Trump hardened stance on Putin

EU mid-market update: Earnings intensifies amid evolving trade narrative; US-China talks continue; Trump hardened stance on Putin; Fed tomorrow with Timiraos take on potentially first multi-dissent meeting since 2019.

Notes/observations

- Three days left before Aug 1st trade deadline imposed by Trump. Markets digesting EU-US deal as Trump continues Scotland visit. There is currently no readout from first day of US-China talks in Sweden (note the specific deadline on the China tariff pause is actually Aug 12th).

- Flash reading of Spanish Q2 GDP was above all analyst estimates. UK June data was also above expectations for net lending, net consumer credit and mortgage approvals.

- Interesting call from Deutsche Bank who now see no more ECB rate cuts and predict next move to be a hike at end-2026

- For geopolitics, yesterday afternoon Trump reduced his deadline for Putin over Ukraine talks, giving him 10-12 days to make a ceasefire deal or face secondary sanctions.

- WSJ's Timiraos says Fed officials are now split into three camps over what economic signals should trigger a rate cut, with two governors—Waller and Bowman—ready to dissent in favor of immediate easing, a scenario that would mark the first multi-dissent meeting since 2019. Back then, the September 2019 FOMC saw both hawkish and dovish dissents, while Minneapolis Fed President Neel Kashkari issued a lone dovish dissent in June 2019 by calling for a deeper 50bp cut than the majority supported.

- Key EU earnings: Philips raised outlook (including current tariffs); Siltronic cut outlook noting visible growth in end markets has so far not led to a normalization of inventory levels at chip manufacturers; Orange raised EBITDAaL guidance for FY but quarter was subdued; Barclays Q2 was mixed, announced £1.0B buyback, traders attributing weak UK unit offsetting trading beat to its stock decline; Astrazeneca top and bottom line beat, affirmed guidance; Stellantis disappointed in H1 results, expects more ‘tough decisions’ and warns of further €1.2B tariff hit, reinstated guidance.

- Asia closed mixed with KOSPI outperforming +0.7%. EU indices +0.3-1.2%. US futures +0.2-0.4%. Gold +0.3%, DXY +0.1%; Commodity: Brent +0.7%, WTI +0.8%; Crypto: BTC 0.0%, ETH -0.5%.

Taiwan

- Trump’s administration has denied permission for Taiwan’s President Lai Ching-te to stop in New York en route to Central America, after China raised objections with Washington about the visit.

Global conflict/tensions

- Pres Trump: Shortens Russia-Ukraine peace deadline to 12 days, warned of sweeping Russia sanctions.

Europe

- UK July BRC Shop Price Index Y/Y: 0.7% v 0.4% prior; Food prices Y/Y: 4.0% v 3.7% prior (highest in 17 months).

Trade

- US Commerce Secretary Lutnick said a 90-day extension of a trade truce with China was a likely outcome with negotiations between the two countries underway in Stockholm.

- Germany and France hit out at EU-US deal; rebuke of the deal negotiated by European Commission President Ursula von der Leyen.

- EU said to admit it could not guarantee $600B promise to Trump as cash would come entirely from private sector investment over which Brussels has no authority.
Trump is preparing to set new tariff rates for over 150 countries under his reciprocal trade initiative, with an August 1 deadline looming.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.60% at 552.04, FTSE +0.32% at 9,110.70, DAX +1.28% at 24,250.41, CAC-40 +1.09% at 7,886.02, IBEX-35 +0.52% at 14,287.98, FTSE MIB +0.72% at 41,025.00, SMI +0.20% at 11,953.54, S&P 500 Futures +0.23%].

Market focal points/Key themes: European indices open generally higher and advanced through the early part of the session; positive risk attitude attributed to residual from US-Eu trade agreement; among sectors leading the way higher are health care and energy; lagging sectors include telecom and real estate; oil & gas subsector supported following spike in oil prices on geopolitical concerns; reportedly EQT to acquire Fujitec; ams Ostram to sell its ENI unit to Ushio; earnings expected in the upcoming Americas session include Boeing, UnitedHealth, Ferrovial and L’Oreal.

Equities

- Consumer discretionary: EssilorLuxottica [EL.FR] +6.0% (earnings), Entain [ENT.UK] +2.0% (trading update), Inchcape [INCH.UK] -6.5% (earnings).

- Financials: Barclays [BARC.UK] -1.0% (earnings; buyback) - Healthcare: Astrazeneca [AZN.UK] +1.5% (earnings) - Industrials: Philips [PHIA.NL] +10.5% (earnings; raises outlook), Teamviewer [TMV.DE] -1.0% (earnings; comments on latest budget cuts on IT spending in the US public sector), Stellantis [STLA.NL] -2.0% (final earnings; outlook; tariff hit) - Technology: Siltronic [WAF.DE] -0.5% (earnings; cut outlook), ASML [ASML.NL] -0.5% (Advantest raised outlook), SÜSS MicroTec [SMHN.DE] -15.0% (prelim earnings; cut outlook).

Speakers

- Hungary Econ Min Nagy: 2025 budget deficit to GDP of 4.1% is still achievable.

- Philippines Central Bank (BSP) Gov Remolona stated that an Aug rate cut was on the table.

- Japan Cabinet Office (Govt) July Monthly Report maintained its overall assessment that domestic economy is recovering at moderate pace but appears to be pausing in parts. Downgraded its monthly assessment of exports for the first time in a year.

- Japan Trade Negotiator Akazawa noted that trade deal had eased uncertainty to some degree; Impact of remaining US tariffs was worth paying attention.

Currencies/fixed income

- USD maintained a steady tone as markets reassess the concept of the “demise of US exceptionalism’ and concluding that such a trend was not evident ahead of key economic releases over the next three sessions. Fed expected to keep policy steady in Wed’s rate decision.

- EUR/USD holding onto the 1.15 level despite market sentiment that ECB rate cuts are finished. One analysts saw the next move being a hike at the end of 2026.

- GBP/USD at 1.3345 area as BOE rate cut talk ramps up following recent soft UK economic data.

- USD/JPY at 148.40 ahead of the BOJ rate decision on Thursday.

- 10-year German Bund yield at 2.71% and 10-year Gilt yield at 4.67%. 10-year Treasury yield: 4.41%.

Economic data

- (FI) Finland Jun GDP Indicator Y/Y: -0.2% v +0.2% prior.

- (FI) Finland Q2 GDP Indicator Q/Q: 0.0% v 0,1% prior.

- (FI) Finland Jun House Price Index M/M: -0.4% v -0.7% prior; Y/Y: -1.3% v -1.8% prior.

- (SE) Sweden Jun GDP Indicator M/M: 0.5% v -0.8% prior; Y/Y: 1.0% v 0.4% prior.

- (SE) Sweden Q2 GDP Indicator Q/Q: 0.1% v 0.2%e; Y/Y: 0.9% v 1.4%er.

- (NO) Norway Jun Retail Sales (w/Auto Fuel) M/M: 0.0% v 0.1% prior.

- (ZA) South Africa Jun M3 Money Supply Y/Y: 7.3% v 6.9% prior; Private Sector Credit Y/Y: 5.0% v 4.4%e.

- (ES) Spain Q2 Preliminary GDP Q/Q: 0.7% v 0.6%e; Y/Y: 2.8% v 2.5%e.

- (ES) Spain Jun Adjusted Retail Sales Y/Y: 6.2% v 5.0% prior; Retail Sales Y/Y: 6.2% v 5.0% prior.

- (EU) Euro Zone Jun ECB 1 Year CPI Expectations: 2.6% v 2.8% prior; 3 Year CPI Expectations: 2.4% v 2.4%e.

- (AT) Austria July Manufacturing PMI: 48.2 v 47.0 prior.

- (UK) Jun Net Consumer Credit: £1.4B v £1.2Be; Net Lending: 5.3£B v £2.4Be.

- (UK) Jun Mortgage Approvals: 64.2K v 63.1Ke.

- (UK) Jun M4 Money Supply M/M: % v 0.2% prior; Y/Y: 3.3% v 3.5% prior; M4 (ex-IOFCs) 3-month annualized: 3.0% v 3.4% prior.

- (BE) Belgium Q2 Preliminary GDP Q/Q: 0.2% v 0.4% prior; Y/Y: 1.0% v 1.1% prior.

Fixed income issuance

- (UK) DMO sold £5.0B in 4.375% Mar 2028 Gilts; Avg Yield: 3.941% v 3.847% prior; bid-to-cover: 3.71x v 3.46x prior; Tail: 0.2bps v 0.1bps prior.

- (IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 6-month bills; Avg Yield: 1.993% v 1.950% prior; Bid-to-cover: 1.48x v 1.64x prior.

Looking ahead

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

- 05:30 (DE) Germany to sell €4.5B in 2.2% Oct 2030 BOBL.

- 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 2033, 2038 and 2044 bonds.

- 06:00 (FR) France Q2 Total Jobseekers: No est v 3.186M prior.

- 06:00 (EU) ECB allotment in 3-month LTRO tender operation.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (US) Jun Advance Goods Trade Balance: -$98.0Be v -$96.4B prior (revised from -$96.6B).

- 08:30 (US) Jun Preliminary Wholesale Inventories M/M: -0.1%e v -0.3% prior; Retail Inventories M/M: 0.2%e v 0.3% prior.

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

- 09:00 (US) May FHFA House Price Index M/M: -0.2%e v -0.4% prior.

- 09:00 (US) May S&P CoreLogic House Price Index (20-city) M/M: -0.20%e v -0.31% prior; Y/Y: 2.99%e v 3.42% prior; House Price Index (overall) Y/Y: No est v 2.72% prior.

- 09:00 IMF World Economic Outlook (WEO): Previously saw 2025 global GDP growth at 2.8%.

- 10:00 (US) Jun JOLTS Job Openings: 7.500Ke v 7.769M prior.

- 10:00 (US) July Consumer Confidence: 96.0e v 93.0 prior.

- 10:30 (US) July Dallas Fed Services Activity: No est v -4.4 prior.

-11:30 (US) Treasury to sell 2-Year FRN.

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

- 13:00 (US) Treasury to sell 7-Year Notes.

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

- 18:00 (CL) Chile Central Bank (BccH) Interest Rate Decision: Expected to cut Overnight Rate Target by 25bps to 4.75%.

- 20:00 (SG) Monetary Authority of Singapore (MAS) quarterly Monetary Policy Statement.

- 21:00 (NZ) New Zealand July ANZ Business Confidence: No est v 46.3 prior; Activity Outlook: No est v 40.9 prior.

- 21:00 (PH) Philippines Jun Trade Balance: No est v -$3.3B prior; Exports Y/Y: No est v 15.1% prior; Imports Y/Y: No est v -4.4% prior.

- 21:30 (AU) Australia Q2 CPI Q/Q:0.8%e v 0.9% prior; Y/Y: 2.2%e v 2.4% prior.

- 21:30 (AU) Australia Q2 CPI Trimmed Mean Q/Q: 0.7%e v 0.7% prior; Y/Y: 2.7%e v 2.9% prior.

- 21:30 (AU) Australia Q2 CPI Weighted Median Q/Q: 0.6%e v 0.7% prior; Y/Y:2.7%e v 3.0% prior.