and Shanghai Comp diverged following the somewhat mixed tier-1 data releases from China in which GDP figures for Q2 and Industrial Production in June topped forecasts but Retail Sales and Fixed Assets Investments disappointed, while House Prices were varied and continued to contract.

Top Asian News

• Chinese President Xi met with Australian PM Albanese and said it is most important to seek common ground while sharing differences and that China is ready to work with the Australian side to push bilateral ties further and make great progress. Furthermore, Australian PM Albanese said in the meeting with Chinese President Xi that they welcome progress on cooperation on free trade and value their relationship with China, while he added they will continue to approach the relationship in a calm and consistent manner guided by their national interest.
• China’s stats bureau spokesperson reiterated that the economic foundation needs to be consolidated and stated that overall economic performance in H1 was stable with steady progress, although structural contradictions within the economy have not been fundamentally alleviated. The stats bureau official stated that domestic demand as a contribution to economic growth has been a driving force for GDP but noted that they need to improve investment structure and environment, while the real estate market is heading towards stabilisation and policy support to boost consumption in H1 should sustain spending in H2. Furthermore, it was stated that China is at a critical moment in improving consumption structure and it will supplement policy support with measures to ensure a stable operation of the economy.
• China held its urban work conference and will vigorously promote the optimisation of urban structure, while it will pay more attention to overall urban planning and make efforts to build innovative cities with vitality, according to Xinhua.
• Japan and the EU will issue a joint statement to strengthen economic alliance with a focus on trade, tech and supply chain coordination, according to Yomiuri.
• China Commerce Ministry announces revisions to export control catalogue. Revises procedures for handling Gallium metal extraction tech. Adds battery cathode material prep tech to control list.

European bourses (STOXX 600 +0.3%) are modestly firmer across the board, paring some of the pressure seen in the prior session but with gains capped ahead of today’s key risk event, US CPI. European sectors hold a positive bias. Tech takes the top spot, with the chip sector boosted after NVIDIA (+5.0% pre-market) said it will resume H20 AI chip shipments to China. Telecoms is pressured by post-earning losses in Ericsson (-2.4%).

Top European News

• BoE is announcing a „package of measures designed to maintain stability in the financial sector while offering new growth opportunities for mid-sized banks and building societies.”.
• Incoming ECB member Radev says any further steps should remain firmly data dependent; I share the view that the threshold for additional rate cuts should remain high”.
• UK Chancellor Reeves says under new reforms, banks will send investment opportunities to savers with cash sitting in low interest accounts for the first time. Govt will allow long term asst funds to be held in stocks and shares ISAs next year

FX

• DXY is giving back some of Monday’s gains in quiet trade as markets await crucial CPI data for June. Core M/M CPI is expected to pick up to 0.3% from 0.1% with the Y/Y rate seen rising to 3.0% from 2.8%. The release will be parsed for any evidence that Trump’s tariff policy is adding to price pressures in the US. DXY briefly made its way onto a 98 handle, matchings Monday’s best at 98.12.
• EUR is firmer vs. the broadly weaker USD as markets await any material breakthrough in US-EU trade negotiations. On which, WSJ reports that the EU has drawn up retaliatory tariffs for US goods in the event a trade deal is not reached with aircraft and booze among the imports targeted. Elsewhere, it was reported that the ECB is to discuss a more negative scenario next week than previously envisaged in June after Trump’s latest tariff threat, but is still seen as holding rates at the meeting. German ZEW data showed a better-than-expected improvement for the expectations and current conditions components but failed to have any sway on EUR. Elsewhere, French political risk could be a focus later today with French PM Bayrou to outline a plan to narrow France’s deficit; will likely lead to calls for a vote of no confidence.
• JPY flat vs. the USD, halting a recent run of declines. Yen traders are still trying to assess the likelihood of an imminent US-Japan trade deal. Yen traders will also be mindful of the movements in the back-end of the Japanese curve, which, in part, has been supported by expectations of looser fiscal policy by Japan as a result of this weekend’s election. USD/JPY ventured as high as 147.88 overnight before fading upside.
• GBP is a touch firmer vs. the USD and flat vs. the EUR. Newsflow surrounding the UK have been quiet at the start of the week given the UK has already secured a trade agreement with the US. However, newsflow is set to pick up with Mansion House text releases from BoE Governor Bailey and Chancellor Reeves due at 21:00BST today.
• Antipodeans are both towards the top of the G10 leaderboard on account of the bounce back in risk sentiment seen today. Both also digested mixed tier-1 data releases from China in which GDP figures for Q2 and Industrial Production in June topped forecasts, but Retail Sales and Fixed Assets Investments disappointed, while House Prices were varied and continued to contract.
• CAD is a touch softer vs. the USD in the run up to Canadian inflation metrics (coincides with the US release). As it stands, the BoC is currently on pause and avoiding forward guidance with the central bank taking a meeting-by-meeting due to economic uncertainty.
• PBoC set USD/CNY mid-point at 7.1498 vs exp. 7.1758 (Prev. 7.1491)

Fixed Income

• USTs are flat and in narrow ranges ahead of US CPI. CPI is expected to pick up to 0.3% M/M in June (prev. 0.1%) for both the headline and core. While the Y/Y is seen at 2.7% (prev. 2.4%) and 3.0% (prev. 2.8%) for the headline and core respectively. A series that will be, primarily, scrutinised for any signs of tariff-induced price pressures.
• Bunds are leading peers, firmer by just under 50 ticks at best having peaked at 129.65 thus far. Upside that takes the benchmark to within reach of Friday’s 129.74 peak but leaves it shy of 130.00 and then multiple past peaks above, which continue all the way back to 131.95 from mid-June when the recent downward trend began. Outperformance potentially as the complex takes a breather from recent pressure and as traders digest reports the ECB will discuss a more negative tariff scenario at next week’s meeting. No move in Bunds following the German ZEW figures, which were firmer-than-expected.
• OATs also firmer but to a lesser degree than Bunds. PM Bayrou from 15:00BST will begin presenting details of the 2026 budget. The goal will be cost savings of EUR 40bln by 2026, in order to bring the deficit-to-GDP ratio down to 4.6% vs the 5.4% projected for 2025, in-line with their fiscal commitments to the EU.
• Gilts are firmer, between USTs and Bunds in terms of magnitude. The immediate docket is light for the UK as we count down to the Mansion House speeches by BoE’s Bailey and Chancellor Reeves; the latter expected to announce a package amounting to the ‘biggest financial regulation reforms in a decade’. Into this, Gilts are at the upper-end of a 91.86 to 92.06 band. Notching a WTD peak and now eyeing 92.19 from last Thursday before that week’s 92.63 best.
• UK DMO sells GBP 1.0bln in 4.25% 2032 Gilts via tender: b/c 4.42x & avg. yield 4.161%.
• Germany sells EUR 3.899bln vs exp. EUR 5bln 1.90% 2027 Schatz: b/c 2.3x, average yield 1.87% and retention 22.02%.

Commodities

• WTI and Brent are currently lower in what has been a choppy session thus far; price action overnight was rangebound which continued into European hours where newsflow remained light up until a Trump-Russia related FT article. The report suggested that US President Trump asked Ukraine’s Zelenskiy if Ukraine could hit Moscow if the US provided them with long-range weapons; the Ukrainian President replied with „absolutely…”. This report sparked some modest upside, which then continued for around 30 minutes thereafter, taking Brent Sept’25 to a fresh session peak of USD 69.36/bbl.
• Precious metals are mixed, with slight gains seen in spot Silver/Gold whilst Palladium is a little lower. The yellow-metal currently trades towards the upper end of a USD 3,341.55-3,365.72/oz range, but with price action fairly muted ahead of US CPI. 3M LME Copper trades towards the mid-point of a narrow USD 9,602.33-9,656.5/t range.
• Base metals hold a negative bias, with incremental losses seen in 3M LME Copper prices as trades digest the latest Chinese GDP and activity metrics.
• Kazakhstan’s PM Bektenov says they try to comply with OPEC+ commitments as much as possible. Not considering options to withdraw from the deal.
• China has lowered gasoline and diesel prices by CNY 130/ton and CNY 124/ton, respectively as of July 16th.

Geopolitics

• US President Trump reportedly asked Ukrainian President Zelensky if Ukraine could hit Moscow in the scenario that the US provided long-ranged weapons, via FT citing sources; call that this conversation occurred within took place on July 4th. To the question from Trump, Zelensky reportedly replied, „Absolutely. We can if you give us the weapons.” Trump reportedly signalled support for the idea, as a strategy to force Russia to the negotiating table. US president said to have encouraged Ukrainian leader to „step up deep strikes on Russia”.
• Russian Kremlin says US President Trump’s statement is serious and needs to be analysed Putin will comment on it if he deems it necessary. Decisions taken in Washington and Brussels are seen by Ukraine as a signal to continue the war. Russia is ready for a next round of talks with Ukraine. However, there have been no proposals for the Ukraine side so far.
• EU Foreign Representative Kallas says it is a good sign that the US appears to realise Russia does not want peace with Ukraine, hope the US will move forward with more sanctions against Russia.
• „Hamas member and leader Faraj al-Ghoul was killed in an Israeli raid”, according to Al Arabiya.

US Event Calendar

• 8:30 am: Jul Empire Manufacturing, est. -9.2, prior -16
• 8:30 am: Jun CPI MoM, est. 0.3%, prior 0.1%
• 8:30 am: Jun CPI Ex Food and Energy MoM, est. 0.26%, prior 0.1%
• 8:30 am: Jun CPI YoY, est. 2.6%, prior 2.4%
• 8:30 am: Jun CPI Ex Food and Energy YoY, est. 2.93%, prior 2.8%
• 8:30 am: Jun CPI Index NSA, est. 322.51, prior 321.46
• 8:30 am: Jun CPI Core Index SA, est. 327.82, prior 326.85

Central Banks Speakers

• 9:15 am: Fed’s Bowman Gives Welcoming Remarks
• 12:45 pm: Fed’s Barr Speaks on Financial Inclusion
• 1:00 pm: Fed’s Barkin Gives Speech in Baltimore
• 2:45 pm: Fed’s Collins Delivers Closing Keynote at NABelgium Event
• 7:45 pm: Fed’s Logan Speaks on the Economy

DB’s Jim Reid concludes the overnight wrap

Welcome to US CPI day and to the start of US earnings season with several banks reporting later on. I’ve just about recovered from a day out yesterday at a Theme Park where I managed to get away with just one baby rollercoaster. Maisie and the twins went on about 20! They are all now tall enough to not need me anymore for ALL the rides. My job here is done! I never have to go on a rollercoaster again. My biggest stress was trying to keep up with a very tense game of cricket between England and India without my wife knowing I wasn’t paying attention to what the family were saying. The CPI print will get my full attention today though as a lot will rest on inflation in the coming months including whether the Fed can cut rates, how the Trump administration’s tariff policy will be received, and most importantly how it impacts long-end bonds with fiscal balance sheets stretched in many countries. See our US economists’ preview here. They expect monthly headline CPI to come in at a 5-month high of +0.34%, with core also at a 5-month high of +0.32%. We seem to be the highest on the street with consensus at +0.27% and +0.25% respectively.

If DB is correct, that would push up the year-on-year numbers, with headline CPI up three-tenths to +2.7%, and core CPI up two-tenths to +3.0%. Consensus is a tenth lower on both. We’ll mostly be focusing on signs of tariff-related inflation in the core good categories. President Trump continued to beat the low inflation drum yesterday though, saying „we have no inflation”, and that „we should be less than 1%” when referring to interest rates.

Ahead of today’s big print, markets have been a bit mixed to start the week as the weekend tariff headlines reverberate, and global long-end bonds continued to edge higher. However US futures are edging up this morning (Nasdaq futures +0.3%) after Nvidia have seemingly been given the green light to resume exporting their H20 chips to China that were suspended in April.

We saw significant headlines on Russia yesterday, as Trump threatened to impose 100% “secondary tariffs” if a ceasefire deal with Ukraine isn’t reached in 50 days. Trump’s announcement was vague on details, with Commerce Secretary Lutnick referring to both “tariffs” and “secondary sanctions”. Reporting later on appeared to confirm that this would include tariffs against buyers of Russian minerals, similar to a proposed sanctions bill in the Senate that is now set to be paused. This could impact the likes of China and India, which account for most of Russia’s oil exports, though there are doubts over how practical such secondary tariffs would be to implement. For now, with any swift definitive sanctions against Russian oil being avoided, oil prices actually saw a decent slump yesterday. Brent crude fell -1.63% to $69.21/bbl, which helped to ease some of the inflationary fears after the weekend tariff announcements. Trump’s comments came during his meeting with NATO Secretary General Rutte, at which he also announced that the US will send additional Patriot air-defense systems to Ukraine that will be paid for by Europe.

Trump also made some brief remarks on trade, saying that he is “always open to talk”, including with the EU, even as he insisted the recent US letters to trading partners “are the deals” and „there are no deals to make”. That left plenty of ambiguity as markets continued to digest the 30% tariff threats made to the EU and Mexico over the weekend. According to AFP, the European Commission said it would propose a new list of US goods worth €72bn that could be subject to EU tariffs should talks between Washington and Brussels fail. Our European economists yesterday published a blog on the potential impact of 30% tariffs (see here).

For the most part, markets yesterday brushed off the prospects of fresh trade escalation, with the STOXX 600 (-0.06%) recovering to little changed after opening -0.6% down. The more trade-sensitive German DAX did decline by -0.39%, alongside a -0.27% fall for the CAC 40, but the FSTMIB (+0.27%) advanced and here in the UK the FTSE 100 (+0.64%) hit a fresh all-time high. Mexican equities struggled a bit more though, with the S&P/BMW IPC index falling -0.41%. This came as President Sheinbaum confirmed that Mexico has a tariff plan should an agreement by August 1 fail.

The equity performance was more positive in the US, with the S&P 500 (+0.14%) closing within 0.2% of last week’s record high. The resilience came as Bitcoin (+2.10%) continued to climb past $120,000 and to a new record, helping fintech and payments companies like PayPal (+3.55%), Coinbase (+1.80%) and Visa (+0.74%). Bitcoin is now up nearly +75% since the US election last November. The Magnificent 7 (+0.10%) saw a modest gain yesterday, with Meta up +0.48% after CEO Zuckerberg said it will invest “hundreds of billions” in a push for AI superintelligence.

Ahead of today’s CPI release, fed futures slightly dialled back their expectations for rate cuts this year, with the amount priced by December down -1.8bps on the day to 48bps, its lowest in nearly four weeks. That helped to push Treasury yields higher, with the 2yr yield (+1.4bps) rising to 3.90%, whilst the 10yr yield (+2.4bps) rose to 4.43% and 30yr closed +2.8bps to 4.98%, the highest close since May 23. Overnight, Treasury yields are flat as we go to print but 30yr JGB yields are up another +1.9bps ahead of the Upper House elections this weekend and have traded at their highest level since 1999. 10yr JGBs are around a basis point higher and earlier touched the highest level since 2008. So lots bubbling under the surface in Japan.

Meanwhile in Europe, yields also moved higher yesterday amidst growing concern about the fiscal trajectory, with those on 10yr bunds (+0.6bps), OATs (+2.0bps) and BTPs (+2.2bps) all rising. There was also a fresh rise in 30yr yields to multi-year highs, with the 30yr yields in Germany (+2.1bps to 3.24%) and France (+4.5bps to 4.24%) reaching their highest levels since 2011. For France, that followed President Macron’s announcement that the 2026 defence budget would be increased by €3.5bn in 2026, followed by another €3bn in 2027. By contrast, UK gilts outperformed, with the 10yr yield down -2.2bps on the day.

In Asia markets are mixed. Chinese stocks are underperforming, with the Hang Seng (+0.08%) struggling to maintain its initial gains despite Nvidia’s H20 announcement, while the CSI (-0.45%) and the Shanghai Composite (-0.98%) are both declining. The Nikkei (+0.12%) is seeing slight gains, and the S&P/ASX 200 (+0.54%) is also trading positively. However, South Korea’s KOSPI (-0.11%) is dipping after a good run.

Returning to China, GDP increased by +5.2% in the second quarter, outperforming Bloomberg’s estimates of +5.1%, although this marks a deceleration from the +5.4% growth recorded in the first quarter. Most of the growth bias is export led over domestic, which was backed up by retail sales growth decelerating to 4.8% YoY in June (v/s +5.3% expected), down from a 6.4% YoY increase in May. Industrial output rose by +6.8% YoY though, exceeding market expectations of 5.6%. Fixed asset investment increased by +2.8% in the first half of this year, falling short of market predictions of a +3.6% rise. Simultaneously, the decline in real estate investment intensified, dropping -11.2% in the first half of the year, compared to a -10.9% decrease in the first five months, while investments in infrastructure and manufacturing also showed signs of slowing.

Finally, as I mentioned at the top, “Crypto Week” is happening in Washington D.C., where the House of Representatives are set to vote on the CLARITY Act, the GENIUS Act and the Anti-CBDC Surveillance Act. The GENIUS Act’s vote in particular could have serious implications for the rapidly growing stablecoin industry – and for US debt markets – and a vote can be expected as early as end of today.

To the day ahead now, as I mentioned look out for the US CPI release. We’ll also get the US July Empire Manufacturing Index, Germany’s July ZEW Survey, Eurozone May Industrial Production, and Canada’s June CPI. Central bank speakers include the Fed’s Bowman, Barr, Collins and Barkin, and BoE Governor Bailey. Earnings include JPMorgan Chase, Wells Fargo, BlackRock, Citigroup and BNY Mellon