Illegal Border Crossings Hit Record Monthly Low, CBP Says

Authored by Aldgra Fredly via The Epoch Times,

Illegal border crossings fell to their lowest level in June, with no parole releases of illegal immigrants, according to U.S. Customs and Border Protection (CPB) data released on Tuesday.

There were 25,228 total encounters nationwide in June, down from 29,478 the previous month, the data showed. This marks the lowest monthly total ever recorded by CBP, the agency stated.

Border Patrol apprehensions nationwide also dropped to a historic low, with 8,024 apprehensions recorded last month, compared to 10,357 in May, the data showed.

Of that total, Border Patrol agents apprehended 6,072 illegal immigrants at the southwest border, marking a 15 percent decline from the March record of 7,183 apprehensions.

CBP recorded its lowest single-day apprehension total on June 28, with just 136 apprehensions, according to the data.

For the second consecutive month, the agency reported zero illegal immigrant releases along the southwest border.

The agency also has seen a 13 percent increase in nationwide seizures of illicit drugs, such as fentanyl and methamphetamine, in June compared to the previous month, which underscored efforts to combat “cartel-driven smuggling routes” at the border.

Methamphetamine seizures surged 102 percent compared to May.

CBP Commissioner Rodney Scott said that these figures were proof of the agency’s commitment to protecting the country “with relentless focus” under the Trump administration.

“From shutting down illegal crossings to seizing fentanyl and enforcing billions in tariffs, CBP is delivering results on every front,” Scott said in a statement.

Secretary of Homeland Security Kristi Noem (2nd R) during a tour along the Nogales border wall at the Mariposa Port of Entry in Nogales, Ariz., on March 15, 2025. Alex Brandon/AFP via Getty Images

Homeland Security Secretary Kristi Noem stated on July 2 that the Trump administration has delivered “the most secure border in American history,” as demonstrated by the latest figures.

“The world is hearing our message: the border is closed to law breakers. Under President Trump, our Border Patrol agents are empowered to do their job once again, secure our border, and protect the American people,” Noem stated on X.

After taking office for a second term on Jan. 20, President Donald Trump signed an executive order aimed at “securing our borders,” directing his administration to build barriers at the border, deter and prevent the entry of illegal immigrants, remove “promptly all aliens who enter or remain in violation of federal law,” and pursue criminal charges “against illegal aliens who violate the immigration laws.”

The order said the United States has seen a “large-scale invasion at an unprecedented level” over the past four years, with millions of illegal immigrants entering the country, including potential terrorists, foreign spies, members of cartels, and other hostile actors with malicious intent.

To further tighten border security, Trump issued a memo on April 11 authorizing the military to take control of land along the U.S.-Mexico border as part of efforts to curb illegal immigration and drug trafficking.

The memo does not apply to Native American reservations but does extend to the Roosevelt Reservation, a 60-foot-wide corridor owned by the federal government running along the U.S.–Mexico border in California, Arizona, and New Mexico.

It also authorized Defense Secretary Pete Hegseth to treat areas where troops are deployed as military installations, granting him the authority to protect those zones and restrict access as necessary.

Tyler Durden Wed, 07/16/2025 - 09:00

Bank of America Misses On Revenue Despite Stellar Sales And Trading Results, Projects Two Rates Cuts In NII Forecast

The strong bank earnings continued for a second day, when after solid results from JPM yesterday (if rather mediocre from Wells) this morning we got top and bottom line beats from Goldman, Morgan Stanley and Bank of America. Taking a closer look at the latter, the bank's traders posted a record second quarter - yet one which missed revenue estimates - as the company reaped the benefits of volatile markets and net interest income topped analysts’ estimates.

While BofA reported an EPS beat (Q2 came at $0.89, vs est of $0.85), total Q2 revenue of $26.5 billion was down 3% YoY from $27.4 billion a year ago, and missed estimates of $26.75 billion. Overall, Bank of America’s second-quarter profit rose, with net income up 3.2% to $7.12 billion, more than the $6.56 billion analysts had predicted.

Still, revenue from fixed income, currencies and commodities trading jumped 19% to $3.25 billion "driven by strong performance in macro products", which helped Bank of America top analysts’ estimates for per-share earnings. Equity trading rose 9.6% to $2.13 billion, also topping expectations," driven by improved trading
performance and increased client activity."

Unlike JPM, where the provision for credit losses unexpectedly tumbled, Bank of America saw its loss provisions rise to $1.6 billion from $1.5 billion a year ago, and in Q1 2025. The net reserve build was $67MM in 2Q25 vs.$28MM in 1Q25. Some more details:

• Total net charge-offs of $1.5B increased $73MM from 1Q25
  • Consumer net charge-offs of $1.1B decreased $60MM, driven by lower credit card losses: Credit card loss rate of 3.82% in 2Q25 vs. 4.05% in 1Q25
  • Commercial net charge-offs of $466MM increased $133MM driven primarily by sales and resolutions of commercial real estate office properties
  • Net charge-off ratio of 0.55% vs. 0.54% in 1Q25
• Allowance for loan and lease losses of $13.3B represented 1.17% of total loans and leases
• Total allowance of $14.4B included $1.1B for unfunded commitments

Taking a closer look at the balance sheet, both total deposits and loans increased across the franchise:

• Average deposits of $1.97T increased $64B, or 3%

• Average loans and leases of $1.13T increased $77B, or 7%

• Average Global Liquidity Sources of $938B
• CET1 capital of $201B was flat to 1Q25
• CET1 ratio of 11.5%4 vs. 11.8% in 1Q25; well above regulatory minimum
• Paid $2.0B in common dividends and announced plans to increase quarterly common dividend 8%5
• Repurchased $5.3B of common stock

Here is Goldman's recap of the earnings: 

• Earnings beat – BAC reported 2Q25 EPS of 89¢, vs. GSe/Visible Alpha Consensus Data 89¢/85¢, with core EPS of 89¢ vs. our/Street like estimates of 91¢/90¢ (backing out $51mn losses on CVA/DVA, a $67mn reserve build, and normalizing the tax rate); with NII-FTE coming in at $14.815, above ‘buyside expects’ of ~$14.7-14.8bn while both expenses and fees were in-line. Both loans and deposits looked better than expectations (there were some worries on deposits) while the buyback also came in a touch above at ~$5.3bn. Within the in-line print in fees, BAC beat in both Trading and IB while the negative offset was ‘other income’
• Key takeaway: We view these results as better than feared, given a core PPNR of $9.5bn roughly in line with the Street, on better core fees, slightly lower NII, and roughly in-line core operating efficiency, with a core ROTCE of 13.3% 20bps below the Street. We expect the focus to be on the cadence of NII and rate sensitivity, and the expense guidance into 2025, although the company held the 4Q25 NII guide unchanged, which we think will be key to the share price performance today, given the weaker NII print for the quarter, vs. consensus. The pick up in NII growth in the second half is driven by a step change in asset repricing (from around $100m in Q2 to $225m per quarter in 3Q/4Q25), and that the guidance still assumes two rate cuts.
• Summary of key quarterly trends: NII was ~0.5% below the Street, on higher loans, earning assets, and deposit balances, and a lower NIM (mainly driven by lower loan and security yields, partially offset by better deposit repricing). Core fee revenue came in ~0.5% above like consensus, on better trading and investment banking revenue, in particular, although core fees are above as well. We peg the core efficiency ratio at 64.5%, 10bps worse vs. the Street. Provisions were 2% below Street estimates, and BAC built $67mn of reserves (largely in line with GSe for a $59mn build).
• Summary of guidance and vs. expectations: Management held the 4Q25 NII guide unchanged at $15.5-15.7bn (vs. Street at $15.6bn), despite 2 fewer rate cuts in their current forecast, although the company upped commentary from low to mid single digit loan growth through the balance of the year. The company also committed to delivering operating leverage in 2H25.
• We look for further clarity on: 1) the contributors to the unchanged 2025 NII outlook, given 2 less rate cuts, but healthy balance sheet growth trends in the quarter, and the company upping guidance from low to mid single digit loan growth; 2) capital returns, given $5.3bn of share repurchases in the quarter (vs. GSe for $5.4bn), and recently freed up additional excess capital from the most recent CCAR test, and the SLR proposal; 3) sustainability of trading revenue, after 2Q25 trading was up 15% YoY (vs. intraquarter guidance for up mid-single digit to high single-digit YoY), and additional excess capital that could be deployed into the business. Separately, the pace of improvement of investment banking, which was down 7% YoY (vs. an implied intraquarter guidance of 23% decline YoY); 4) the efficiency outlook for 2025, after core expenses rose 5% YoY in 2Q25; and 5) the pace and magnitude of credit normalization and reserve builds, given macro and geopolitical uncertainty.

Banks benefited from the market volatility which whipsawed global markets after Trump announced tariffs on trading partners around the world in April. Indeed, what was bad news for markets (at least initially) was great news for businesses at Bank of America and its rivals across Wall Street as they’ve benefited from a surge in client activity while also thwarting expectations for a strong rebound in mergers and acquisitions.

The second-largest US bank also said that net interest income, a key source of revenue for the company, rose 7.1% to $14.7 billion, above the 6.5% analyst estimate for NII, the revenue collected from loan payments minus what depositors are paid. Commenting on the results, BofA said that NII increased $0.2B from 1Q25, "driven by higher deposit and loan balances, one additional day of interest accrual, and fixed-rate asset repricing, partially offset by the impact of lower non-U.S. interest rates on loan yields." The Q2 NII also "increased $1.0B from 2Q24, driven by fixed-rate asset repricing, higher NII related to Global Markets (GM) activity, and higher deposit and loan balances, partially offset by the impact of lower interest rates."

Similar to JPMorgan, BofA's outlook is for continued growth in NII (to $15.6BN), where fixed-rate asset repricing adds $450MM by year end, offsetting the $250MM in expected rate cuts in Sept and Oct. 

“Consumers remained resilient, with healthy spending and asset quality, and commercial borrower utilization rates rose,” Chief Executive Officer Brian Moynihan said in the statement. “In addition, we saw good momentum in our markets businesses.”

As Bloomberg notes, Bank of America’s results offered a further look at how the biggest US banks fared at the beginning of Trump’s second term. Investors are also eager to hear details on the national economy from executives whose firms cater to large swaths of American consumers and businesses.

On Tuesday, JPMorgan and Citigroup reported earnings that beat analysts’ estimates, with trading and investment-banking activity boosting results. Executives at both banks expect the momentum in trading to continue and the investment-banking pipeline to build as corporate clients get more comfortable with geopolitical tensions.

Shares of Charlotte, North Carolina-based Bank of America rose 1.8% at 6:59 a.m. in early New York trading. They gained 4.6% in the 12 months through Tuesday, less than the 19% increase in the S&P 500 Financials Index.

Much more in the full Bank of America earnings presentation below (pdf link).

Tyler Durden Wed, 07/16/2025 - 08:42

'Cool' US Producer Prices Blow Up Tariff-Flation Narrative

Following yesterday's 'mixed' CPI, all eyes are on the Producer Prices prints this morning for signs that the inflation pipeline is hotting up (or not)... and the print confirms - it's not hotting up.

Headline and core PPI printed cooler than expected (unchanged MoM), well below the expected +0.2% MoM (in fact it was lower than all estimates)

Headline PPI rose 2.3% YoY (down from a revised higher 2.7% in May and below the 2.5% expected) - that is the lowest YoY print since Sept 2024...

Source: Bloomberg

On a MoM basis, Services PPI 'deflated'...

Source: Bloomberg

And on a YoY basis, Energy prices continue to 'deflate'...

Source: Bloomberg

Final demand goods:

Prices for final demand goods rose 0.3 percent in June, the largest increase since moving up 0.3 percent in February. Over half of the broad-based advance in June can be traced to the index for final demand goods less foods and energy, which climbed 0.3 percent. Prices for final demand energy and for final demand foods also rose, 0.6 percent and 0.2 percent, respectively.

Product detail: Within the index for final demand goods in June, prices for communication and related equipment increased 0.8 percent. The indexes for gasoline; residential electric power; canned, cooked, smoked, or prepared poultry; meats; and tree nuts also moved higher. In contrast, prices for chicken eggs dropped 21.8 percent. The indexes for natural gas liquids and for thermoplastic resins and plastics materials also declined. 

Final demand services:

Prices for final demand services edged down 0.1 percent in June after increasing 0.4 percent in May. Leading the decrease, the index for final demand services less trade, transportation, and warehousing declined 0.1 percent. Prices for final demand transportation and warehousing services fell 0.9 percent, while margins for final demand trade services were unchanged. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Over half of the June decline in the index for final demand services can be attributed to prices for traveler accommodation services, which fell 4.1 percent. The indexes for automobiles and automobile parts retailing, deposit services (partial), airline passenger services, and food and alcohol wholesaling also decreased. Conversely, prices for portfolio management advanced 2.2 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; furniture retailing; and apparel, jewelry, footwear, and accessories retailing also rose. 

But will the energy component start to rise next month?

Core PPI also printed cooler than expected, down to just 2.6% YoY. Core PPI YoY was last lower than this is March 2024...

Source: Bloomberg

The pipeline for PPI is picking with Intermediate Demand Goods prices picking up...

Source: Bloomberg

Margin pressure lifted this month...

Source: Bloomberg

So much for the terrifying threat of tariff-flation... or will we just have to wait for next month to see the full horror.. or the next month?

Tyler Durden Wed, 07/16/2025 - 08:39

Federal Judge Takes Control Of US Government

Authored by Kenin Spivak via RealClearPolitics,

Just days after the Supreme Court again made it clear that the separation of powers is sacrosanct, Indira Talwani, an Obama appointed federal judge in Massachusetts, has taken the unprecedented step of ordering the government to fund Planned Parenthood, purporting to enjoin implementation of a portion of the Big Beautiful Bill (BBB) passed by Congress.

The BBB imposed a one-year ban on state Medicaid payments to health care nonprofits that offer abortions and also received more than $800,000 in federal funding in 2023. Three days after the president signed the BBB into law, Planned Parenthood sought a temporary restraining order (TRO). Without hearing from the government, complying with federal rules, or even providing an explanation, within hours after the filing, Talwani issued a TRO for at least 14 days that requires the government to spend money Congress declined to appropriate.

Four days later, the administration asked Talwani to dissolve the TRO because of its obvious infirmities. Instead, she doubled down, issuing an amended TRO that satisfied the technical requirements she had previously ignored.

I work with Planned Parenthood’s very capable lead lawyers. Without the facts or the law on their side, they did the right thing. They found a far-left federal judge who has repeatedly ruled against the Trump administration and is willing to create a constitutional crisis to advance a political cause.

Numerous Supreme Court decisions explain that merely because something is legal does not mean that Congress must fund it, or continue to do so. Just a few weeks ago, in Medina v. Planned Parenthood, the Supreme Court rejected Planned Parenthood’s challenge to South Carolina’s right to exclude Planned Parenthood from its Medicaid program. For more than 40 years, the Hyde Amendment has generally prohibited federal funding for abortion, and the court has repeatedly held that the government is under no contrary obligations (e.g., Maher v. Roe and Harris v. McRae).

Talwani’s order violates Article I of the Constitution, which could not be more clear: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Article I vests the power to authorize spending exclusively in Congress. In OPM v. Richmond (1989), the Supreme Court confirmed that the Appropriations Clause conveys a “straightforward and explicit command” that no money “can be paid out of the Treasury unless it has been appropriated by an act of Congress.”

There is no basis in the Constitution or any Supreme Court decision to support the right of a court – any court – to interfere in congressional decisions to fund, or cease funding, a private organization. To the contrary, in Rust v. Sullivan (1991), the Supreme Court held that “the Government has no constitutional duty to subsidize an activity merely because the activity is constitutionally protected.”

Planned Parenthood’s main argument is the equivalent of jury nullification. Because it is the dominant provider of abortion services in the United States, limiting its ability to carry out its mission would deprive women of access to such services. Even if true, that is a political argument unsuccessfully made during the last election and during the debate over the BBB.

Planned Parenthood asserts that the BBB is an unconstitutional bill of attainder because the criteria for defunding effectively single it out. That absurd argument flies in the face of an unbroken line of cases that apply the Article I prohibition on bills of attainder only to criminal or quasi-criminal punishment. Congress often funds, or defunds, individuals and organizations. In Nixon v. Administrator of General Services (1971), the Supreme Court rejected the proposition that an individual or defined group is subject to a bill of attainder merely because Congress singles them out. Talwani did not mention bills of attainder in her amended TRO.

Planned Parenthood also claims that defunding its efforts constitutes viewpoint retaliation under the First Amendment, and a violation of the equal protection clause of the Fifth Amendment. In Rust, the Supreme Court rejected similar claims. In its papers, Planned Parenthood cites no Supreme Court case compelling Congress to appropriate spending on these grounds.

Nonetheless, in her amended TRO, Talwani relied on the First and Fifth Amendments to justify issuance of the TRO. She also rejected the government’s concern that it would be harmed if it paid money to Planned Parenthood, because, she averred, the government likely would instead use the funds to pay another provider. By that logic, a mugger is only taking money that his victim would probably spend on something else.

The first hearing is on Friday. If Talwani does not relent, she can expect an unpleasant rebuke from appellate courts.

Kenin M. Spivak is founder and chairman of SMI Group LLC, an international consulting firm and investment bank. He is the author of fiction and non-fiction books and a frequent speaker and contributor to media, including The American Mind, National Review, the National Association of Scholars, television, radio, and podcasts.

Tyler Durden Wed, 07/16/2025 - 08:25

What GAO Found DOD's Financial Management Regulation (FMR) includes timelines for reimbursing service members for costs incurred for permanent change of station (PCS) moves. However, GAO found that parts of the FMR guidance are unclear and have inconsistent PCS reimbursement timelines—including both a 30-calendar day and a 25-business day timeline. Military service officials told GAO that this lack of clarity causes confusion. Without clear guidance, service members might carry the burden of moving costs beyond a reasonable period. GAO reviewed 3 fiscal years of PCS data from two selected military services—the Army and the Marine Corps—to identify the extent to which such reimbursements were delayed, monitored, and addressed. GAO found that these services regularly monitor PCS reimbursements through multistep reviews and post-payment audits. However, instances of delays persist. Specifically, during the 3-year period, GAO found the following delays, by service: Army. Of the 586,417 PCS voucher reimbursements processed, 40,798 (7.0 percent), were delayed beyond the 30-calendar day time frame the Army follows under the FMR. Of those, most were paid within 31 to 60 calendar days. These delays totaled almost $139 million in reimbursements. Marine Corps. Of the 176,216 voucher reimbursements processed, 17,134 (9.7 percent) were delayed beyond the 10-business day time frame the Marine Corps follows. Most of those delays, which totaled almost $47 million, were paid within 11 to 20 business days. Had the vouchers been processed using the 30-day calendar time frames in the FMR, the Marine Corps would have 1,118 voucher reimbursements processed (0.6 percent), totaling $5.7 million, delayed in that period. Number and Percent of PCS Reimbursement Delays for the Army and the Marine Corps, Fiscal Years 2021-2023 Note: The Army follows a 30- and the Marine Corps a 10-day timeline for voucher reimbursements. The data reflect the number and percentage of permanent change of station (PCS) transactions involving service members and excludes data related to sensitive or classified PCS relocations. Army and Marine Corps officials cited challenges associated with processing PCS reimbursements on time, including multiple offices being involved and higher staffing needs, particularly during summer months. Each service lacks a single entity with authority and responsibility to monitor and address problems associated with such delays. Such an entity for each service could help improve their ability to resolve delays expeditiously and help ensure timely PCS reimbursements to service members. Why GAO Did This Study In 2024, more than 400,000 service members received PCS travel orders and moved to a new duty station. When the military services order these moves, service members are entitled to timely PCS reimbursements to cover costs. A January 2023 report by the Suicide Prevention and Response Independent Review Committee cited delayed payments, especially PCS reimbursements, as a financial stressor associated with suicide risk for service members. House Report 118-125 includes a provision for GAO to review delayed payments to service members, with an emphasis on PCS reimbursement delays. GAO's review assesses the extent to which (1) DOD has guidance on monitoring timelines for PCS reimbursements and (2) the Army and Marine Corps monitor and address delays in PCS reimbursements. GAO analyzed guidance related to the monitoring of PCS reimbursements; interviewed DOD and military service finance officials; and analyzed PCS data from fiscal years 2021 through 2023 (the latest complete year of data available at the time of GAO's data request and review).

Futures Drop As Tariffs, Earnings And Rising Yields Dent Sentiment

US equity futures and global stocks dropped, but were well off session lows, as a stream of negative tariff headlines and dialed-back expectations for interest-rate cuts prompted doubts about the market’s ability to sustain recent highs and sent 30Y yields above 5%, a level seen as a redline for further stock appreciation. As of 7:00am, the S&P 500 was on track for a second straight decline, with futures down 0.1% after , while Nasdaq futures were 0.3% lower after closing at a record; the small-caps Russell 2000 is seeing an early outperformance bid. Pre-mkt, Mag7/semis are mixed as are Cyclicals with Banks seeing an offer into the next batch of earnings. In Europe, the Stoxx 600 slipped 0.2%, weighed down by technology shares as ASML Holding NV trimmed its growth outlook for next year, citing trade tensions; French car giant Renault slumped 16% after slashing its profit guidance. Treasury yields are flat as is the USD. Commodities are mostly higher with Ags leading, precious metals following while energy is modestly weaker. Today’s macro data focus is the PPI data which will give more clues about how tariffs are affecting companies after mixed CPI numbers. We have another batch of Fedspeakers who will say nothing of importance.

In premarket trading, Mag 7 stocks are mixed (Apple +0.3%, Alphabet +0.2%, Meta +0.3%, Microsoft little changed, Tesla -0.4%, Amazon -0.5%, Nvidia -0.6%). Here are some other notable premarket movers:

• Crypto-linked stocks rose with Bitcoin prices in premarket trading Wednesday as President Donald Trump said the House will pass the GENIUS Act stablecoin bill on Wednesday after a procedural vote Tuesday failed (Among gainers Strategy +1.5%, Circle Internet Group +1.6%, Coinbase +0.8%, Galaxy Digital +4.1%, Hut 8 +2.3%, Hive Digital Technologies +0.7%, MARA Holdings +1.8%, Cleanspark +1.8%, Riot Platforms +2.1%, Cipher Mining +0.5%, Bitfarms +2.9%, Terawulf +1.6%, Bit Digital +6.4%, SharpLink Gaming +13%, and Bitdeer Technologies +2.6%).
• ASML ADRs (ASML) fall 8.4% after the chip equipment maker struck a more cautious tone about growth outlook next year.
• JB Hunt reported 2Q earnings that beat estimates, but flagged “higher professional driver wages and equipment-related costs.” 
• Brighthouse Financial (BHF) is up 7.4% on light volume after the Wall Street Journal said Aquarian is in exclusive talks to buy the provider of annuities and life insurance, citing people familiar.
• Global Payments (GPN) is up 6.4%; activist investor Elliott Investment Management has amassed a sizable position in payments services company, according to a person with knowledge of the matter.
• Renault SA shares sank 16% after the automaker lowered its profitability outlook for the year and named company veteran Duncan Minto interim chief executive officer.
• Nvidia Corp. boss Jensen Huang anticipates getting the first batch of US licenses to export H20 AI chips to China soon.
• Barclays Plc was fined £42 million ($56 million) over failures to properly identify financial crime risks with two clients.
• Huawei Technologies Co. took the top spot in China’s smartphone market for the first time in more than four years.

Among trade headlines, Trump said he was likely to impose tariffs on pharmaceuticals as soon as the end of the month and that levies on chips could come soon as well. Traders further pared bets to their lowest level in a month for two Federal Reserve interest rate cuts this year on anticipation that tariff-related costs are increasingly being passed on to consumers (a continuation of a bet that has so far been dead wrong). Elsewhere, EU’s McGrath says a trade deal between the EU and US can be done by Aug. 1 and expects two weeks of “intense negotiations.” Meanwhile, UBS strategists said US equity investors are complacent in their view that tariffs are predominantly a negotiation tool. They put their S&P 500 year-end target of 5,300 - some 1000 lower than where the S&P is trading now - under review.

Traders trimmed expectations for Fed rate cuts after the CPI data, but the main Fed focus today is on who may replace Powell. Kevin Hassett is the early frontrunner, Bloomberg reported, with Kevin Warsh also in the top two. The Trump administration is also said to be finalizing an executive order that would pave the way for 401(k) retirement savings plans to invest in private equity.

After big bank earnings got off to an underwhelming start on Tuesday, investors will be looking at the next flurry of results with Bank of American Corp., Goldman Sachs and Morgan Stanley reporting today. “We have toned down our risk by a notch,” said Mohit Kumar, chief European strategist at Jefferies International. “However, technicals are still supportive and news flow of more deals being struck over the coming weeks should offset some of the negative trade rhetoric.”

US stocks are back to near-historic premiums over global peers, but bargain hunters must also work harder to find options outside the world’s biggest market, according to Bloomberg Intelligence. The S&P 500 now trades at a 55% forward P/E premium to the Bloomberg Global ex-US Index, more than double the roughly 25% median from 2015-19.

Economic data due later Wednesday is expected to show a similar trend for producer goods. “The tariff inflation shock starts to hit,” wrote Robin Brooks, a senior fellow at the Brookings Institution and former chief currency strategist at Goldman Sachs Group Inc. “This effect will keep building in intensity as pre-tariff inventories are depleted.”

In Europe, the Stoxx 600 is down 0.2%, falling for a fourth straight session after some disappointing corporate updates from the region. Autos are leading declines as Renault shares fall 17% after the French carmaker issued a profit warning. Technology stocks also underperform as ASML shares fall 8% in Amsterdam after the CEO walked back the company’s growth forecast for next year due to trade disputes and global tensions.  Equities have struggled to hit new highs in recent weeks amid lingering uncertainty around the US trade war. Among notable moves, Richemont rises on better-than-expected sales, defying a wider downturn for luxury goods. Renault shares tumble after a profit warning. Here are some of the more notable equity movers:

• Richemont shares rise as much as 2.4% after the Cartier-owner reported surging sales at its jewelry division despite a tough backdrop for the luxury goods industry.
• Partners Group climbs as much as 7.3%, after the Swiss private equity company delivers a beat on assets under management in the first half and reiterates its outlook for the full year.
• Barco shares surge as much as 17%, hitting the highest since April 2024, following the visualization specialist’s first-half Ebitda beat.
• ASML shares fall as much as 7.3%, the most in three months, after the chip equipment maker cautioned about growth next year.
• Renault shares fall as much as 17%, the steepest drop since March 2020, after the French carmaker issued a profit warning on Tuesday evening, lowering operating margin guidance for this year and also trimming its free cash flow expectations.
• AstraZeneca shares drop as much as 1.6%, after its experimental drug for a rare plasma cell disorder failed to delay death or reduce the number of hospitalizations for heart problems.
• Ontex shares plunge as much as 12%, after the maker of disposable personal hygiene products delivered quarterly results below expectations and cut its full-year earnings outlook.
• Bakkafrost falls as much as 14%, the most since July 2023, after the seafood group issued a profit warning.
• Nel falls as much as 8.1%, the most since May, after the hydrogen technology supplier reported a sharp fall in new orders in the second quarter. Citi said weak order intake is a continued concern.
• Fuchs shares plunge as much as 16%, the biggest drop since 2011, as the lubricant maker cut its annual guidance after second-quarter profit came in lower than expected.
• DNO shares drop as much as 8.1% after the oil producer said it has temporarily suspended operations at its Tawke license in the Kurdistan region of Iraq following three explosions early this morning.
• Svenska Handelsbanken declines as much as 8%, the worst performer on the Stoxx 600 Banks Index, after net interest income at the Nordic lender missed analysts estimates for the second quarter.

Earlier in the session, Asian stocks were mixed, as gains in Hong Kong and optimism over the tech sector were countered by dimming prospects for Federal Reserve easing. The MSCI Asia Pacific Index dipped 0.1%. Key gauges declined in Australia and South Korea, while shares rose in Taiwan as well as Hong Kong. TSMC and Alibaba climbed for a second day after news that the US would allow resumption of some AI chip shipments to China. The regional benchmark has traded sideways in July after a three-month rally. Broader sentiment took a hit Wednesday after US consumer price data indicated companies are beginning to pass through some tariff-related costs, with Fed Dallas President Lorie Logan saying. Hong Kong stocks advanced meanwhile, with the Hang Seng Index heading for its highest close since February 2022 on a rebound in risk appetite amid signs of easing US-China tensions. Still, upcoming Chinese corporate results are expected to show weak earnings growth.

In FX, the Bloomberg Dollar Spot Index falls 0.1%. The euro outperforms its G-10 peers slightly with a 0.2% gain. The pound fades post-CPI gains, trading flat versus the greenback just below $1.34.

In rates, Treasuries are steady ahead of more US inflation data later on Wednesday in the form of producer prices. US 10-year yields are flat at 4.48%. Japan’s super-long bonds rebounded following a sharp selloff earlier in the week, as investors weighed the potential for increased fiscal spending after this weekend’s upper house election.  

Gilts fall along the curve after UK inflation unexpectedly rose to its highest level since January 2024, prompting traders to trim bets on easing by the Bank of England this year. UK 10-year yields rise 3 bps to 4.65%. Bunds are little changed.

In commodities, spot gold rises $16 to around $3,340/oz. Bitcoin climbs 2% and back above $119,000. WTI falls 0.5% to near $66.20 a barrel.

Today's US economic data slate includes June PPI and July New York Fed services business activity (8:30am) and June industrial production (9:15am). Fed speaker slate includes Barkin (8am), Hammack (9:15am), Barr (10am), Bostic (3:30pm) and Williams (6:30pm), and Fed releases Beige book at 2pm

Market Snapshot

• S&P 500 mini -0.1%
• Nasdaq 100 mini -0.3%
• Russell 2000 mini little changed
• Stoxx Europe 600 -0.1%
• DAX +0.2%
• CAC 40 little changed
• 10-year Treasury yield -1 basis point at 4.48%
• VIX unchanged at 17.38
• Bloomberg Dollar Index little changed at 1206.71
• euro +0.2% at $1.162
• WTI crude -0.3% at $66.32/barrel

Top Overnight News

• Trump said on Tuesday that Treasury Secretary Scott Bessent could be a candidate to replace Federal Reserve Chairman Jerome Powell, but suggested that might not happen. When asked if Powell’s renovation cost overrun were a fire able offense, Trump said “I think it sort of is.” RTRS
• President Donald Trump said he was likely to impose tariffs on pharmaceuticals as soon as the end of the month and that levies on semiconductors could come soon as well, suggesting that those import taxes could hit alongside broad “reciprocal” rates set for implementation on Aug. 1. BBG
• Kevin Hassett, one of President Donald Trump’s longest-serving economic aides, is the early frontrunner to replace Jerome Powell as Federal Reserve chief next year, followed by Kevin Warsh. BBG
• Trump is expected to sign an executive order in the coming days designed to help open up 401(k)s to private-market investments, according to WSJ.
• Senator Cassidy said President Trump is to sign Fentanyl Act into law on Wednesday.
• Defense Secretary Hegseth ordered the release of 2000 National Guard troops from the federal protection mission in LA.
• Japan’s super-long bonds rose, reversing course after a rout earlier in the week over concern that this weekend’s election will result in higher government spending. BBG
• Rio Tinto’s macro commentary on the Chinese economy – “industrial activity and net exports grew strongly during the quarter on the back of China’s highly competitive manufacturing sector. Trade diversification continued as the decline in exports to the US was more than offset by shipments to other regions. Retail sales growth was supported by ongoing stimulus measures while the government remains committed to infrastructure investment. However, headwinds such as trade tensions and a soft property market continue to pose challenges."
• Indonesia’s central bank cut its policy rate by 25bp to 5.25% (analysts were split on the outcome of this meeting, with some anticipating a cut while others felt rates would stay unchanged). WSJ
• ASML (-7.3% in pre)  walked back growth forecasts for next year due to the trade uncertainty, even as its second-quarter orders beat estimates. The stock slumped. BBG
• Inflation unexpectedly rose in the U.K., likely keeping policymakers at the BOE cautious despite a limping economy. Headline, core, and services CPI all were higher than anticipated. WSJ
• Taiwan, Switzerland and India, none of which received letters letters from Trump last week, are all potentially closing in on deals that could be announced in the coming weeks. Politico
• Fed's Logan (2026 voter) said the base case is that monetary policy needs to hold tight for a while longer to bring inflation down and she wants to see low inflation continue longer to be convinced, while she added that June CPI data suggests PCE inflation, which the Fed targets at 2%, will rise. Logan also commented that softer inflation and a weakening labor market could call for lower rates fairly soon and under the base case, the Fed can sustain maximum employment even with modestly restrictive policy. 

Trade/Tariffs

• US President Trump they are working on five to six trade deals and there will probably be two to three deals by August 1st.
• US President Trump said pharma tariffs will probably begin at month-end and initial tariffs on pharmaceuticals will be low, while Trump also said they will release tariff letters for smaller countries soon and will probably set one tariff for all of them over 10%.
• US President Trump said a great deal for everybody was just made with Indonesia with Indonesia to pay 19%, while the US will pay nothing and similar deals are in the works. Trump later posted that "Indonesia has committed to purchasing $15 Billion Dollars in U.S. Energy, $4.5 Billion Dollars in American Agricultural Products, and 50 Boeing Jets, many of them 777’s."
• US Trade Representative announced the initiation of a Section 301 investigation of Brazil's unfair trading practices.
• China's Commerce Ministry said China and Australia signed a memorandum of understanding on the implementation and review of the China-Australia Free Trade Agreement.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly subdued following the lacklustre handover from Wall St owing to an acceleration in US CPI data, while trade uncertainty lingered after President Trump suggested pharma tariffs could begin at month-end and tariff letters for smaller countries could be sent out soon. ASX 200 retreated with nearly all sectors in the red aside from tech and with miners not helped by the indecisive performance in Rio Tinto following its quarterly operations update in which it registered higher iron ore production but a decline in shipments Y/Y. Nikkei 225 traded indecisively in which the index swung between gains and losses amid the lack of pertinent drivers for Japan and some political concerns ahead of Sunday's upper house election as a recent poll showed the ruling bloc was at risk of losing its majority. Hang Seng and Shanghai Comp were mixed in the absence of any major fresh pertinent macro drivers and despite comments from China's Vice Premier He Lifeng who stated that China is accelerating the construction of a modern industrial system and is stepping up efforts to boost consumption.

Top Asian News

• China's Vice Premier He Lifeng said China is accelerating the construction of a modern industrial system and its industrial upgrading providing support to global industrial and supply chain operations, while He added China is stepping up efforts to boost consumption.
• Japan's ruling coalition risks losing a majority at the upper house election, according to Nikkei.

European bourses opened mixed/mostly lower, but have traded with an upward bias throughout the European morning, to show a mixed picture. European sectors are mixed, with underperformance in Autos, dragged lower by post-earning losses in Renault (-16.4%) after it cut guidance; Stellantis (-4%) also moves lower after it halted its hydrogen fuel cell technology development programme. Tech has also been pressured by ASML (-8.7%) after its Q2 results; the Co. reported better-than-expected headline metrics, but guidance was light and the CEO said they cannot confirm growth in 2026.

Top European News

• BoE Governor Bailey said multilateral institutions are essential for good policymaking and they are following financial stability risks closely, while he noted countries with big deficits typically come under most financial market pressure and he is yet to be convinced about the need for a retail CBDC.

European earnings

• ASML -8.7%: Lowered Q3 rev., margin outlook, does not confirm 2026 growth target.
• Renault -16.2%: Provided dreary FY guidance, stressed poor retail market.
• Rio Tinto +1.2%: Pilbara iron ore output rise, copper production exp. at top of FY guidance.
• Richemont +0.5%: Q1 sales at constant FX rise.
• Sandvik -0.9%: mixed results, noted of strong momentum noted in mining, highest order intake ever in Q2

FX

• The dollar is giving back some of Tuesday's gains seen in the aftermath of US CPI data. Further inflation data is due today with Y/Y PPI expected to decline to 2.5% from 2.6%, M/M is expected to pick up to 0.2% from 0.1%. Once released, markets will be able to cement calls for the upcoming PCE report (the Fed's preferred inflation gauge). Today's Fed docket is a busy one with Barkin, Barr, Cook, Hammack, Logan, Kugler & Williams all due on deck. Note, the Fed Beige Book at 19:00BST will be parsed for the impact of Trump's tariff regime at a regional level. DXY sits towards the top end of Tuesday's 97.97-98.69 range.
• EUR is attempting to atone for Tuesdays’ losses, which saw EUR/USD slip onto a 1.15 handle for the first time since 25th June. French politics moved back into focus yesterday after PM Bayrou unveiled his plans to bolster France's finances. His outline was subsequently met with threats of no confidence from the hard left and far right. EUR/USD sits towards the bottom end of Tuesday's 1.1593-1.1692 range.
• JPY flat vs. the USD after a recent run of losses, which have lifted USD/JPY from the low seen on July 1st at 142.68 to a multi-month high today at 149.18. The main drivers for the move have been a broad pick-up in the USD and angst over the lack of trade progress between Japan and the US. The next upside level for USD/JPY comes via the 3rd April high at 149.33.
• GBP has seen some mild support in the wake of hotter-than-expected UK inflation metrics. Y/Y CPI unexpectedly advanced to 3.6% from 3.4% (exp. 3.4%) and the services metric held steady at 4.7% vs. expectations of a decline to 4.6%. Nonetheless, markets still expect the BoE to cut rates next month, but US Jobs data will be in focus on Thursday. Whilst Cable did briefly make its way back onto a 1.34 handle with a session high at 1.3416, the upside was limited by the aforementioned stagflationary outlook facing the UK.
• Antipodeans are slightly mixed vs. the USD with no obvious driver for the mild discrepancy. Newsflow surrounding both currencies remains light as markets await tomorrow's Australian jobs report.
• PBoC set USD/CNY mid-point at 7.1526 vs exp. 7.1914 (Prev. 7.1498)

Fixed Income

• USTs are incrementally firmer/flat (whilst global peers are broadly lower). Currently in a in a very thin 110-08+ to 111-13+ band, awaiting PPI, Industrial Production and Fed speak. PPI will be scoured to see if the series’ internals are evident of tariff-driven price pressures emerging; a slew of Fed speakers are also due.
• Bunds are modestly lower today, but well off lows in a 129.19-56 band, matching Tuesday’s trough ahead of the 129.12 low from last Friday. The main event today for the bloc is the EU Multiannual Financial Framework (MFF) presentation, i.e. the bloc’s budget for the next seven years. As it stands, Commission President von der Leyen is scheduled to unveil it at 16:00BST.
• OATs are trading broadly in-line with peers, down by a handful of ticks. In French politics, PM Bayrou’s plan to save EUR 43.8bln from the budget in 2026 in order to get the debt-to-GDP ratio down, in-line with existing commitments/targets. The proposal has already drawn criticism from various political parties, unsurprisingly National Rally (RN) has said they will move to censure Bayrou if he does not change his plans.
• Gilts are underperforming, opened lower by 19 ticks and then slipped another 21 in short order to a 91.17 base. Notching a new WTD low and taking Gilts back to 91.16 from the first week of June. If breached, then we look to 90.11 from May as the next major point of support. Pressure emerged on the morning’s June inflation. A hotter-than-expected series, driven by motor fuel prices. While hotter, the series has only sparked a relatively modest move in BoE pricing with c. 1bps of implied easing removed from August and only around 3bps by end-2025.
• UK DMO sells GBP 1.5bln 4.5% 2034 Gilt: b/c 3.32x, average yield 4.553%, tail 0.4bps.
• Germany sells EUR 1.129bln vs exp. EUR 1.5bln 2.90% 2056 and EUR 0.8bln vs exp. EUR 1.0bln 1.25% 2048 Bunds

Commodities

• WTI and Brent are currently incrementally lower, and have held a negative bias throughout the European morning. Brent Sept’25 has traded in a very tight USD 68.46-69.09/bbl range, and ultimately awaiting US PPI.
• Precious metals are mixed with Palladium a little lower whilst spot Gold and Silver post modest gains. Newsflow has been relatively light today and Dollar price-action has been muted. The yellow-metal is seemingly attempting to pare back losses seen in the prior session. XAU/USD currently trades in a USD 3,325.21-3,342.49/oz range, with the low for today incrementally above its 50 DMA (3,323.42)
• Base metals are broadly lower continuing the downbeat mood seen overnight, in-fitting with the broader risk tone across the equities complex. 3M LME Copper currently trades towards the lower end of a USD 9,613.1-9,663/t range.
• US Private Sector Inventory data showed (bbls) crude +0.8mln (exp. -0.6mln), gasoline +1.9mln (-1.0mln), distillate +0.8mln (+0.2mln), according to Reuters citing sources.
• Gulf Keystone Petroleum has temporarily shut in production at the Shaikan field (capacity approx. 55k BPD) following reports over the past two days of explosions at several nearby oil fields.

Geopolitics: Middle East

• US President Trump's administration asked Israel to stop its strikes on Syrian military forces in the south of the country, while Israel promised that it would cease the attacks on Tuesday evening, according to a US official cited by Axios.
• US President Trump is to meet with the Qatari PM today to discuss negotiations over Gaza's ceasefire deal and are expected to discuss efforts to resume negotiations between the US and Iran to reach a new nuclear agreement, according to Axios.
• US, France and Germany agreed that Iran faces stiff sanctions if there is no deal by the end of August, according to Axios.
• Foreign tanker reportedly seized by Iran for 'smuggling' 2mln litres of fuel, according to SNN.
• Iranian Parliament issues statement saying negotiations with US cannot begin until preconditions are met, according to ISNA

Geopolitics: Ukraine

• US President Trump said weapons are already being shipped to Ukraine and NATO will pay them back for everything and won't have boots on the ground, while he added that Iran wants to talk but he is in no rush to talk with Iran.
• Russia's Kremlin says subject of weapon supplies to Ukraine is high on agenda, via Ifax; phone call with US President Trump not planned but can be organised quickly, via Tass.

US Event Calendar

• 7:00 am: Jul 11 MBA Mortgage Applications, prior 9.4%
• 8:30 am: Jun PPI Final Demand MoM, est. 0.2%, prior 0.1%
• 8:30 am: Jun PPI Ex Food and Energy MoM, est. 0.2%, prior 0.1%
• 8:30 am: Jun PPI Final Demand YoY, est. 2.5%, prior 2.6%
• 8:30 am: Jun PPI Ex Food and Energy YoY, est. 2.7%, prior 3%
• 9:15 am: Jun Industrial Production MoM, est. 0.1%, prior -0.2%
• 9:15 am: Jun Capacity Utilization, est. 77.4%, prior 77.4%

Central Banks 

• 8:00 am: Fed’s Barkin Gives Speech in Westminister, MD
• 9:15 am: Fed’s Hammack Speaks on Community Development
• 10:00 am: Fed’s Barr Speaks on Financial Regulation
• 2:00 pm: Fed Releases Beige Book
• 3:30 pm: Fed’s Bostic Appears on Fox Business Network
• 6:30 pm: Fed’s Williams Speaks on Economic Outlook, Policy

DB's Jim Reid concludes the overnight wrap

Morning from Berlin. I was at an important dinner last night in this beautiful city and got a phone call from my wife. I said I was at a work dinner and could I call her back later. Before I could finish she said. “It’s an emergency. I have five nine-year-old girls over for a sleepover specifically to see the new Zombies 4 film just released. They’ve all been waiting three years for this day (since Zombies 3) and I can’t get into our Disney+ account. Do you know the password?” I had to make my excuses to leave the table and go through my phone to desperately try to find it. Thankfully I did and the world could move on.

Meanwhile, markets have struggled to move on from the debate as to how inflationary the US tariff policy will be with yesterday’s US CPI providing something for everyone on this topic. On the one hand, the core CPI print was below expectations for a 5th consecutive month, and the S&P 500 even moved up to an intraday record at the open. But as investors digested the print and focused on the more obvious tariff impacts in the various components, Treasuries extended their decline and the 30yr yield (+4.3bps) moved back above the 5% mark again (closing at 5.02%). It’s previously closed above 5% for only 9 days since 2007. 6 days were during the issuance- and Fed-driven Treasury sell-off in autumn 2023, and 3 days were back in May this year after the Moody's downgrade and amid increased focus on the implications of the Republican budget bill that was passing through the House.

In terms of the details of the print, monthly CPI came in at +0.29% in June (vs. +0.3% expected), which was a 5-month high but broadly in line with expectations. Moreover, the core CPI measure was a comparatively softer +0.23% (vs. +0.3% expected), which eased fears that this month would see a big jump thanks to the tariffs. However, there were some concerning signs under the surface, and household appliances (+1.9%) saw their biggest monthly price jump in records back to 1999. And if you looked at core goods (excluding used cars and trucks) there was a decent +0.32% monthly gain that was the strongest since February 2023. So the fear is that as the tariff impact is more fully felt (with plenty more in the pipeline), those increases could become more widespread across the consumer basket. Indeed, those concerns were clear in market pricing too, and the 2yr US inflation swap (+2.0bps) moved up to a fresh two-year high of 2.97%. Watch out for PPI today and importantly the usual read through to those categories that directly feed into core PCE. Our economists are tracking +0.30% for the PPI print after yesterday’s data (see their CPI reaction note for more).

That growing pessimism on inflation meant investors dialled back their expectations for rate cuts this year. They are now pricing in a rate cut by September as only a 58% probability, down from 65% the day before. And for the year as a whole, investors now see just 44bps of rate cuts by the December meeting, down from 48bps the day before. That said, there was another round of calls for rate cuts from President Trump, who posted afterwards that the “Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!” But there was no such urgency in the limited Fedspeak following the CPI print, with Boston Fed President Collins saying that “an ‘actively patient’ approach to monetary policy remains appropriate”. And for markets, the prospect of fewer rate cuts and more inflation helped to push Treasury yields higher across the curve. So the 2yr yield (+4.1bps) was up to 3.94%, the 10yr yield (+4.8bps) hit a one-month high of 4.48%, and the 30yr yield (+4.3bps) closed above 5% for the first time since May 23rd, at 5.02%.

The hawkish implications from the CPI print meant that most equities struggled. The S&P 500 fell by -0.40% in a very broad-based decline that saw 453 stocks lose ground, which was the largest number of decliners in eight weeks. Indeed, the only S&P sector to advance was information technology (+1.27%), which was led by a +4.04% gain for Nvidia, as the chipmaker reached a new all-time high after news the previous evening that it would resume AI chip deliveries to China. The boost for tech stocks meant that the NASDAQ (+0.18%) hit another all-time high, having now surged by +35.4% since its closing low just after Liberation Day. By contrast, banks were among the underperformers after earnings from several US financials, with the KBW Bank Index falling -2.42%. Wells Fargo (-5.48%) and BlackRock (-5.88%) saw sizeable slumps after missing estimates, with JPMorgan (-0.74%) falling back more modestly after their release. On the other hand, Citigroup (+3.68%) rose to its highest since 2008 after beating revenue estimates and announcing increased stock buybacks. S&P 500 and NASDAQ 100 futures are both down by -0.15% this morning.

Elsewhere, the tariff deadline on August 1 remains in focus, although it’s clear that markets aren’t pricing in a full bounceback in the tariffs yet, with the expectation that further trade deals or delays will avoid that outcome. Speaking of which, Trump announced yesterday that he had reached a deal with Indonesia. This will see goods from Indonesia facing US tariffs of 19%, above the 10% interim tariff over the past three months but clearly below the 32% the country faced under the initial Liberation Day tariffs on April 2. Trump later posted that Indonesia also agreed to buy $15bn in US energy, $4.5bn of agricultural products and 50 Boeing jets. Boeing’s shares briefly rallied on the news but were back in the red (-0.22%) by the close. Trump also added that “Transshipment from a higher Tariff Country” via Indonesia would face additional tariffs.

Asian equity markets are mostly lower with the S&P/ASX 200 (-0.92%) leading the way after nearing record highs earlier this week. Additionally, the KOSPI (-0.86%), the CSI (-0.33%) and the Shanghai Composite (-0.13%) are also lower. The Hang Seng (+0.28%) is bucking the regional trend, continuing its strong gains from the previous session, buoyed by NVIDIA's announcement that it will be resuming H20 AI chip sales to China. The Nikkei (+0.55%) is being helped by a Yen at its weakest since April and a JGB rally at the long-end with 30 and 40yr yields -3bps and -8bps, respectively, after yesterday’s slump. 10yr JGBs are +1.5bps, likely catching up with yesterday’s global sell-off that saw the 10yr yield hit its highest intraday level since 2008, and the 30yr yield move to its highest intraday level since that maturity was first issued in 1999. I wrote about this more in my chart of the day yesterday (link here ), and our FX strategists also have a new podcast on the political and policy choices facing Japan and the market impact on the yen. You can listen to it on Spotify here or the DB Research website here. It’s a timely discussion before the Upper House election on Sunday.

Back in Europe, the tone was more downbeat yesterday, with equities losing ground across the continent. That included a 3rd consecutive decline for the STOXX 600 (-0.37%), and a 4th consecutive decline for the DAX (-0.42%). However, sovereign bond yields did move off their highs from the previous day, with those on 10yr bunds (-1.7bps), OATs (-2.6bps) and BTPs (-2.0bps) all moving lower. That outperformance for OATs came as French PM Bayrou proposed some €44bn of measures to reduce the deficit, including ending two public holidays on Easter Monday and VE Day. The leader of the National Rally party Marine Le Pen has threatened to bring down the government unless Bayrou rows back the proposed measures. Meanwhile, in the UK gilts lost further ground, with the 10yr yield up +2.4bps, whilst the 30yr yield (+2.9bps) moved up to its highest since late May, at 5.46%.

There wasn’t much other data yesterday, with Canada’s CPI rising as expected to +1.9% in June. However, the CPI-median measure followed by the Bank of Canada ticked up to +3.1% (vs. +3.0% expected), which led investors to push back the timing of the next rate cut, whilst 10yr government bond yields rose +8.4bps on the day. Meanwhile in Germany, the ZEW survey rose more than expected in July, with the expectations component up to a three-year high of 52.7 (vs. 50.4 expected).

To the day ahead now, and US data releases include the PPI reading for June, along with industrial production and capacity utilisation. In the UK, there’s also the CPI print for June. From central banks, we’ll hear from the Fed’s Barkin, Hammack, Barr and Williams, and the Fed will release their Beige Book. The European Commission will also be releasing its proposal for the next 7-year EU budget running from 2028 to 2034 (see our economists’ preview here). Finally, earnings releases include Bank of America, Morgan Stanley, Goldman Sachs and United Airlines.

Tyler Durden Wed, 07/16/2025 - 07:34

Futures Drop As Tariffs, Earnings And Rising Yields Dent Sentiment

US equity futures and global stocks dropped, but were well off session lows, as a stream of negative tariff headlines and dialed-back expectations for interest-rate cuts prompted doubts about the market’s ability to sustain recent highs and sent 30Y yields above 5%, a level seen as a redline for further stock appreciation. As of 7:00am, the S&P 500 was on track for a second straight decline, with futures down 0.1% after , while Nasdaq futures were 0.3% lower after closing at a record; the small-caps Russell 2000 is seeing an early outperformance bid. Pre-mkt, Mag7/semis are mixed as are Cyclicals with Banks seeing an offer into the next batch of earnings. In Europe, the Stoxx 600 slipped 0.2%, weighed down by technology shares as ASML Holding NV trimmed its growth outlook for next year, citing trade tensions; French car giant Renault slumped 16% after slashing its profit guidance. Treasury yields are flat as is the USD. Commodities are mostly higher with Ags leading, precious metals following while energy is modestly weaker. Today’s macro data focus is the PPI data which will give more clues about how tariffs are affecting companies after mixed CPI numbers. We have another batch of Fedspeakers who will say nothing of importance.

In premarket trading, Mag 7 stocks are mixed (Apple +0.3%, Alphabet +0.2%, Meta +0.3%, Microsoft little changed, Tesla -0.4%, Amazon -0.5%, Nvidia -0.6%). Here are some other notable premarket movers:

• Crypto-linked stocks rose with Bitcoin prices in premarket trading Wednesday as President Donald Trump said the House will pass the GENIUS Act stablecoin bill on Wednesday after a procedural vote Tuesday failed (Among gainers Strategy +1.5%, Circle Internet Group +1.6%, Coinbase +0.8%, Galaxy Digital +4.1%, Hut 8 +2.3%, Hive Digital Technologies +0.7%, MARA Holdings +1.8%, Cleanspark +1.8%, Riot Platforms +2.1%, Cipher Mining +0.5%, Bitfarms +2.9%, Terawulf +1.6%, Bit Digital +6.4%, SharpLink Gaming +13%, and Bitdeer Technologies +2.6%).
• ASML ADRs (ASML) fall 8.4% after the chip equipment maker struck a more cautious tone about growth outlook next year.
• JB Hunt reported 2Q earnings that beat estimates, but flagged “higher professional driver wages and equipment-related costs.” 
• Brighthouse Financial (BHF) is up 7.4% on light volume after the Wall Street Journal said Aquarian is in exclusive talks to buy the provider of annuities and life insurance, citing people familiar.
• Global Payments (GPN) is up 6.4%; activist investor Elliott Investment Management has amassed a sizable position in payments services company, according to a person with knowledge of the matter.
• Renault SA shares sank 16% after the automaker lowered its profitability outlook for the year and named company veteran Duncan Minto interim chief executive officer.
• Nvidia Corp. boss Jensen Huang anticipates getting the first batch of US licenses to export H20 AI chips to China soon.
• Barclays Plc was fined £42 million ($56 million) over failures to properly identify financial crime risks with two clients.
• Huawei Technologies Co. took the top spot in China’s smartphone market for the first time in more than four years.

Among trade headlines, Trump said he was likely to impose tariffs on pharmaceuticals as soon as the end of the month and that levies on chips could come soon as well. Traders further pared bets to their lowest level in a month for two Federal Reserve interest rate cuts this year on anticipation that tariff-related costs are increasingly being passed on to consumers (a continuation of a bet that has so far been dead wrong). Elsewhere, EU’s McGrath says a trade deal between the EU and US can be done by Aug. 1 and expects two weeks of “intense negotiations.” Meanwhile, UBS strategists said US equity investors are complacent in their view that tariffs are predominantly a negotiation tool. They put their S&P 500 year-end target of 5,300 - some 1000 lower than where the S&P is trading now - under review.

Traders trimmed expectations for Fed rate cuts after the CPI data, but the main Fed focus today is on who may replace Powell. Kevin Hassett is the early frontrunner, Bloomberg reported, with Kevin Warsh also in the top two. The Trump administration is also said to be finalizing an executive order that would pave the way for 401(k) retirement savings plans to invest in private equity.

After big bank earnings got off to an underwhelming start on Tuesday, investors will be looking at the next flurry of results with Bank of American Corp., Goldman Sachs and Morgan Stanley reporting today. “We have toned down our risk by a notch,” said Mohit Kumar, chief European strategist at Jefferies International. “However, technicals are still supportive and news flow of more deals being struck over the coming weeks should offset some of the negative trade rhetoric.”

US stocks are back to near-historic premiums over global peers, but bargain hunters must also work harder to find options outside the world’s biggest market, according to Bloomberg Intelligence. The S&P 500 now trades at a 55% forward P/E premium to the Bloomberg Global ex-US Index, more than double the roughly 25% median from 2015-19.

Economic data due later Wednesday is expected to show a similar trend for producer goods. “The tariff inflation shock starts to hit,” wrote Robin Brooks, a senior fellow at the Brookings Institution and former chief currency strategist at Goldman Sachs Group Inc. “This effect will keep building in intensity as pre-tariff inventories are depleted.”

In Europe, the Stoxx 600 is down 0.2%, falling for a fourth straight session after some disappointing corporate updates from the region. Autos are leading declines as Renault shares fall 17% after the French carmaker issued a profit warning. Technology stocks also underperform as ASML shares fall 8% in Amsterdam after the CEO walked back the company’s growth forecast for next year due to trade disputes and global tensions.  Equities have struggled to hit new highs in recent weeks amid lingering uncertainty around the US trade war. Among notable moves, Richemont rises on better-than-expected sales, defying a wider downturn for luxury goods. Renault shares tumble after a profit warning. Here are some of the more notable equity movers:

• Richemont shares rise as much as 2.4% after the Cartier-owner reported surging sales at its jewelry division despite a tough backdrop for the luxury goods industry.
• Partners Group climbs as much as 7.3%, after the Swiss private equity company delivers a beat on assets under management in the first half and reiterates its outlook for the full year.
• Barco shares surge as much as 17%, hitting the highest since April 2024, following the visualization specialist’s first-half Ebitda beat.
• ASML shares fall as much as 7.3%, the most in three months, after the chip equipment maker cautioned about growth next year.
• Renault shares fall as much as 17%, the steepest drop since March 2020, after the French carmaker issued a profit warning on Tuesday evening, lowering operating margin guidance for this year and also trimming its free cash flow expectations.
• AstraZeneca shares drop as much as 1.6%, after its experimental drug for a rare plasma cell disorder failed to delay death or reduce the number of hospitalizations for heart problems.
• Ontex shares plunge as much as 12%, after the maker of disposable personal hygiene products delivered quarterly results below expectations and cut its full-year earnings outlook.
• Bakkafrost falls as much as 14%, the most since July 2023, after the seafood group issued a profit warning.
• Nel falls as much as 8.1%, the most since May, after the hydrogen technology supplier reported a sharp fall in new orders in the second quarter. Citi said weak order intake is a continued concern.
• Fuchs shares plunge as much as 16%, the biggest drop since 2011, as the lubricant maker cut its annual guidance after second-quarter profit came in lower than expected.
• DNO shares drop as much as 8.1% after the oil producer said it has temporarily suspended operations at its Tawke license in the Kurdistan region of Iraq following three explosions early this morning.
• Svenska Handelsbanken declines as much as 8%, the worst performer on the Stoxx 600 Banks Index, after net interest income at the Nordic lender missed analysts estimates for the second quarter.

Earlier in the session, Asian stocks were mixed, as gains in Hong Kong and optimism over the tech sector were countered by dimming prospects for Federal Reserve easing. The MSCI Asia Pacific Index dipped 0.1%. Key gauges declined in Australia and South Korea, while shares rose in Taiwan as well as Hong Kong. TSMC and Alibaba climbed for a second day after news that the US would allow resumption of some AI chip shipments to China. The regional benchmark has traded sideways in July after a three-month rally. Broader sentiment took a hit Wednesday after US consumer price data indicated companies are beginning to pass through some tariff-related costs, with Fed Dallas President Lorie Logan saying. Hong Kong stocks advanced meanwhile, with the Hang Seng Index heading for its highest close since February 2022 on a rebound in risk appetite amid signs of easing US-China tensions. Still, upcoming Chinese corporate results are expected to show weak earnings growth.

In FX, the Bloomberg Dollar Spot Index falls 0.1%. The euro outperforms its G-10 peers slightly with a 0.2% gain. The pound fades post-CPI gains, trading flat versus the greenback just below $1.34.

In rates, Treasuries are steady ahead of more US inflation data later on Wednesday in the form of producer prices. US 10-year yields are flat at 4.48%. Japan’s super-long bonds rebounded following a sharp selloff earlier in the week, as investors weighed the potential for increased fiscal spending after this weekend’s upper house election.  

Gilts fall along the curve after UK inflation unexpectedly rose to its highest level since January 2024, prompting traders to trim bets on easing by the Bank of England this year. UK 10-year yields rise 3 bps to 4.65%. Bunds are little changed.

In commodities, spot gold rises $16 to around $3,340/oz. Bitcoin climbs 2% and back above $119,000. WTI falls 0.5% to near $66.20 a barrel.

Today's US economic data slate includes June PPI and July New York Fed services business activity (8:30am) and June industrial production (9:15am). Fed speaker slate includes Barkin (8am), Hammack (9:15am), Barr (10am), Bostic (3:30pm) and Williams (6:30pm), and Fed releases Beige book at 2pm

Market Snapshot

• S&P 500 mini -0.1%
• Nasdaq 100 mini -0.3%
• Russell 2000 mini little changed
• Stoxx Europe 600 -0.1%
• DAX +0.2%
• CAC 40 little changed
• 10-year Treasury yield -1 basis point at 4.48%
• VIX unchanged at 17.38
• Bloomberg Dollar Index little changed at 1206.71
• euro +0.2% at $1.162
• WTI crude -0.3% at $66.32/barrel

Top Overnight News

• Trump said on Tuesday that Treasury Secretary Scott Bessent could be a candidate to replace Federal Reserve Chairman Jerome Powell, but suggested that might not happen. When asked if Powell’s renovation cost overrun were a fire able offense, Trump said “I think it sort of is.” RTRS
• President Donald Trump said he was likely to impose tariffs on pharmaceuticals as soon as the end of the month and that levies on semiconductors could come soon as well, suggesting that those import taxes could hit alongside broad “reciprocal” rates set for implementation on Aug. 1. BBG
• Kevin Hassett, one of President Donald Trump’s longest-serving economic aides, is the early frontrunner to replace Jerome Powell as Federal Reserve chief next year, followed by Kevin Warsh. BBG
• Trump is expected to sign an executive order in the coming days designed to help open up 401(k)s to private-market investments, according to WSJ.
• Senator Cassidy said President Trump is to sign Fentanyl Act into law on Wednesday.
• Defense Secretary Hegseth ordered the release of 2000 National Guard troops from the federal protection mission in LA.
• Japan’s super-long bonds rose, reversing course after a rout earlier in the week over concern that this weekend’s election will result in higher government spending. BBG
• Rio Tinto’s macro commentary on the Chinese economy – “industrial activity and net exports grew strongly during the quarter on the back of China’s highly competitive manufacturing sector. Trade diversification continued as the decline in exports to the US was more than offset by shipments to other regions. Retail sales growth was supported by ongoing stimulus measures while the government remains committed to infrastructure investment. However, headwinds such as trade tensions and a soft property market continue to pose challenges."
• Indonesia’s central bank cut its policy rate by 25bp to 5.25% (analysts were split on the outcome of this meeting, with some anticipating a cut while others felt rates would stay unchanged). WSJ
• ASML (-7.3% in pre)  walked back growth forecasts for next year due to the trade uncertainty, even as its second-quarter orders beat estimates. The stock slumped. BBG
• Inflation unexpectedly rose in the U.K., likely keeping policymakers at the BOE cautious despite a limping economy. Headline, core, and services CPI all were higher than anticipated. WSJ
• Taiwan, Switzerland and India, none of which received letters letters from Trump last week, are all potentially closing in on deals that could be announced in the coming weeks. Politico
• Fed's Logan (2026 voter) said the base case is that monetary policy needs to hold tight for a while longer to bring inflation down and she wants to see low inflation continue longer to be convinced, while she added that June CPI data suggests PCE inflation, which the Fed targets at 2%, will rise. Logan also commented that softer inflation and a weakening labor market could call for lower rates fairly soon and under the base case, the Fed can sustain maximum employment even with modestly restrictive policy. 

Trade/Tariffs

• US President Trump they are working on five to six trade deals and there will probably be two to three deals by August 1st.
• US President Trump said pharma tariffs will probably begin at month-end and initial tariffs on pharmaceuticals will be low, while Trump also said they will release tariff letters for smaller countries soon and will probably set one tariff for all of them over 10%.
• US President Trump said a great deal for everybody was just made with Indonesia with Indonesia to pay 19%, while the US will pay nothing and similar deals are in the works. Trump later posted that "Indonesia has committed to purchasing $15 Billion Dollars in U.S. Energy, $4.5 Billion Dollars in American Agricultural Products, and 50 Boeing Jets, many of them 777’s."
• US Trade Representative announced the initiation of a Section 301 investigation of Brazil's unfair trading practices.
• China's Commerce Ministry said China and Australia signed a memorandum of understanding on the implementation and review of the China-Australia Free Trade Agreement.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly subdued following the lacklustre handover from Wall St owing to an acceleration in US CPI data, while trade uncertainty lingered after President Trump suggested pharma tariffs could begin at month-end and tariff letters for smaller countries could be sent out soon. ASX 200 retreated with nearly all sectors in the red aside from tech and with miners not helped by the indecisive performance in Rio Tinto following its quarterly operations update in which it registered higher iron ore production but a decline in shipments Y/Y. Nikkei 225 traded indecisively in which the index swung between gains and losses amid the lack of pertinent drivers for Japan and some political concerns ahead of Sunday's upper house election as a recent poll showed the ruling bloc was at risk of losing its majority. Hang Seng and Shanghai Comp were mixed in the absence of any major fresh pertinent macro drivers and despite comments from China's Vice Premier He Lifeng who stated that China is accelerating the construction of a modern industrial system and is stepping up efforts to boost consumption.

Top Asian News

• China's Vice Premier He Lifeng said China is accelerating the construction of a modern industrial system and its industrial upgrading providing support to global industrial and supply chain operations, while He added China is stepping up efforts to boost consumption.
• Japan's ruling coalition risks losing a majority at the upper house election, according to Nikkei.

European bourses opened mixed/mostly lower, but have traded with an upward bias throughout the European morning, to show a mixed picture. European sectors are mixed, with underperformance in Autos, dragged lower by post-earning losses in Renault (-16.4%) after it cut guidance; Stellantis (-4%) also moves lower after it halted its hydrogen fuel cell technology development programme. Tech has also been pressured by ASML (-8.7%) after its Q2 results; the Co. reported better-than-expected headline metrics, but guidance was light and the CEO said they cannot confirm growth in 2026.

Top European News

• BoE Governor Bailey said multilateral institutions are essential for good policymaking and they are following financial stability risks closely, while he noted countries with big deficits typically come under most financial market pressure and he is yet to be convinced about the need for a retail CBDC.

European earnings

• ASML -8.7%: Lowered Q3 rev., margin outlook, does not confirm 2026 growth target.
• Renault -16.2%: Provided dreary FY guidance, stressed poor retail market.
• Rio Tinto +1.2%: Pilbara iron ore output rise, copper production exp. at top of FY guidance.
• Richemont +0.5%: Q1 sales at constant FX rise.
• Sandvik -0.9%: mixed results, noted of strong momentum noted in mining, highest order intake ever in Q2

FX

• The dollar is giving back some of Tuesday's gains seen in the aftermath of US CPI data. Further inflation data is due today with Y/Y PPI expected to decline to 2.5% from 2.6%, M/M is expected to pick up to 0.2% from 0.1%. Once released, markets will be able to cement calls for the upcoming PCE report (the Fed's preferred inflation gauge). Today's Fed docket is a busy one with Barkin, Barr, Cook, Hammack, Logan, Kugler & Williams all due on deck. Note, the Fed Beige Book at 19:00BST will be parsed for the impact of Trump's tariff regime at a regional level. DXY sits towards the top end of Tuesday's 97.97-98.69 range.
• EUR is attempting to atone for Tuesdays’ losses, which saw EUR/USD slip onto a 1.15 handle for the first time since 25th June. French politics moved back into focus yesterday after PM Bayrou unveiled his plans to bolster France's finances. His outline was subsequently met with threats of no confidence from the hard left and far right. EUR/USD sits towards the bottom end of Tuesday's 1.1593-1.1692 range.
• JPY flat vs. the USD after a recent run of losses, which have lifted USD/JPY from the low seen on July 1st at 142.68 to a multi-month high today at 149.18. The main drivers for the move have been a broad pick-up in the USD and angst over the lack of trade progress between Japan and the US. The next upside level for USD/JPY comes via the 3rd April high at 149.33.
• GBP has seen some mild support in the wake of hotter-than-expected UK inflation metrics. Y/Y CPI unexpectedly advanced to 3.6% from 3.4% (exp. 3.4%) and the services metric held steady at 4.7% vs. expectations of a decline to 4.6%. Nonetheless, markets still expect the BoE to cut rates next month, but US Jobs data will be in focus on Thursday. Whilst Cable did briefly make its way back onto a 1.34 handle with a session high at 1.3416, the upside was limited by the aforementioned stagflationary outlook facing the UK.
• Antipodeans are slightly mixed vs. the USD with no obvious driver for the mild discrepancy. Newsflow surrounding both currencies remains light as markets await tomorrow's Australian jobs report.
• PBoC set USD/CNY mid-point at 7.1526 vs exp. 7.1914 (Prev. 7.1498)

Fixed Income

• USTs are incrementally firmer/flat (whilst global peers are broadly lower). Currently in a in a very thin 110-08+ to 111-13+ band, awaiting PPI, Industrial Production and Fed speak. PPI will be scoured to see if the series’ internals are evident of tariff-driven price pressures emerging; a slew of Fed speakers are also due.
• Bunds are modestly lower today, but well off lows in a 129.19-56 band, matching Tuesday’s trough ahead of the 129.12 low from last Friday. The main event today for the bloc is the EU Multiannual Financial Framework (MFF) presentation, i.e. the bloc’s budget for the next seven years. As it stands, Commission President von der Leyen is scheduled to unveil it at 16:00BST.
• OATs are trading broadly in-line with peers, down by a handful of ticks. In French politics, PM Bayrou’s plan to save EUR 43.8bln from the budget in 2026 in order to get the debt-to-GDP ratio down, in-line with existing commitments/targets. The proposal has already drawn criticism from various political parties, unsurprisingly National Rally (RN) has said they will move to censure Bayrou if he does not change his plans.
• Gilts are underperforming, opened lower by 19 ticks and then slipped another 21 in short order to a 91.17 base. Notching a new WTD low and taking Gilts back to 91.16 from the first week of June. If breached, then we look to 90.11 from May as the next major point of support. Pressure emerged on the morning’s June inflation. A hotter-than-expected series, driven by motor fuel prices. While hotter, the series has only sparked a relatively modest move in BoE pricing with c. 1bps of implied easing removed from August and only around 3bps by end-2025.
• UK DMO sells GBP 1.5bln 4.5% 2034 Gilt: b/c 3.32x, average yield 4.553%, tail 0.4bps.
• Germany sells EUR 1.129bln vs exp. EUR 1.5bln 2.90% 2056 and EUR 0.8bln vs exp. EUR 1.0bln 1.25% 2048 Bunds

Commodities

• WTI and Brent are currently incrementally lower, and have held a negative bias throughout the European morning. Brent Sept’25 has traded in a very tight USD 68.46-69.09/bbl range, and ultimately awaiting US PPI.
• Precious metals are mixed with Palladium a little lower whilst spot Gold and Silver post modest gains. Newsflow has been relatively light today and Dollar price-action has been muted. The yellow-metal is seemingly attempting to pare back losses seen in the prior session. XAU/USD currently trades in a USD 3,325.21-3,342.49/oz range, with the low for today incrementally above its 50 DMA (3,323.42)
• Base metals are broadly lower continuing the downbeat mood seen overnight, in-fitting with the broader risk tone across the equities complex. 3M LME Copper currently trades towards the lower end of a USD 9,613.1-9,663/t range.
• US Private Sector Inventory data showed (bbls) crude +0.8mln (exp. -0.6mln), gasoline +1.9mln (-1.0mln), distillate +0.8mln (+0.2mln), according to Reuters citing sources.
• Gulf Keystone Petroleum has temporarily shut in production at the Shaikan field (capacity approx. 55k BPD) following reports over the past two days of explosions at several nearby oil fields.

Geopolitics: Middle East

• US President Trump's administration asked Israel to stop its strikes on Syrian military forces in the south of the country, while Israel promised that it would cease the attacks on Tuesday evening, according to a US official cited by Axios.
• US President Trump is to meet with the Qatari PM today to discuss negotiations over Gaza's ceasefire deal and are expected to discuss efforts to resume negotiations between the US and Iran to reach a new nuclear agreement, according to Axios.
• US, France and Germany agreed that Iran faces stiff sanctions if there is no deal by the end of August, according to Axios.
• Foreign tanker reportedly seized by Iran for 'smuggling' 2mln litres of fuel, according to SNN.
• Iranian Parliament issues statement saying negotiations with US cannot begin until preconditions are met, according to ISNA

Geopolitics: Ukraine

• US President Trump said weapons are already being shipped to Ukraine and NATO will pay them back for everything and won't have boots on the ground, while he added that Iran wants to talk but he is in no rush to talk with Iran.
• Russia's Kremlin says subject of weapon supplies to Ukraine is high on agenda, via Ifax; phone call with US President Trump not planned but can be organised quickly, via Tass.

US Event Calendar

• 7:00 am: Jul 11 MBA Mortgage Applications, prior 9.4%
• 8:30 am: Jun PPI Final Demand MoM, est. 0.2%, prior 0.1%
• 8:30 am: Jun PPI Ex Food and Energy MoM, est. 0.2%, prior 0.1%
• 8:30 am: Jun PPI Final Demand YoY, est. 2.5%, prior 2.6%
• 8:30 am: Jun PPI Ex Food and Energy YoY, est. 2.7%, prior 3%
• 9:15 am: Jun Industrial Production MoM, est. 0.1%, prior -0.2%
• 9:15 am: Jun Capacity Utilization, est. 77.4%, prior 77.4%

Central Banks 

• 8:00 am: Fed’s Barkin Gives Speech in Westminister, MD
• 9:15 am: Fed’s Hammack Speaks on Community Development
• 10:00 am: Fed’s Barr Speaks on Financial Regulation
• 2:00 pm: Fed Releases Beige Book
• 3:30 pm: Fed’s Bostic Appears on Fox Business Network
• 6:30 pm: Fed’s Williams Speaks on Economic Outlook, Policy

DB's Jim Reid concludes the overnight wrap

Morning from Berlin. I was at an important dinner last night in this beautiful city and got a phone call from my wife. I said I was at a work dinner and could I call her back later. Before I could finish she said. “It’s an emergency. I have five nine-year-old girls over for a sleepover specifically to see the new Zombies 4 film just released. They’ve all been waiting three years for this day (since Zombies 3) and I can’t get into our Disney+ account. Do you know the password?” I had to make my excuses to leave the table and go through my phone to desperately try to find it. Thankfully I did and the world could move on.

Meanwhile, markets have struggled to move on from the debate as to how inflationary the US tariff policy will be with yesterday’s US CPI providing something for everyone on this topic. On the one hand, the core CPI print was below expectations for a 5th consecutive month, and the S&P 500 even moved up to an intraday record at the open. But as investors digested the print and focused on the more obvious tariff impacts in the various components, Treasuries extended their decline and the 30yr yield (+4.3bps) moved back above the 5% mark again (closing at 5.02%). It’s previously closed above 5% for only 9 days since 2007. 6 days were during the issuance- and Fed-driven Treasury sell-off in autumn 2023, and 3 days were back in May this year after the Moody's downgrade and amid increased focus on the implications of the Republican budget bill that was passing through the House.

In terms of the details of the print, monthly CPI came in at +0.29% in June (vs. +0.3% expected), which was a 5-month high but broadly in line with expectations. Moreover, the core CPI measure was a comparatively softer +0.23% (vs. +0.3% expected), which eased fears that this month would see a big jump thanks to the tariffs. However, there were some concerning signs under the surface, and household appliances (+1.9%) saw their biggest monthly price jump in records back to 1999. And if you looked at core goods (excluding used cars and trucks) there was a decent +0.32% monthly gain that was the strongest since February 2023. So the fear is that as the tariff impact is more fully felt (with plenty more in the pipeline), those increases could become more widespread across the consumer basket. Indeed, those concerns were clear in market pricing too, and the 2yr US inflation swap (+2.0bps) moved up to a fresh two-year high of 2.97%. Watch out for PPI today and importantly the usual read through to those categories that directly feed into core PCE. Our economists are tracking +0.30% for the PPI print after yesterday’s data (see their CPI reaction note for more).

That growing pessimism on inflation meant investors dialled back their expectations for rate cuts this year. They are now pricing in a rate cut by September as only a 58% probability, down from 65% the day before. And for the year as a whole, investors now see just 44bps of rate cuts by the December meeting, down from 48bps the day before. That said, there was another round of calls for rate cuts from President Trump, who posted afterwards that the “Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!” But there was no such urgency in the limited Fedspeak following the CPI print, with Boston Fed President Collins saying that “an ‘actively patient’ approach to monetary policy remains appropriate”. And for markets, the prospect of fewer rate cuts and more inflation helped to push Treasury yields higher across the curve. So the 2yr yield (+4.1bps) was up to 3.94%, the 10yr yield (+4.8bps) hit a one-month high of 4.48%, and the 30yr yield (+4.3bps) closed above 5% for the first time since May 23rd, at 5.02%.

The hawkish implications from the CPI print meant that most equities struggled. The S&P 500 fell by -0.40% in a very broad-based decline that saw 453 stocks lose ground, which was the largest number of decliners in eight weeks. Indeed, the only S&P sector to advance was information technology (+1.27%), which was led by a +4.04% gain for Nvidia, as the chipmaker reached a new all-time high after news the previous evening that it would resume AI chip deliveries to China. The boost for tech stocks meant that the NASDAQ (+0.18%) hit another all-time high, having now surged by +35.4% since its closing low just after Liberation Day. By contrast, banks were among the underperformers after earnings from several US financials, with the KBW Bank Index falling -2.42%. Wells Fargo (-5.48%) and BlackRock (-5.88%) saw sizeable slumps after missing estimates, with JPMorgan (-0.74%) falling back more modestly after their release. On the other hand, Citigroup (+3.68%) rose to its highest since 2008 after beating revenue estimates and announcing increased stock buybacks. S&P 500 and NASDAQ 100 futures are both down by -0.15% this morning.

Elsewhere, the tariff deadline on August 1 remains in focus, although it’s clear that markets aren’t pricing in a full bounceback in the tariffs yet, with the expectation that further trade deals or delays will avoid that outcome. Speaking of which, Trump announced yesterday that he had reached a deal with Indonesia. This will see goods from Indonesia facing US tariffs of 19%, above the 10% interim tariff over the past three months but clearly below the 32% the country faced under the initial Liberation Day tariffs on April 2. Trump later posted that Indonesia also agreed to buy $15bn in US energy, $4.5bn of agricultural products and 50 Boeing jets. Boeing’s shares briefly rallied on the news but were back in the red (-0.22%) by the close. Trump also added that “Transshipment from a higher Tariff Country” via Indonesia would face additional tariffs.

Asian equity markets are mostly lower with the S&P/ASX 200 (-0.92%) leading the way after nearing record highs earlier this week. Additionally, the KOSPI (-0.86%), the CSI (-0.33%) and the Shanghai Composite (-0.13%) are also lower. The Hang Seng (+0.28%) is bucking the regional trend, continuing its strong gains from the previous session, buoyed by NVIDIA's announcement that it will be resuming H20 AI chip sales to China. The Nikkei (+0.55%) is being helped by a Yen at its weakest since April and a JGB rally at the long-end with 30 and 40yr yields -3bps and -8bps, respectively, after yesterday’s slump. 10yr JGBs are +1.5bps, likely catching up with yesterday’s global sell-off that saw the 10yr yield hit its highest intraday level since 2008, and the 30yr yield move to its highest intraday level since that maturity was first issued in 1999. I wrote about this more in my chart of the day yesterday (link here ), and our FX strategists also have a new podcast on the political and policy choices facing Japan and the market impact on the yen. You can listen to it on Spotify here or the DB Research website here. It’s a timely discussion before the Upper House election on Sunday.

Back in Europe, the tone was more downbeat yesterday, with equities losing ground across the continent. That included a 3rd consecutive decline for the STOXX 600 (-0.37%), and a 4th consecutive decline for the DAX (-0.42%). However, sovereign bond yields did move off their highs from the previous day, with those on 10yr bunds (-1.7bps), OATs (-2.6bps) and BTPs (-2.0bps) all moving lower. That outperformance for OATs came as French PM Bayrou proposed some €44bn of measures to reduce the deficit, including ending two public holidays on Easter Monday and VE Day. The leader of the National Rally party Marine Le Pen has threatened to bring down the government unless Bayrou rows back the proposed measures. Meanwhile, in the UK gilts lost further ground, with the 10yr yield up +2.4bps, whilst the 30yr yield (+2.9bps) moved up to its highest since late May, at 5.46%.

There wasn’t much other data yesterday, with Canada’s CPI rising as expected to +1.9% in June. However, the CPI-median measure followed by the Bank of Canada ticked up to +3.1% (vs. +3.0% expected), which led investors to push back the timing of the next rate cut, whilst 10yr government bond yields rose +8.4bps on the day. Meanwhile in Germany, the ZEW survey rose more than expected in July, with the expectations component up to a three-year high of 52.7 (vs. 50.4 expected).

To the day ahead now, and US data releases include the PPI reading for June, along with industrial production and capacity utilisation. In the UK, there’s also the CPI print for June. From central banks, we’ll hear from the Fed’s Barkin, Hammack, Barr and Williams, and the Fed will release their Beige Book. The European Commission will also be releasing its proposal for the next 7-year EU budget running from 2028 to 2034 (see our economists’ preview here). Finally, earnings releases include Bank of America, Morgan Stanley, Goldman Sachs and United Airlines.

Tyler Durden Wed, 07/16/2025 - 07:34

Pulled up the rest of the story on young US citizens doing the same work as migrant labor. The thought being they were young enough to do it. Teenage boys heeding the call of a federal government looking for teens to work on farms. That was 1965. I can tell you laboring for a bunch […]

The post Replace Migrant Farm Workers with High Schoolers?” appeared first on Angry Bear.

Renault Shock Profit Warning Sends Shares Crashing

Shares of French carmaker Renault, trading in Paris, crashed the most since the early days of the Covid pandemic after the company issued an unscheduled release, warning of lower profits for the year amid slumping demand and fierce competition from Chinese carmakers like BYD Motors.

Renault stated in the release that it had lowered its operating margin forecast for the year to around 6.5%, down from at least 7% previously. It also cut its free cash flow estimate to between 1 billion euros and 1.5 billion euros, down from 2 billion euros. 

It stated that first-half volumes were lower than expected, as the retail market continues to soften, and added that inventories have swelled.  

Renault slashed its full-year forecast:

• Sees operating margin 6.5%, saw at least 7%, estimate 7.1% (Bloomberg Consensus)

• Sees free cash flow EU1 billion to EU1.5 billion, saw at least EU2 billion, estimate EU2.09 billion

Renault's preliminary H1 results:

• Prelim operating margin 6%, estimate 6.8%

• Prelim revenue EU27.6 billion, estimate EU27.46 billion

The revised guidance underscores Europe's sluggish car market and the competitiveness of Chinese manufacturers, such as BYD, which are flooding the continent with vehicles and putting increased pressure on domestic brands. 

In Paris, Renault shares crashed 17%, the largest daily decline since early March 2020.  

And shares are at their lowest point since 2024. 

Commenting on the shock profit warning, UBS analyst Justinus Steinhorst told clients:

Renault contributes 60% to the selloff in Autos on the day with the UBS Autos basket {UBXEAUTO} down 2.4% after issuing a profit warning.

Here's what other top desks are saying (courtesy of Bloomberg):

Oddo (outperform, PT to €55 from €60)

• Analyst Michael Foundoukidis says it's a stark warning and unfortunate timing after CEO departure, leading them to cut their estimates by 10% 

• "The release suggests an awful June which will likely raise fears around the visibility in the new guide," he adds

• Says stock will likely be seen as "dead money near term" at least pending new CEO

Morgan Stanley (equal-weight)

• Analyst Javier Martinez de Olcoz Cerdan says while Renault is the first auto OEM to cut its guidance, the factors behind this profit warning will likely drive more cuts across the sector

• Guidance implies about 7% cut to consensus Ebit for FY25, with Renault impacted by further commercial pressures

• 2Q may be bottom of the cycle if tariffs normalize, but if not there is further downside risk to margins and performance

Citi (buy)

• Commercial pressure in Europe adds to broader headwinds from tariffs and pricing pressures, which Renault had until now been managing better than many peers, analyst Harald Hendrikse writes

• While the stock does already discount some of the concerns, investors may be wondering if margins are peaking at a time when wider SXAP margins are nearing a trough

• Appointment of a CEO may be seen as a positive "when the dust settles"

JPMorgan (overweight)

• Analyst Jose Asumendi says preliminary 1H Ebit 13% below consensus expectations, impacted by volume miss, commercial pressures and higher receivables due to timing impacts

• Notes that Renault does expect some improvement in 2H, and that several launches are scheduled

• Will be crucial for Renault to provide clarity on permanent CEO succession

.  .  .

Tyler Durden Wed, 07/16/2025 - 07:20

Renault Shock Profit Warning Sends Shares Crashing

Shares of French carmaker Renault, trading in Paris, crashed the most since the early days of the Covid pandemic after the company issued an unscheduled release, warning of lower profits for the year amid slumping demand and fierce competition from Chinese carmakers like BYD Motors.

Renault stated in the release that it had lowered its operating margin forecast for the year to around 6.5%, down from at least 7% previously. It also cut its free cash flow estimate to between 1 billion euros and 1.5 billion euros, down from 2 billion euros. 

It stated that first-half volumes were lower than expected, as the retail market continues to soften, and added that inventories have swelled.  

Renault slashed its full-year forecast:

• Sees operating margin 6.5%, saw at least 7%, estimate 7.1% (Bloomberg Consensus)

• Sees free cash flow EU1 billion to EU1.5 billion, saw at least EU2 billion, estimate EU2.09 billion

Renault's preliminary H1 results:

• Prelim operating margin 6%, estimate 6.8%

• Prelim revenue EU27.6 billion, estimate EU27.46 billion

The revised guidance underscores Europe's sluggish car market and the competitiveness of Chinese manufacturers, such as BYD, which are flooding the continent with vehicles and putting increased pressure on domestic brands. 

In Paris, Renault shares crashed 17%, the largest daily decline since early March 2020.  

And shares are at their lowest point since 2024. 

Commenting on the shock profit warning, UBS analyst Justinus Steinhorst told clients:

Renault contributes 60% to the selloff in Autos on the day with the UBS Autos basket {UBXEAUTO} down 2.4% after issuing a profit warning.

Here's what other top desks are saying (courtesy of Bloomberg):

Oddo (outperform, PT to €55 from €60)

• Analyst Michael Foundoukidis says it's a stark warning and unfortunate timing after CEO departure, leading them to cut their estimates by 10% 

• "The release suggests an awful June which will likely raise fears around the visibility in the new guide," he adds

• Says stock will likely be seen as "dead money near term" at least pending new CEO

Morgan Stanley (equal-weight)

• Analyst Javier Martinez de Olcoz Cerdan says while Renault is the first auto OEM to cut its guidance, the factors behind this profit warning will likely drive more cuts across the sector

• Guidance implies about 7% cut to consensus Ebit for FY25, with Renault impacted by further commercial pressures

• 2Q may be bottom of the cycle if tariffs normalize, but if not there is further downside risk to margins and performance

Citi (buy)

• Commercial pressure in Europe adds to broader headwinds from tariffs and pricing pressures, which Renault had until now been managing better than many peers, analyst Harald Hendrikse writes

• While the stock does already discount some of the concerns, investors may be wondering if margins are peaking at a time when wider SXAP margins are nearing a trough

• Appointment of a CEO may be seen as a positive "when the dust settles"

JPMorgan (overweight)

• Analyst Jose Asumendi says preliminary 1H Ebit 13% below consensus expectations, impacted by volume miss, commercial pressures and higher receivables due to timing impacts

• Notes that Renault does expect some improvement in 2H, and that several launches are scheduled

• Will be crucial for Renault to provide clarity on permanent CEO succession

.  .  .

Tyler Durden Wed, 07/16/2025 - 07:20

What GAO Found The Department of Homeland Security's (DHS) Office of Intelligence and Analysis (I&A) has four primary strategic oversight requirements based in statute and policy: develop (1) an annual consolidated budget proposal, (2) an annual intelligence priorities framework, (3) enterprise program reviews and submit an evaluation report annually to the DHS Secretary, and (4) intelligence training for enterprise staff. Although these have been policy requirements since 2013, GAO found that I&A has not consistently completed them due to a lack of leadership focus. For example, I&A had not fulfilled its requirement to propose a consolidated budget for the Intelligence Enterprise until fiscal year 2025. Developing and implementing procedures to develop a consolidated budget would help I&A complete this annual requirement. In turn, this would help ensure components are budgeting the necessary resources to share intelligence on threats. GAO found that I&A addressed six of eight leading collaboration practices. For example, I&A ensured accountability for enterprise-wide activities by establishing performance standards to evaluate collaboration. Status of Department of Homeland Security (DHS) Office of Intelligence and Analysis (I&A) Actions to Collaborate with the DHS Intelligence Enterprise that Address Leading Practices However, I&A has partially addressed two of eight practices. For instance, with respect to the leading practice of leveraging resources and information, GAO found that at the time of its review, I&A lacked a process to identify experts in relevant components to coordinate on reviews of intelligence products. According to I&A and component analysts this has caused errors in products. In June 2025, I&A finalized a coordination list of experts, but it is too soon to tell if it is working as intended. Fully implementing this process could help I&A ensure its product reviews are more robust and avoid publishing inaccurate or incomplete information. Why GAO Did This Study Violent extremists and adversarial nation-states pose a complex set of threats to the U.S. Addressing these threats requires coordinated intelligence sharing across the DHS Intelligence Enterprise—the primary method to integrate DHS's intelligence programs. Led by I&A, it includes the intelligence offices of nine other DHS components. Internal DHS reviews have proposed enhancements to I&A's oversight and coordination roles for the enterprise. GAO was asked to review issues related to I&A's oversight of the DHS Intelligence Enterprise. This report addresses the extent to which I&A is (1) conducting its required strategic oversight, and (2) addressing leading practices in its required collaboration with the DHS Intelligence Enterprise. GAO reviewed DHS policies for I&A's strategic oversight requirements and enterprise collaboration efforts. GAO interviewed management officials from all enterprise components. GAO conducted discussion groups with analysts in three components and three I&A analytic centers that collaborate most frequently with I&A on intelligence products. Finally, GAO compared I&A efforts to leading collaboration practices.

Supply Chain planning done the right way: Why is this a big deal? Well for one thing China and the European Union have been at odds with each other. EU centrist parties are losing ground to far-right groups, Democracy (ID) and the European Conservatives and Reformists (ECR). This political realignment is poised to influence the […]

The post Supply Chain Location is Important to Supply Asia appeared first on Angry Bear.

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 10.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 11, 2025. Last week’s results included an adjustment for the Fourth of July holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 10.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 13 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 25 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 12 percent from one week earlier. The unadjusted Purchase Index increased 11 percent compared with the previous week and was 13 percent higher than the same week one year ago.

“Treasury yields finished higher last week on average despite an intra-week drop, driven partly by renewed concerns of the impact of tariffs on the economy. As a result, mortgage rates rose after two weeks of declines, which contributed to slower application activity,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Jumbo rates were lower than conventional rates for the third straight week, as some depositories may be positioning themselves for growth in balance sheet lending.”

Added Kan, “Purchase applications remained sensitive to both the uncertain economic outlook and the volatility in rates and declined to the slowest pace since May. Refinance applications also dipped because of higher rates, with refinance applications falling, led by VA refinances partially reversing their previous week’s gain, dropping 22 percent.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.82 percent from 6.77 percent, with points remaining unchanged at 0.62 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 13% year-over-year unadjusted. 
Red is a four-week average (blue is weekly).  
Purchase application activity is still depressed, but above the lows of October 2023 and slightly above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index decreased and remains very low.

China's Rare Earths Exports High Highest Level Since 2009

China exported 7,742 metric tonnes of rare earths last month, marking the highest peak since 2009.

This is according to newly released customs data.

Additionally, as Statista's Anna Fleck reports, it also marks a 60-percent increase from June 2024 and a 32-percent increase from May 2025.

You will find more infographics at Statista

Total exports of rare minerals for the cumulative first half of 2025 amounted to 32,569 tonnes, up from 29,095 tonnes in H1 2024 (+11.9 percent).

In April, Beijing implemented export restrictions on seven rare earth elements and magnets in a move widely considered a response to increased tariffs from the United States.

These restrictions raised concerns in countries such as the U.S., Japan and European nations over supply chain disruptions, particularly in the defense, energy and automotive sectors.

But in June, Beijing and Washington reached a new set of agreements to speed up rare earth shipments to the U.S. once more. China’s commerce ministry has also said it is willing to accelerate the examination and approval of rare earths exports to the EU.

The customs data reflected in this chart does not specify which rare earths were exported, with a more detailed breakdown expected later this month.

Tyler Durden Wed, 07/16/2025 - 06:55

China's Rare Earths Exports High Highest Level Since 2009

China exported 7,742 metric tonnes of rare earths last month, marking the highest peak since 2009.

This is according to newly released customs data.

Additionally, as Statista's Anna Fleck reports, it also marks a 60-percent increase from June 2024 and a 32-percent increase from May 2025.

You will find more infographics at Statista

Total exports of rare minerals for the cumulative first half of 2025 amounted to 32,569 tonnes, up from 29,095 tonnes in H1 2024 (+11.9 percent).

In April, Beijing implemented export restrictions on seven rare earth elements and magnets in a move widely considered a response to increased tariffs from the United States.

These restrictions raised concerns in countries such as the U.S., Japan and European nations over supply chain disruptions, particularly in the defense, energy and automotive sectors.

But in June, Beijing and Washington reached a new set of agreements to speed up rare earth shipments to the U.S. once more. China’s commerce ministry has also said it is willing to accelerate the examination and approval of rare earths exports to the EU.

The customs data reflected in this chart does not specify which rare earths were exported, with a more detailed breakdown expected later this month.

Tyler Durden Wed, 07/16/2025 - 06:55

Global Oil Consumption Reaches All-Time High

Authored by Robert Rapier via OilPrice.com,

• Global oil consumption reached an all-time high in 2024, driven primarily by non-OECD countries, with the U.S. remaining the largest consumer.

• The U.S. continues to lead the world in total oil production, contributing to a record global output despite a slowdown in its growth rate.

• The 2025 Statistical Review reveals key shifts including declining production in Russia and Saudi Arabia, surging demand in India, and the significant rise of Guyana as an oil producer.

Each year, the Statistical Review of World Energy offers important insights into global energy trends. Now published by the Energy Institute in collaboration with KPMG and Kearney, the 2025 edition—reflecting full-year 2024 data—reveals that global oil production and consumption remained relatively steady, but there are meaningful shifts underway.

These shifts reflect not only changing geopolitics and economic recovery patterns but also longer-term questions around energy security, investment priorities, and the uneven global evolution toward decarbonization.

Global Oil Consumption Hits New High

In 2024, global oil consumption–which excludes biofuels but includes coal and natural gas derivatives–reached 101.8 million barrels per day (bpd). The represents an all-time high that slightly surpassed the 2023 level by 0.7%. On average, oil demand has increased by 1% per year over the past decade, driven almost entirely by non-OECD countries.

The U.S. remains the world’s largest oil consumer, accounting for 18.7% of global demand. Daily consumption in the U.S. fell slightly from 2023, but over the past decade it increased by 0.5% per year on average.  

China was the world’s second-largest oil consumer, accounting for 16.1% of global demand. Its daily consumption fell 1.2% to 16.4 million bpd in 2024. This decline is a marked departure from the average 4% gain per year over the past decade, which means China’s oil demand may be showing signs of plateauing. With economic growth slowing and a push toward electrification of transportation underway, some analysts speculate China may be approaching its long-term oil demand peak.

Meanwhile, India’s oil consumption continues to surge, jumping 3.1% year-over-year to 5.6 million bpd. The nation’s economic expansion and rising middle class continue to drive growth, putting India on track to become the third-largest oil consumer globally within a few years.

OECD nations saw modest changes in oil demand (+0.1%) while non-OECD nations saw demand jump by 1.2%. 

U.S. Leads All Producers to New Record

On the production side, global oil output (including natural gas liquids and other liquids) hit a record 96.9 million barrels per day. That’s 1.8 million barrels more than the pre-pandemic peak, and about 9% higher than the lows seen during the COVID-19 downturn. On the surface, it’s a story of resilience and recovery. But dig a little deeper, and the numbers reveal a more complicated picture.

The United States continues to lead the world in total oil production, clocking in at 20.1 million barrels per day. But that headline figure includes a sizable share of natural gas liquids—byproducts like ethane and propane that aren’t typically directly used as transportation fuels but may function as refinery feedstock. 

Strip those out, and U.S. production of crude oil and condensate—the type of output most analysts consider “true oil”—comes in at 13.2 million barrels per day. Although this was yet another production record, the 2% increase from 2023 was less than half the 4.2% average annual gain over the previous decade, which could be an indication that U.S. production is close to a plateau. 

Russia follows in second place at 10.2 million barrels per day of crude plus condensate. That was down 3.1% from 2023, largely due to the impact of Western sanctions and logistical constraints. However, Russian exports to China and India remained robust, helping the country maintain relevance in global energy markets despite diplomatic isolation.

Saudi Arabia also saw production fall by 4.2%. Saudi was in third place in 2024 with 9.2 million barrels per day, the lowest level since 2011. The drop reflects both voluntary production cuts to support prices and long-term questions about the Kingdom’s spare capacity amid heavy domestic investments in refining and petrochemicals.

Proved Reserves

The Statistical Review also sheds light on global oil reserves, although those are only available for the end of 2020. At that time, the world’s proven oil reserves stood at 1.7 trillion barrels—enough to sustain current production levels for roughly 53.5 years. However, the distribution of those reserves remains highly uneven.

Venezuela still holds the largest proved reserves, at 304 billion barrels, but much of that oil is heavy and difficult to extract. Saudi Arabia is second with 298 billion barrels, followed by Iran at 158 billion. The U.S., by contrast, holds 69 billion barrels—reflecting both a mature production base and a reserve classification system that tends to be more conservative.

Unusual Developments and Emerging Themes

A few notable trends emerged from this year’s data:

• Saudi Arabia’s Output Decline: The drop in Saudi production is significant not only because it’s the lowest in more than a decade, but also because it signals a shift in how the Kingdom may balance price stability with market share.

• U.S. Efficiency and NGLs: While the U.S. continues to be the top oil producer, a growing share of that output is in the form of natural gas liquids, which are not suitable for all applications and require different refining infrastructure. This evolution has implications for and refining strategies.

• Flat Growth in Global Reserves: The relative lack of reserve growth despite strong consumption reflects an investment hesitancy across much of the industry. This could pose long-term supply challenges if demand doesn’t moderate.

• India’s Ascent: India’s rise as a major demand center—with relatively little domestic production—makes it one of the most strategically important countries in the oil market. Its policy choices on storage, refining, and renewables will shape future demand dynamics.

• Guyana’s Rise: Guyana’s meteoric rise from zero to over 600,000 barrels daily in just five years is one of the fastest production ramps in oil industry history. With reserves now estimated at 11 billion barrels, Guyana is projected to reach 1 million barrels daily soon, potentially becoming a top-five global producer within the decade.

Outlook: Stability or Strain?

Oil markets in 2024 were defined by an uneasy equilibrium. On the one hand, production and consumption were closely matched, and price volatility was relatively contained. On the other, the factors holding that balance together—OPEC+ coordination, U.S. shale resilience, and subdued global demand growth—are all subject to disruption.

Looking ahead, several questions loom:

• Will China’s oil demand begin to decline in absolute terms?

• Can U.S. shale sustain output without massive reinvestment?

• Will geopolitical risks in the Middle East, Russia, or elsewhere upset the delicate supply-demand balance?

These aren’t just market questions—they are strategic ones that affect global inflation, trade, and energy security.

Final Thoughts

The 2025 Statistical Review confirms that oil is still very much at the center of the global economy. Demand is growing in the developing world, production remains concentrated among a handful of players, and supply vulnerabilities persist.

In the coming weeks, I’ll continue to unpack key findings from the Statistical Review, including natural gas, coal, renewables, and nuclear power trends. But one thing is clear from the oil data: in a world increasingly focused on energy transition, the importance of oil—economically and geopolitically—hasn’t gone anywhere.

Tyler Durden Wed, 07/16/2025 - 05:00

What Are Inheritance And Gift Taxes Like In Europe?

An estimated $2 to $3 trillion were inherited globally in 2024, according to consulting firm EY. As EY analysts highlight, the impending inheritance to be passed on from the baby boomer generation will marks the biggest transfer of wealth in modern financial history.

Against this backdrop, we're turning our attention to the topic inheritance and gift taxes.

Statista's Anna Fleck reports that data compiled by the Tax Foundation (as of 2024) reveals that the approach to inheritance and gift tax varies considerably across Europe.

You will find more infographics at Statista

In France, tax rates generally range from 5 percent to 45 percent, depending on the value of the transfer and the degree of kinship, but can climb as high as 60 percent for distant relatives.

The range is similar in Germany, where rates vary from 7 percent to 50 percent, depending on the amount and relationship between the parties.

Only two other European countries have higher top rates: Belgium (3 percent to 80 percent) and Spain (7.7 percent to 87.6 percent).

In the UK, the range is narrower, with rates between 20 percent and 40 percent, while Ireland applies a flat rate of 33 percent.

At the other end of the spectrum, some of the lowest inheritance and gift tax rates in Europe can be found in Bulgaria (0.4 percent to 6.6 percent), Croatia (4 percent), Italy (4 percent to 8 percent), Lithuania (5 percent to 10 percent), Iceland (10 percent), Portugal and Poland (both with 0 percent to 20 percent).

Around ten other European countries - including Sweden, Norway, Austria, Estonia, and Romania - do not impose any inheritance or gift taxes at all.

Tyler Durden Wed, 07/16/2025 - 04:15

Euro Adoption Unlikely In Czechia As Elections Favorites & Public Opinion Align Against Common Currency

Authored by Thomas Brooke via Remix News,

Andrej Babiš's ANO, SPD, STAČILO! and others vow to protect the Czech crown, while business leaders and government coalition partners push for the adoption of the euro...

Czechia’s possible adoption of the euro in the future may emerge as an issue in the upcoming parliamentary elections this October.

While most parties in the current governing coalition have expressed support for adopting the common European currency, the opposition ANO movement — widely expected to win the largest share of the vote — remains firmly opposed.

ANO leader Andrej Babiš has repeatedly dismissed the euro as economically dangerous and politically unwise. “I do not support it,” he said bluntly, warning that if the current coalition retained power, “they will introduce the euro.”

He argued that adopting the euro would lead to higher prices and force Czechia to take on the financial liabilities of heavily indebted eurozone members. Instead, he advocates keeping the Czech crown, following the example of wealthy non-euro EU states such as Denmark and Sweden.

Czechia committed to adopting the euro when it joined the European Union in 2004, but remains one of only three countries from that enlargement round — alongside Poland and Hungary — that have yet to join.

Other opposition parties are similarly critical. Kateřina Konečná of the far-left STAČILO! movement said, “The euro means higher prices,” citing Croatia’s experience. “I am against giving up the Czech crown, which would, among other things, give up another part of our sovereignty.” Her party has called for any future decision to be made by referendum.

The populist Motorists, led by Petr Macinka, and the right-wing SPD under Tomio Okamura also reject euro adoption.

“We would be giving up another part of our sovereignty and submitting even more to Brussels,” said Macinka. Okamura’s SPD warned of a forced sharing of debt burdens with large Western states and added, “The Czech crown is also a national symbol.”

The fledgling Motorists are seen as a possible coalition partner for Babiš’s ANO should the parliamentary arithmetic not allow it to govern on its own; however, such an alliance would be subject to the party reaching the threshold to enter parliament. Okamura’s SPD is less likely to be seen as a viable partner, given its more hardline approach, but it is not impossible.

While political resistance remains strong among right-leaning and nationalist parties, much of the current government coalition takes the opposite view.

STAN leader and Deputy Prime Minister Vít Rakušan has declared, “The Czech Republic should adopt the euro as soon as possible,” calling for a parallel public education campaign to dispel what he termed myths about the currency.

Pirates vice-chairman Zdeněk Hřib also supports swift adoption, claiming it would boost economic stability, strengthen Europe, and save the state up to 30 billion crowns annually in debt servicing costs.

Prime Minister Petr Fiala has struck a more cautious tone, acknowledging that the Czech Republic now meets key Maastricht criteria but warning that public opposition remains too high.

“Majority public support is key to the decision to launch the process of adopting the euro,” he said.

“This condition has not yet been met.”

A Median poll from early 2024 found that more than two-thirds of Czechs believed adopting the euro would not be beneficial, with three in five wanting a referendum on the issue. Students and entrepreneurs were somewhat more supportive, with 45 percent and 40 percent backing the euro, respectively.

This heavily contrasts with support among businesses, with a PwC survey showing nearly 70 percent of CEOs see euro adoption as beneficial to their companies, citing savings on transaction costs, elimination of exchange rate risks, and greater investor confidence. “Seven out of ten bosses convinced of the positive impact of the euro on their company is already a very strong signal sent to the new government,” said PwC partner Jan Brázda.

Read more here...

Tyler Durden Wed, 07/16/2025 - 03:30

The 28 Biggest Global Risks, According To The UN

As the world confronts overlapping crises, from accelerating climate change to the unchecked spread of misinformation, global risks are increasingly interconnected, compounding one another in ways that could overwhelm current institutions and systems.

This visualization, via Visual Capitalist's Kayla Zhu, shows the top 28 most important global risk as outlined in the United Nations Global Risk Report 2024.

Risk importance combines the likelihood and severity of a risk, with top risks seen as most likely to occur with severe impacts if or when they manifest.

Rankings are based on a survey of 1,100 stakeholders across 136 countries which includes representatives of government, industry, civil society, and academia.

What is the Most Important Risk the World is Facing?

Below, we show the top 28 most important global risks and their importance scores, according to the United Nations.

Rank Risk Importance Score Category 1 Climate Change Inaction 37.2 Environmental 2 Large-Scale Pollution 36.0 Environmental 3 Mis- and Disinformation 35.4 Political 4 Natural Hazard Risks 35.0 Environmental 5 Rise in Inequalities 34.7 Societal 6 Biodiversity Decline 34.6 Environmental 7 Geopolitical Tensions 34.5 Political 8 Natural Resource Shortages 34.3 Environmental 9 Mass Movement of People 33.2 Societal 10 Large-Scale War 32.6 Political 11 Biorisks 32.3 Societal 12 New Pandemic 32.1 Societal 13 Rule of Law Collapse 32.0 Political 14 Cybersecurity Breakdown 31.7 Technological 15 Global Financial Crisis 31.6 Economic 16 Weapons of Mass Destruction 31.1 Political 17 AI and Frontier Tech 31.0 Technological 18 Proliferation of Non-State Actors 30.8 Societal 19 Tech-Driven Power Concentration 30.8 Technological 20 Social Cohesion Collapse 30.4 Societal 21 Widespread Debt Crisis 30.2 Economic 22 Economic Fragmentation 29.1 Economic 23 State Sovereignty Erosion 28.5 Political 24 Global Economic Stagnation 27.9 Economic 25 Supply Chain Collapse 27.8 Economic 26 Geoengineering Disasters 27.5 Technological 27 Multilateral Institution Collapse 26.3 Political 28 Space-Based Event 23.4 Environmental

Across all regions, environmental risks emerged as the highest priority, with climate change inaction and large-scale pollution both seen as highly likely and highly severe.

Climate change inaction was the most important risk overall, ranking as the most pressing issue in three of the seven regions.

In total, 84% of respondents said mis- and disinformation is already occurring, making it the most immediate risk today, according to the UN.

Mis- and disinformation also ranked as the top risk in the next two years, according to the World Economic Forum’s Global Risk Report.

While environmental concerns were top of mind for all regions, other perceptions varied by region. For example, in North Africa and Asia, concerns about cybersecurity breakdowns and artificial intelligence (AI) were among the top 10 risks, unlike in other regions.

Cybersecurity breakdowns were among the least prepared-for risks, with a preparedness score of just 3.9 out of 7. The only risk the world is less prepared for is a potential space-based event.

To learn more about risks the world is facing in the near and long term, check out this graphic that visualizes the top global risks, as ranked by the World Economic Forum.

Tyler Durden Tue, 07/15/2025 - 22:10

The 28 Biggest Global Risks, According To The UN

As the world confronts overlapping crises, from accelerating climate change to the unchecked spread of misinformation, global risks are increasingly interconnected, compounding one another in ways that could overwhelm current institutions and systems.

This visualization, via Visual Capitalist's Kayla Zhu, shows the top 28 most important global risk as outlined in the United Nations Global Risk Report 2024.

Risk importance combines the likelihood and severity of a risk, with top risks seen as most likely to occur with severe impacts if or when they manifest.

Rankings are based on a survey of 1,100 stakeholders across 136 countries which includes representatives of government, industry, civil society, and academia.

What is the Most Important Risk the World is Facing?

Below, we show the top 28 most important global risks and their importance scores, according to the United Nations.

Rank Risk Importance Score Category 1 Climate Change Inaction 37.2 Environmental 2 Large-Scale Pollution 36.0 Environmental 3 Mis- and Disinformation 35.4 Political 4 Natural Hazard Risks 35.0 Environmental 5 Rise in Inequalities 34.7 Societal 6 Biodiversity Decline 34.6 Environmental 7 Geopolitical Tensions 34.5 Political 8 Natural Resource Shortages 34.3 Environmental 9 Mass Movement of People 33.2 Societal 10 Large-Scale War 32.6 Political 11 Biorisks 32.3 Societal 12 New Pandemic 32.1 Societal 13 Rule of Law Collapse 32.0 Political 14 Cybersecurity Breakdown 31.7 Technological 15 Global Financial Crisis 31.6 Economic 16 Weapons of Mass Destruction 31.1 Political 17 AI and Frontier Tech 31.0 Technological 18 Proliferation of Non-State Actors 30.8 Societal 19 Tech-Driven Power Concentration 30.8 Technological 20 Social Cohesion Collapse 30.4 Societal 21 Widespread Debt Crisis 30.2 Economic 22 Economic Fragmentation 29.1 Economic 23 State Sovereignty Erosion 28.5 Political 24 Global Economic Stagnation 27.9 Economic 25 Supply Chain Collapse 27.8 Economic 26 Geoengineering Disasters 27.5 Technological 27 Multilateral Institution Collapse 26.3 Political 28 Space-Based Event 23.4 Environmental

Across all regions, environmental risks emerged as the highest priority, with climate change inaction and large-scale pollution both seen as highly likely and highly severe.

Climate change inaction was the most important risk overall, ranking as the most pressing issue in three of the seven regions.

In total, 84% of respondents said mis- and disinformation is already occurring, making it the most immediate risk today, according to the UN.

Mis- and disinformation also ranked as the top risk in the next two years, according to the World Economic Forum’s Global Risk Report.

While environmental concerns were top of mind for all regions, other perceptions varied by region. For example, in North Africa and Asia, concerns about cybersecurity breakdowns and artificial intelligence (AI) were among the top 10 risks, unlike in other regions.

Cybersecurity breakdowns were among the least prepared-for risks, with a preparedness score of just 3.9 out of 7. The only risk the world is less prepared for is a potential space-based event.

To learn more about risks the world is facing in the near and long term, check out this graphic that visualizes the top global risks, as ranked by the World Economic Forum.

Tyler Durden Tue, 07/15/2025 - 22:10