60-day Hormuz deal being outlined

EU mid-market update: Double crash for SpaceX, stock drops >10% as results disappoint and Falcon 9 rocket hits moon; 60-day Hormuz deal being outlined.

Notes/observations

- Hormuz de-escalation drives the macro tape. Reports of an US-Iran-Oman interim agreement to reopen the Strait of Hormuz, with Axios reporting a 60-day arrangement (extendable) routing inbound traffic through Iranian waters and outbound through Omani waters, no tolls during the initial period, and mine-clearing of the median lane within 30 day, all aimed at restoring the ceasefire and restarting nuclear talks. Bessent flagged a possible deal "tomorrow" and Trump said the Strait will open "very soon," though Iranian state media pushed back, saying agreement will be delayed as long as US threats continue, and Houthi forces attacked a Saudi tanker in the Red Sea, a reminder that regional risk is not fully priced out. Iranian State TV said Iran-Oman Hormuz talks are unrelated to immediate reopening.

- SpaceX's Q2 was a blowout on the AI side but disappointment everywhere else (AI revenue $2.56B vs $737M y/y, compute at 1.4GW heading above 2GW by year-end, $6.7B of new cloud contracts signed in early Q3), with Musk pulling the $1T revenue target forward to 2030, guiding $100B+ ARR by December, and flagging sustained compute scarcity and pricing power as AI demand grows ~200% annually against ~20% memory supply growth. SpaceX shares are down 11% premarket after the Q2 call, a reaction that likely stems from the reaffirmed commitment to near-$18B quarterly CapEx - largely for AI infrastructure that already delivers sub-one-year paybacks - rather than any near-term de-risking of free cash flow or margin expansion. AMD beat and guided higher with data centre now 58% of revenue and Helios demand ahead of forecasts; Samsung unveiled its zHBM/BV-NAND next-gen memory concepts. Read-through was global: Asian semis and memory rallied hard (the Kospi triggered a +5% sidecar halt) following a 7% SOX surge, and in Europe Infineon beat and raised FY guidance on data-centre chip demand and pricing.

- The most consequential developments mentioned during SpaceX earnings call that sat outside the AI-compute narrative were these: Starlink’s next-generation direct-to-cell constellation, armed with 65 MHz of EchoStar spectrum versus the current 5 MHz and roughly ten times more satellites, is expected to deliver approximately 100-fold performance gains once service begins near year-end 2027, while the supporting terrestrial network is designed around distributed, CapEx-light Starlink-linked micro-cells. Also, Enterprise and government Starlink revenue is projected to overtake consumer revenue over time; SpaceX has never lost an enterprise customer, remains less than 10 percent penetrated in aviation, and still sees substantial open runway in maritime. Starship’s heat-shield problem is now regarded as effectively solved, removing the last technical barrier to full rapid reusability; the next flight (late August, pending regulatory clearance) will attempt a ship catch, with daily launch cadence targeted for around August 2027, human-rated reliability by year-end 2027, and a crewed lunar landing in 2028.

- European earnings breadth is improving. The heavy calendar skewed positive: Siemens Energy delivered a strong Q3 and affirmed guidance, DHL and Wolters Kluwer affirmed outlooks, Heineken's organic volumes beat (Asia-Pacific notably strong, Europe still soft), Next raised FY profit guidance by £25M on +9.2% full-price sales, and Glencore launched a $500M buyback alongside broader shareholder returns and an ASX secondary listing plan. Sandoz affirmed guidance; the main disappointment was Novo Nordisk, lower despite a beat-and-raise on soft Wegovy dynamics. One negative to flag for commodity/logistics exposure: Ferrexpo suspended Ukraine iron ore production on Black Sea disruption, with cash sufficient only to mid-September.

- For Policy, FX and data: Bessent's unusually direct comments on the yen (blaming weakness for Japan's inflation, backing Ueda, and pledging "whatever it takes" support after last week's joint intervention worth roughly $88B over Thursday-Friday) keep JPY policy front and centre; Japan's Katayama stressed fiscal discipline and no reliance on new debt issuance, while BOJ minutes showed members more mindful of upside price risks and June labour cash earnings ran hot on a same-sample basis. Elsewhere the RBI held at 5.25% as expected with Malhotra citing lingering US tariff uncertainty, Fed's Schmid stayed hawkish on inflation, and Colombia's central bank raised its 2026 inflation forecast to 6.9%. July final services PMIs confirmed the eurozone's first expansion in four months (51.7), with Spain a standout at 58.3 and the UK back in growth at 52.1, though France and Germany remain in service-sector contraction; China's RatingDog services PMI slumped to 50.4, the lowest since September 2024, which analysts view as temporary and likely to prompt more fiscal support.

- Lastly, UK fiscal policy is loosening at the margin, with ministers reportedly using investment-friendly fiscal rules to add £9B for housing/infrastructure, worth watching for gilt supply implications alongside today's German green triple-tranche auction being the eurozone's sole issuance. Trade frictions are quietly building: China announced tighter drone export controls on the US and suspended certain US certification inspections, while US-Canada steel/aluminium talks revived a quota-for-lower-tariffs framework. Geopolitically, North Korea warned of military options over Japan's defence expansion and Brazil is reportedly downgrading diplomatic ties with Argentina.

- Note: Samsung has unveiled the industry’s first zHBM architecture - vertically stacking memory directly atop AI accelerators instead of placing it alongside them - while simultaneously introducing BV-NAND that lifts density 58% and accelerates I/O performance. The design claims more than ten times the density of conventional HBM5, triple the energy efficiency, and a greater-than-50 percent reduction in thermal resistance through wafer bonding, all aimed at the exploding bandwidth and power constraints of next-generation AI systems. If realized at scale, the breakthrough would most powerfully advantage hyperscale cloud providers and AI-chip designers currently constrained by HBM bandwidth walls and thermal ceilings, while reinforcing Samsung’s position against competitors in both high-bandwidth memory and high-capacity enterprise NAND.

- Asia closed higher with KOSPI +3.8%. EU indices +0.1-0.5%. US futures -0.1% to +0.2%. Gold +2.1%, DXY -0.1%; Commodity: Brent +0.8%, WTI +0.2%; Crypto: BTC +0.9%, ETH +0.7%.

Asia

- China July RatingDog Services PMI: 50.4 v 53.7e (41st month of expansion but lowest since Sept 2024).

- Australia July Final Services PMI: 53.6 v 53.0 prelim (confirmed 2nd month of expansion).

- Japan July Final Services PMI: 51.2 v 51.9 prelim (confirmed 21st month of expansion).

- Japan Jun Labor Cash Earnings Y/Y: 3.4% v 3.4%e; Real Cash Earnings Y/Y: 1.6% v 1.6%e.

- BOJ Jun Minutes (2 decisions ago) noted that many members said BOJ must be more mindful than before of upside price risks.

- New Zealand Q2 Unemployment Rate: 5.6% v 5.4%e.

- India Central Bank (RBI) left the Repurchase Rate unchanged at 5.25% (as expected).

Global conflict/tensions

- US, Iran and Oman said to be closing in on an interim agreement to reopen the Strait of Hormuz, with the US aiming for a Wednesday announcement. Structure said to be a 60 day temporary arrangement between Oman and Iran, extendable, splitting traffic by direction: inbound shipping into the Gulf through a northern lane in Iranian waters, outbound into the Arabian Sea through a southern lane in Omani waters in coordination with Iran with no tolls or fees during the period. Mines would be cleared from the median lane within 30 days (**Note: emerging deal would meet some of Iran's demands for greater control over traffic in the Strait of Hormuz).

- Pres Trump stated that the Strait was going to open very soon; if Iran backed out again, they’ll get hit very hard.

Europe

- UK ministers said to have decided to take advantage of fiscal rules that allow investments in infrastructure as ‘assets’ and are moving to provide an extra £9B to housing, Infrastructure and support for businesses.

Americas

- Fed's Schmid (hawk; non-voter in 2026) noted that tighter policy needed to return inflation to 2% target; Primary concern was inflation.

- Pentagon said to be drafting a new US nuclear strategy that emphasizes the possible use of shorter-range tactical weapons in case of a regional war with China or Russia.

- Brazilian government said to be expecting new sanctions from the US govt. Trump administration revoked visa of Brazil’s ambassador (**Note: retaliation with Brazil on the denial of visas for 2 American diplomats plus a delay in accepting US’s ambassador for Brazil).

Energy

- Press report that Iranians appeared to have made the control of the Strait of Hormuz a non-negotiable red line. Iranian State Media noted that Strait of Hormuz agreement with Oman would be delayed as long as US continued to threaten Iran.

- Weekly API Crude Oil Inventories: +2.7M v +3.3M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE +0.12% at 10,892.53, DAX +0.05% at 26,235.48, CAC-40 +0.06% at 8,671.65, IBEX-35 +0.44% at 20,112.66, FTSE MIB +0.25% at 53,672.00, SMI +0.14% at 14,483.80, S&P 500 Futures +0.26%].

Market focal points/key themes: European equities held near record highs, with the STOXX 600 up 0.4%, Germany’s DAX gaining 0.5%, the FTSE 100 rising 0.4%, and the CAC 40 edging 0.1% higher, as robust corporate earnings from healthcare, industrials, and logistics names, combined with a 1.4% drop in Brent crude that eased pressure on bond yields, allowed investors to largely ignore mixed macroeconomic signals and unresolved geopolitical risks. Strong balance sheets and guidance upgrades—particularly in high-margin pharmaceuticals and power infrastructure—continued to anchor sentiment, while cautious support came from incremental Middle East diplomacy reports of progress toward resolving U.S.-Iran tensions without any concrete breakthroughs. Standout performers included Siemens Energy, which surged on better-than-expected third-quarter profits driven by AI data-center demand for grid equipment, Heineken rising on improved first-half operating profit from cost cuts including roughly 3,000 job reductions, and other gainers such as Fresenius (raised full-year guidance), Glencore, Next, and Wacker Chemie, while Novo Nordisk fell despite raising its full-year outlook on strong GLP-1 demand, DHL slipped after beating estimates, and Infineon declined following its results amid broader semiconductor supply-chain scrutiny. Attention now shifts to the upcoming U.S. ADP private payrolls data as the next key signal on American labor-market health ahead of the nonfarm payrolls release.

Equities

- Consumer discretionary: Next plc [NXT.UK] +6.5% (trading update), Deutsche Post [DHL.DE] -2.9% (H1 results).

- Consumer staples: Heineken [HEIA.NL] +2.5% (earnings).

- Energy: Siemens Energy [ENR.DE] +2.0% (earnings).

- Healthcare: Novo Nordisk [NOVOB.DK] -4.5% (earnings; does not plan more cost cuts).

- Technology: Infineon Technologies [IFX.DE] -5.5% (earnings; AMD results).

- Materials: Wacker Chemie [WCH.DE] +6.0% (Trump admin weighs polysilicon tariffs/price floor), Glencore [GLEN.UK] +4.0% (earnings).

Speakers

- Italy Econ Min Giorgetti stated that the got was seeking EU deficit leeway on energy and defense.

- China MOFCOM: To strengthen drone exports controls to US.

- Japan Fin Min Katayama reiterated govt stance that would not rely on new debt issuance to fill tax revenue shortages. Stated that US Treasury Sec Bessent had trust in its policy stance and saw improvement in Japan's fiscal discipline.

- Yemeni Houthis stated that they attacked a Saudi oil tanker in the Red Sea with missiles.

Currencies

- USD was steady after a recent bout of softness with focus on the potential Iran/Oman/US deal to reopen the Strait of Hormuz.

- EUR/USD steady at 1.1540 area as various EU Services PMI readings improved in final readings.

- USD/JPY continued to hold onto its post intervention levels as Japan Fin Min Katayama reiterated the govt pledge to have a discipline in its fiscal finances. US Treasury Sec Bessent did offer extra verbal support in the aftermath of last week’s FX intervention to support the yen currency.

- The 10-year German Bund yield last at 3.09%, France 10-year Oat at 3.87% and 10-year Gilt yield at 4.88%; 10-year Treasury yield: 4.61%; 10-year JGB: 2.79%.

Economic data

- (RU) Russia July Services PMI: 49.0 v 48.2 prior (5th month of contraction).

- (SE) Sweden July Services PMI: 54.2 v 56.5 prior (5th month of expansion).

- (FR) France Jun Industrial Production M/M: 0.1% v 0.3%e; Y/Y: -0.1% v +0.6%e.

- (FR) France Jun Manufacturing Production M/M: -1.1% v -1.0% prior; Y/Y: -1.7% v 2.4% prior.

- (CZ) Czech July Preliminary CPI M/M: 0.7% v 0.6%e; Y/Y: 1.7% v 1.7%e.

- (CZ) Czech Jun Retail Sales (ex-auto) Y/Y: 3.6% v 4.0%e.

- (ES) Spain July Services PMI: 58.3 v 54.8e (3rd month of expansion); Composite PMI: 56.5 v 53.5e.

- (ZA) South Africa July PMI (whole economy): 50.3 v 50.5 prior.

- (IT) Italy July Services PMI: 52.5 v 51.0e (2nd month of expansion); Composite PMI: 52.5 v 51.5e.

- (FR) France July Final Services PMI: 49.6 v 49.8 prelim (confirmed 6th month of contraction); Composite PMI: 49.4 v 49.6 prelim.

- (DE) Germany July Final Services PMI: 49.8 v 49.6 prelim (confirmed 4th month of contraction); Composite PMI: 51.3 v 51.2 prelim.

- (EU) Euro Zone July Final Services PMI: 51.7 v 51.6 prelim (confirmed 1st expansion in 4 months); Composite PMI: 52.0v 51.9 prelim.

- (UK) July New Car Registrations Y/Y: 11.7% v 11.4% prior.

- (TW) Taiwan July Foreign Reserves: $594.3B v $597.2B prior.

- (UK) July Final Services PMI: 52.1 v 51.8 prelim (confirmed 1st expansion in 3 months); Composite PMI: 52.2 v 52.1 prelim.

- (UK) July Official Reserves Changes: -$0.3B v -$6.0B prior.

- (EU) Euro Zone Jun PPI M/M: -0.3% v -0.3%e; Y/Y: 4.6% v 4.6%e.

- (NO) Norway July House Price Index M/M: % v -0.3% prior; Y/Y: 2.2% v 3.9% prior.

Fixed income issuance

- (DK) Denmark sold total DKK in 2028 and 2035 DGB bonds.

- (SE) Sweden sold SEK5.0B vs. SEK5.0B indicated in 2.5% Oct 2036 SGB bonds.

- (NO) Norway sold total NOK2.0B vs. NOK2.0B indicated in 2031 and 2036 bonds.

- (IN) India sold total INR240B vs. INR240B indicated in 3-month, 6-month and 12-month bills.

Looking ahead

- (MX) Mexico CitiBanamex Survey of Economists.

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

- 05:30 (DE) Germany to sell combined €1.5B in 2029, 2035 and 2053 green bonds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays.

- 06:00 (PT) Portugal Q2 Unemployment Rate: No est v 6.1% prior.

- 06:00 (EU) European Union to sell combined €4.5B in 3-month, 6-month and 12-month bills.

- 07:00 (US) MBA Mortgage Applications w/e July 31st: No est v -6.4% prior.

- 07:00 (UK) Weekly PM Question time in House.

- 08:00 (HU) Hungary Central Bank (MNB) July Minutes.

- 08:00 (MX) Mexico May Gross Fixed Investment M/M: -0.8%e v+ 4.0% prior; Y/Y: -0.5%e v +5.9% prior; Private Consumption Y/Y: 2.0%e v 2.1% prior.

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

- 08:15 (US) July Monthly ADP Employment Change: +65Ke v +98K prior.

- 08:30 (CL) Chile Central Bank (BCCh) July Minutes.

- 08:30 (US) Treasury Quarterly Refunding Announcement.

- 09:00 (BR) Brazil July Services PMI: No est v 51.3 prior; Composite PMI: No est v 50.7 prior.

- 09:45 (US) July Final S&P Services PMI: 53.6e v 53.6 prelim; Composite PMI: No est v 53.6 prelim.

- 10:00 (US) July ISM Services Index: 54.5e v 54.0 prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 16:05 (US) Fed’s Cook.

- 17:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to cut Selic Target Rate by 25bps to 14.00%.

- 18:00 (CO) Colombia Central Bank July Minutes.

- 19:00 (KR) South Korea Jun Current Account Balance: No est v $38.6B prior; Balance of Payments (BoP): No est v $37.9B prior.

- 20:01 (IE) Ireland July Services PMI: No est v 54.2 prior; Composite PMI: No est v 54.4 prior.

- 21:00 (PH) Philippines Jun Unemployment Rate: No est v 4.8% prior.

- 21:30 (AU) Australia Jun Trade Balance (A$): -1.1Be v -3.0B prior; Exports M/M: No est v -6.9% prior; Imports M/M: No est v 2.6% prior.

- 22:00 (JP) Japan July Tokyo Avg Office Vacancies: No est v 2.0% prior.

- 23:30 (JP) Japan to sell 6-Month Bills.

- 23:35 (JP) Japan to sell 30-year JGB Bonds.