Trump-Putin relationship sours with 100% tariff jab

EU Mid-Market Update: Trump-Putin relationship sours with 100% tariff jab as markets eye up US CPI and bank earnings bonanza; Nvidia plans to resume selling H20 GPU in China.

Notes/observations

- Trade tension theme lingers with Trump threatening 100% secondary tariffs on Russia if no Ukraine peace deal is reached within 50 days, after he threatened EU and Mexico with 30% tariffs earlier in week. However, tech sector helped lift market sentiment overnight as Nvidia announced they were resuming H20 exports to China.

- According to FT report, during a July 4th call, Pres Trump privately encouraged Ukraine Pres Zelenskiy to strike deep into Russian territory—even Moscow—if provided with longer-range weapons like ATACMS, framing it as a way to “make Russia feel the pain” and pressure Russia into negotiations. Although a list of potential long-range systems was shared in Rome and could be routed through NATO partners to bypass current aid restrictions, it remains uncertain whether Washington will actually deliver such capabilities.

- Upcoming Japan’s Upper House elections still in focus as all three of the leading opposition parties espouse some form of consumption tax cuts, which may increase concerns about Japan’s fiscal health; In 1989, 1998 and 2007, losses in the Upper House swiftly produced PM resignations and leadership contests.

- Major catalysts on immediate horizon as US CPI to drop for June at 08:30 ET, and bank earnings before market open for JPM, WFC, C, BLK, BK and STT.

- Asia closed mixed with Hang Seng outperforming +1.6%. EU indices -0.4% to +0.2%. US futures -0.1% to +0.5%. Gold +0.6%, DXY -0.2%; Commodity: Brent -0.2%, WTI -0.3%; Crypto: BTC -4.0%, ETH -2.0%.

Asia

- China Q2 GDP Q/Q: 1.1% v 0.9%e; Y/Y: 5.2% v 5.1%e.

- China Jun Retail Sales Y/Y: 4.8% v 5.2%e; Retail Sales YTD Y/Y: 5.0% 5.0%e.

- China Jun Industrial Production Y/Y: 6.8% v 5.6%e; Industrial Production YTD Y/Y: 6.4% v 6.2%e.

- China Jun YTD Fixed Urban Assets Y/Y: 2.8% v 3.6%e.

- China Jun Surveyed Jobless Rate: 5.0% v 5.0%e.

- China Jun YTD Property Investment Y/Y: -11.2% v -10.9%e.

- China Jun New Home Prices M/M: -0.27\t v -0.22% prior.

- Australia July Westpac Consumer Confidence: 93.1 v 92.6 prior.

- Japan Econ Min Akazawa noted to need to strike right balance between steps to boost growth and achieve fiscal discipline.

- Japan Fin Min Kato stated that he would attend this week's G20 Finance Leaders meeting in South Africa.

- China NBS [Stats Agency] Official reiterated economic foundation needed to be consolidated. Overall economic performance in H1 was stable with steady progress.

Europe

- UK BRC LFL Sales Y/Y: 2.7% v 1.0%e.

- ECB said to discuss more negative scenario next week than one seen in June following US Pres Trump's latest tariff threat; ECB still seen holding rates at July 24th meeting so as not to act on threat alone; Rate cut discussion remains set back to Sept 2025.

- EU Commission to launch its plan for the next seven-year budget. Proposal for more than €1.0T of the bloc’s joint spending that must be agreed unanimously by all 27 member states. Plan will shift common budget to aid newer member states and those bordering Russia.

Americas

- Fed Chair Powell sent letter to Senate Banking Chair Scott and Sen Warren regarding building renovations at the Fed. Asked the IG to take a fresh look at the project.

- White House NEC Dir Hassett said to be gaining ground in competition to be next Fed Chair; Selection process remains fluid.

Trade

- Japan PM Ishiba and Trade Negotiator Akazawa to meet with Treasury Sec Bessent in Tokyo, July 18th.

- EU finalized a second list of potential retaliatory tariffs on US goods worth €72B, including aircraft, cars, bourbon, and a wide range of industrial and agricultural products.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.30% at 548.60, FTSE +0.01% at 8,999.29, DAX +0.32% at 24,242.84, CAC-40 +0.20% at 7,823.67, IBEX-35 -0.18% at 14,015.70, FTSE MIB +0.18% at 40,259.00, SMI +0.35% at 11,961.64, S&P 500 Futures +0.31%].

Market focal points/key themes: European indices open higher across the board and remained upbeat through the early part of the session; among sectors trending to the upside are technology and industrials; lagging sectors include telecom and consumer discretionary; tech sectors supported following Nvidia’s earnings yesterday; Pandox to acquire Dalata Hotel; unofficial start of Q2 earnings season; focus on US inflation report later in the day; earnings expected in the upcoming Americas session include JPMorgan, Wells Fargo, BlackRock and Citigroup.

Equities

- Consumer discretionary: Barratt Redrow [BDEV.UK] -8.5% (trading update; weak FY26 outlook), Robert Walters [RWA.UK] -2.5% (trading update).

- Energy: Aker BP [AKERBP.NO] -4.0% (Q2 results).

- Healthcare: Solvay [SOLB.BE] -2.5% (cut EBITDA outlook) - Industrials: Experian [EXPN.UK] +1.0% (trading update).

- Technology: ASML [ASML.NL] +2.0% (Meta data center announcement; Nvidia announced filing applications to sell the NVIDIA H20 GPU again; To resume H20 sales to China), Trustpilot [TRST.UK] +12.0% (trading update).

- Telecom: Ericsson [ERICB.SE] -3.5% (Q2 results; Q3 outlook).

Speakers

- India Central Bank (RBI) Gov Malhotra stated that could not say inflation was more important than growth.

Currencies/ Fixed Income:

- FX price action was again listless ahead of US Jun CPI data due out later today. Markets await clues for Fed rate path trajectory.

- EUR/USD holding below the 1.17 level. German ZEW survey continued its string of improvement.

- GBP/USD drifting off recent 3-week lows. Wed session will see the UK Jun CPI data. Recent weak data has prompted speculation of more BOE rate cuts to come. Pair at 1.3450 by mid-session.

- USD/JPY edging towards 148 area. Markets said to be bracing for a potential power shift in Japanese upper house elections this weekend and the outcome might lead to larger fiscal stimulus and bond market pressure. Yen unable to capitalize on higher yields.

- 10-year German Bund yield at 2.69% and 10-year Gilt yield at 4.58%. 10-year Treasury yield: 4.42%.

Economic data

- (DK) Denmark Jun PPI M/M: -0.2% v -1.4% prior; Y/Y: 8.4% v 9.2% prior.

- (ES) Spain Jun Final CPI M/M: 0.7% v 0.6% prelim; Y/Y: 2.3% v 2.2% prelim.

- (ES) Spain Jun Final CPI EU Harmonized M/M: 0.7% v 0.6% prelim; Y/Y: 2.3% v 2.2% prelim.

- (ES) Spain Jun Final CPI Core M/M: 0.5% v 0.1% prior; Y/Y (final): 2.2% v 2.2% prelim.

- (ES) Spain May Home Sales Y/Y: 39.7% v 2.3% prior.

- (PL) Poland Jun Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 4.1% v 4.1% prelim.

- (IT) Italy May General Government Debt: €3.054T v €3.063T prior.

- (DE) Germany July ZEW Current Situation Survey: -59.5 v -66.0e; Expectations Survey: 52.7 v 50.4e- (EU) Euro Zone July ZEW Expectations Survey:

36.1 v 35.3 prior.

- (EU) Euro Zone May Industrial Production M/M: 1.7% v 0.7%e; Y/Y: 3.7% v 2.1%e.

- (IS) Iceland Jun International Reserves (ISK): 893B v 960B prior.

Fixed income issuance

- (UK) DMO sold £1.0B in 4.25% Jun 2032 Gilts via tender; Avg Yield: 4.161% v 0.321% prior; bid-to-cover: 4.42x v 2.99x prior Tail: 0.3bps v 0.2bps prior.

Looking ahead

- OPEC Monthly Oil Report.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa May Total Mining Production M/M: No est v 0.6% prior; Y/Y: No est v -7.7% prior; Gold Production Y/Y: No est v -2.5% prior; Platinum Production Y/Y: No est v -24.1% prior.

- 5:30 (DE) Germany to sell €5.0B in new 1.90% Sept 2027 Schatz.

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2035, 2037 and 2040 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:30 (EU) ESM to sell €1.1B in 6-month bills.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) July Empire Manufacturing: -9.2e v -16.0 prior.

- 08:30 (US) Jun CPI M/M: 0.3%e v 0.1% prior; Y/Y: 2.6%e v 2.4% prior.

- 08:30 (US) Jun CPI (ex-food/energy) M/M: 0.3%e v 0.1% prior; Y/Y: 2.9%e v 2.8% prior.

- 08:30 (US) Jun CPI Index NSA: 322.513e v 321.465 prior; CPI Core Index : 327.819e v 326.854 prior.

- 08:30 (US) Jun Real Avg Hourly Earning Y/Y: No est v 1.4% prior; Avg Weekly Earnings Y/Y: % v 1.4% prior (revised from 1.5%e).

- 08:30 (CA) Canada Jun CPI M/M: 0.1%e v 0.6% prior; Y/Y: 1.9%e v 1.7% prior; CPI Core-Median Y/Y: 3.0%e v 3.0% prior; CPI Core-Trim Y/Y: 3.0%e v 3.0% prior; Consumer Price Index: 164.4e v 164.3 prior.

- 08:30 (CA) Canada May Manufacturing Sales M/M: -1.3%e v -2.8% prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (CA) Canada Jun Existing Home Sales M/M: 4.0%e v 3.6% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.6-6.8B in 3-month, 6-month and 12-month bills.

- 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 09:15 (US) Fed’s Bowman.

- 10:30 (CA) Canada to sell 1-month, 3-month, 6-month and 12-month.

- 11:00 (PE) Peru May Unemployment Rate: 5.6%e v 5.6% prior.

- 11:00 (PE) Peru May Economic Activity Index (Monthly GDP) Y/Y: 2.0%e v 1.4% prior.

- 11:00 (CO) Colombia May Retail Sales Y/Y: 12.0%e v 11.4% prior.

- 11:00 (CO) Colombia May Manufacturing Production Y/Y: +2.0%e v -3.3% prior; Industrial Production Y/Y: No est v -4.8% prior.

- 11:30 (IL) Israel Jun CPI M/M: +0.2%e v -0.3% prior; Y/Y: 3.1%e v 3.1% prior.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 12:45 (US) Fed’s Barr.

- 14:45 (US) Fed's Collins gives Keynote Remarks.

- 16:00 (UK) BOE Gov Bailey Mansion House Speech.

- 16:30 (US) Weekly API Crude Oil Inventories.

- 17:00 (KR) South Korea Jun Export Price Index M/M: No est v -3.4% prior; Y/Y: No est v -2.4% prior.

- 17:00 (KR) South Korea Jun Import Price Index M/M: No est v -3.7% prior; Y/Y: No est v -5.0% prior.

- 19:00 (KR) South Korea Jun Unemployment Rate: 2.7%e v 2.7% prior.

- 19:00 (US) Fed's Barkin.

- 19:45 (US) Fed’s Logan.

- 21:10 (KR) Bank of Korea to sell KRW1.2T in 3-year Bonds.

- 23:00 (NZ) New Zealand Jun Non Resident Bond Holdings: No est v 61.9% prior.

- 23:00 (TH) Thailand to sell combined THB22.0B in 2040 and 2072 bonds.