US futures pare post-payroll gains as markets close for independence day

EU mid-market update: US futures pare post-payroll gains as markets close for independence day; China rules on EU brandy probe; Trade deal deadline looms.

Notes/observations

- EU bourses are red, led by French CAC-40 after China issued the final ruling on imported EU brandy probe, imposing 27.7%-34.9% anti-dumping duties for five years from 5th July. Alcohol names sharply dropped but reversed most of the move.

- In trade news, Trump said he would send 10-12 letters from today to countries detailing new tariff rates, which could range from 60% or 70% to 10% and 20%, and will start paying ‘new’ tariffs from Aug 1st. Deadline looms on July 9th.

- July 4th holiday for US Independence Day is removing some liquidity from overall market and sees main US markets closed; Trump set to sign OBBB today around 17:00ET.

- House Speaker Johnson said they have a second reconciliation package planned in the Fall.

- According to SCMP, Chinese Foreign Minister Wang Yi told the EU that Beijing isn’t eager to see Russia defeated in Ukraine, fearing that a Russian loss would free the U.S. to concentrate all its attention on China.

- Asia closed mixed with KOSPI underperforming -2.0%. EU indices -0.4% to -1.5%. US futures -0.6%. Gold +0.5%, DXY -0.2%; Commodity: Brent -0.9%, WTI -0.8%; Crypto: BTC -1.0%, ETH -1.9%.

Asia

- South Korea May Current Account Balance: $10.1B v $5.7B prior.

- Japan May Household Spending Y/Y: 4.7% v 1.2%e.

- Australia May Household Spending M/M: 0.9% v 0.5%e; Y/Y: 4.2% v 3.5%e.

Global conflict/tensions

- Pres Trump stated that he was disappointed with conversation with Putin and did not believe Putin would stop the conflict in Ukraine. Would speak to Ukraine Pres Zelenskiy on Friday.

- Russia Pres Putin spoke to Trump and discussed the current situation in Iran and the Middle East, and the situation in Syria. Told Trump that Russia to achieve goals in conflict with Ukraine.

Europe

- ECB’s Nagel (Germany): No reason to 'rush' on next rate cuts. Must not get anxious if prices temporarily below 2%.

Americas

- US House passed the “Big Beautiful Bill: with a 118-114 vote; bill now goes to President Trump for his signature.

- White House: Pres Trump signing OBBB at 17.00ET on Friday.

- House Speaker Johnson stated that a second Reconciliation package was planned for the autumn.

Trade

- US tariff revenues surged almost fourfold from a year earlier to a record $24.2B in May, the first full month in which President Trump’s 10 per cent global tariff was in effect.

- President Trump might begin telling countries of new tariff rates on Friday, July 4th.

- European Commission Pres Von der Leyen noted that all instruments were on the table if did not reach trade deal with US; Ready for a deal with US. Added that a final EU-US trade deal is “impossible” before July 9th, so the two sides are aiming for a less detailed “agreement in principle”.

- Canada Fin Min Champagne believed Canada could negotiate a better trade deal with the US than other nations due to its significant trade relationship with the US.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.88% at 538.98, FTSE -0.40% at 8,788.28, DAX -0.79% at 23,713.81, CAC-40 -1.22% at 7,660.00, IBEX-35 -1.89% at 13,941.95, FTSE MIB -0.87% at 39,594.00, SMI -0.85% at 11,870.56, S&P 500 Futures -0.50%].

Equities

- Consumer discretionary: Remy Cointreau [RCO.FR] +0.5%, Diageo [DGE.UK] +0.5%, Pernod Ricard [RI.FR] +0.5% (China to impose up to 34.9% duties on EU brandy imports from July 5th for 5 years; No duty on 34 EU brandy firms if they fulfill price pledge), Air France/KLM [AF.FR] -0.5% (Initiates proceedings to increase its stake in SAS’s share capital, from 19.9% currently to 60.5%).

- Energy: Aker BP [AKERBP.NO] -3.0% (trading update) - Financials: DWS [DWS.DE] -3.5% (analyst downgrade), CVC Capital Partners [CVC.NL] -0.5% (analyst upgrade).

- Industrials: M.J.Gleeson [GLE.UK] -3.0% (trading update; new Chair), Alstom [ALO.FR] +1.0% (awarded €2.0B contract to supply M-9A railcars to the New York Metropolitan Transportation Authority), Softcat [SCT.UK] +4.5% (analyst upgrade).

Speakers

- ECB Chief Lagarde stated that would do whatever we must do to reach our inflation target; in a good place on rates.

- ECB's Villeroy (France): Closely watching FX rate volatility. EUR currency appreciation had a clear disinflationary effect and create the risk of an inflation undershoot.

- Poland Central Bank (NBP) Member Wnorowski stated that was not ruling our next rate change in Sept.

- Czech Central Bank (CNB) Jun Minutes noted the need to continue to remain restrictive and limit money creation.

- Indonesia Chief Economy Min stated that the gvot had offered near zero percent tariff to 20 main US exports.

- China MOFCOM issued final ruling on EU brandy probe; To impose up to 34.9% duties on EU brandy imports from July 5th for 5 years.

Currencies/fixed income

- Focus turned solely on trade tariffs ahead of the July 9th deadline imposed by President Trump. Market uncertainty remain high as final trade deals might not be reached by July 9th.The greenback has lost 10% of its value in the 1st half of 2025 for its worst start in 50 years.

- EUR/USD at 1.1775 during a very quiet EU session. Various economic released having limited impact on price movements. As the pair advanced towards the 1.20 neighborhood; ECB speak picking up of the possible risk of inflation undershooting target.

- USD/JPY at 144.40 by mid-session with focus on trade talks.

- 10-year German Bund yield at 2.58% and 10-year Gilt yield at 4.52%. 10-year Treasury yield: 4.35% (**Note: no cash trading due to US holiday).

Economic data

- (DE) Germany May Factory Orders M/M: -1.4% v -0.2%e; Y/Y: 5.3% v 5.7%e.

- (HU) Hungary May Industrial Production M/M: -1.3% v -0.4%e; Y/Y: -2.6% v -1.5%e.

- (FR) France May Industrial Production M/M: -0.5% v +0.3%e; Y/Y:-0.9 % v +0.1%e.

- (FR) France May Manufacturing Production M/M: -1.0% v -0.7% prior; Y/Y: -0.1% v -1.4% prior.

- (ES) Spain May Industrial Production M/M: 0.6% v 0.4%e; Y/Y: 1.7% v 1.3%e; Industrial Output NSA (unadj) Y/Y: -0.8% v -5.7% prior.

- (CH) Swiss Jun Unemployment Rate: 2.7% v 2.7% prior.

- (CZ) Czech Jun Preliminary CPI M/M: 0.3% v 0.2%e; Y/Y: 2.9% v 2.9%e.

- (CZ) Czech May Retail Sales (ex-auto) Y/Y: 5.3% v 5.3%e.

- (DE) Germany Jun Construction PMI: 44.8 v 44.4 prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 84.6K v 81.6K tons prior.

- (TH) Thailand May Foreign Reserves w/e Jun 27th: $261.5B v $258.4B prior.

- (UK) Jun New Car Registrations Y/Y: 6.7% v 1.6% prior.

- (UN) Jun FAO World Food Price Index: 128.0 v 127.7 prior.

- (IT) Italy May Retail Sales M/M: -0.4% v +0.2%e; Y/Y: 1.3% v 3.8% prior.

- (RU) Russia Narrow Money Supply w/e Jun 27th (RUB): 18.26T v 18.33T prior.

- (TW) Taiwan Jun Foreign Reserves: $598.4B v $592.9B prior.

- (UK) Jun Construction PMI: 48.8 v 48.5e (6th month of contraction).

- (EU) Euro Zone May PPI M/M: -0.6% v -0.6%e; Y/Y: 0.3% v 0.3%e.

Fixed income issuance

- (IN) India sold total INR320B vs. INR320B indicated in 2040 and 2065 bonds.

Looking ahead

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

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2033, 2046 and 2058 Bonds.

- 06:00 (IE) Ireland Jun Live Register Monthly Change: No est v -4.7K prior; Live Register Level: No est v 165.7K prior.

- 06:00 (UK) DMO to sell £5.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £3.0B respectively).

- 06:00 (BE) Belgium Debt Agency (BDA) to sell OLO Bonds via Ori Auction.

- 07:30 (TR) Turkey Jun Real Effective Exchange Rate (REER): No est v 71.11 prior.

- 07:30 (IN) India Forex Reserve w/e Jun 27th: No est v $697.9B prior.

- 08:00 (PL) Poland Central Bank (NBP) May Minutes (2 decisions ago).

- 08:00 (MX) Mexico May Leading Indicators M/M: No est v -0.05 prior.

- 08:00 (MX) Mexico Jun Consumer Confidence: 46.8e v 46.7 prior.

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

- 09:00 (IN) India announces upcoming bill issuance (held on Wed).

- 09:30 (CA) Canada Jun Services PMI: No est v 45.6 prior; Composite PMI: No est v 45.5 prior.

- 11:00 (CO) Colombia May Exports FOB: No est v $4.1B prior.

- 14:00 (BR) Brazil Jun Monthly Trade Balance: $6.2Be v $7.2B prior; Exports: $28.6Be v $30.2B prior; Imports: $22.6Be v $22.9B prior.