📝 Market Report.
💼 Treasury Secretary Scott Bessent suggested a review of the entire Federal Reserve institution, beyond just the current controversy over building renovations, to examine whether the Fed has been successful in its mission.
🤝 Bessent has been at the center of the controversy, both as a potential successor at the Fed and as a mediator looking to discourage Trump from ousting Powell. Bessent backed the idea that the Fed should be easing interest rates, as inflation has been moderate, and criticized the Fed for being stuck in a certain mindset despite having “all these Ph.D.s.”
📉 “They were fear mongering over tariffs, and thus far we have seen very little, if any, inflation,” Bessent said to CNBC. “We’ve had great inflation numbers. So, you know, I think this idea [is] of them not being able to break out of a certain mindset. All these Ph.D.s over there, I don’t know what they do.”
⏳ Bessent also said that implementing high tariff rates on countries starting August 1 “will put more pressure on those countries to come with better agreements,” suggesting that the August 1 deadline is more of a negotiating tactic to squeeze trading partners into favorable terms for the U.S., rather than a firm deadline to ink deals.
📅 Bessent suggested that the Trump administration is more concerned with the quality of trade agreements than their timing, ahead of the August 1 deadline for countries to secure deals or face steep tariffs. He also said there would be “talks in the very near future” with China, and that the administration could discuss issues like China’s overcapacity in manufacturing sectors and its purchases of sanctioned Iranian and Russian oil.
⚖️ US administration has told trading partners that tariff rates could “boomerang back” to the higher April 2 levels if no deals are reached by August 1.
🤔 Despite the administration’s insistence that this time they are serious about the 1 August tariffs, investors and importers appear torn between bracing for the tariffs to take effect and betting they will be postponed again.
💪 Donald Trump’s stance in negotiations has grown more resolute as the critical deadline approaches. According to Bloomberg reports, the U.S. administration is advocating for a near-universal tariff exceeding 10%, with only limited exemptions for sectors such as aviation, medical devices, and select spirits. EU officials have indicated that even if a resolution is finalized, they anticipate the terms will fall short of the previous favorable conditions, signaling a shift in the bargaining landscape.
🌍 Meanwhile, The European Union has imposed sanctions on two Chinese banks and five Chinese companies as part of the latest round of sanctions against Russia over its invasion of Ukraine. This is the first time that Chinese banks have been added to the European sanctions list since the Russian invasion of Ukraine in 2022. The sanctioned banks are Heihe Rural Commercial Bank Co. and Heilongjiang Suifenhe Rural Commercial Bank Co. The EU had earlier proposed adding the two banks to a list of financial institutions that have allegedly aided Moscow by processing transactions or providing export financing for trade operations that circumvent EU sanctions.
⚔️ The war in Ukraine is part of the trade war; it always has been. A Chinese Foreign Ministry spokesman stating that the normal exchanges and cooperation between Chinese and Russian companies are consistent with WTO rules and market principles. The nation’s largest state banks have a history of complying with previous US sanctions against Iran and North Korea to avoid losing access to the US dollar clearing system. China promises to retaliate and protect its own financial institutions.
📊 The Congressional Budget Office (CBO) is accused of using outdated static scoring models that fail to account for the dynamic growth effects of tax cuts, deregulation, and tariffs by Trump’s administration. Proponents argue that One Big Beautiful Bill policies will drive economic growth, increase revenues, and lower deficits. The One Big Beautiful Bill tax cuts and investment incentives will create a surge of economic activity, generating higher revenues and reducing interest rates. Critics say the CBO frontloaded costs and ignored tariff revenue estimates, skewing the analysis.
💰 Advocates cite the success of Trump’s 2017 Tax Cuts and Jobs Act, which spurred 2.9% GDP growth in 2018, higher business investment, and repatriation of overseas profits. They claim the CBO underestimated the economic impact of those reforms, repeating the same mistake with now with this new Bill.
🕊️ Peace talks between Ukraine and Russia are planned for Wednesday in Turkey, according to Ukrainian President Volodymyr Zelenskiy. Russia and Ukraine have provided conflicting information on the dates of the talks, with some sources saying they will take place over two days, Thursday and Friday. The two sides have held two rounds of talks in Istanbul that led to prisoner exchanges, but have made no breakthrough towards a ceasefire or a settlement to end the nearly three-and-a-half-year war.
📉 If a peace agreement is reached, all of Europe’s budget expansion and economic stimulus plans, as well as the business generated for US companies through the promised increase in NATO contributions, will lose momentum or become meaningless.
🛡️ France will double its defense spending to €64 billion by 2027, accelerating the timeline from 2030. Macron described this as a “historic and proportionate” effort to strengthen military capabilities. The additional funds will come from increased economic activity, not borrowing. The updated military planning law will focus on drones, munitions, air defense, and electronic warfare, with €6.5 billion added in 2026-2027. Macron highlighted the “durable Russian threat” to Europe and reduced reliance on U.S. military support.
🤝 France and Germany will hold a joint Defense and Security Council in August to advance cooperation.
🎯 A potential agreement this week between Germany and the United States aims to deploy additional Patriot air-defense units to Ukraine, sourced from European Union funding amid Russia’s ongoing missile and drone strikes. According to the arrangement, Berlin plans to contribute two Patriot battery units directly to Kyiv, while the U.S. would replenish the systems from existing manufacturer reserves, ensuring continuous support despite the conflict’s persistent demands.
🚗 Once again, Germany could be using European funds to increase sales of the US military industry, keeping the US administration happy and avoiding trade tariffs against its automotive sector.
🚫 China has officially blocked OnlyFans. Officials claim that the platform represents “Western moral decay” and “immoral and corrupt Western garbage.”
📈 Market Review:
📊 The Mini S&P 500 futures have retreated after reaching a new all-time high during yesterday’s session, currently standing at 6,340 points. The Nasdaq 100 futures also managed to hit new highs during yesterday’s session, approaching 23,425 points, from which they have since pulled back to the current level of 23,310 points.
💵 The US Dollar Index (DXY) weakened during yesterday’s trading session, dropping below 98 points to a low of 97.70, before rebounding back to the vicinity of 98 points. This led to the EUR/USD pair temporarily recovering to 1.17 during yesterday’s session, after which it has pulled back to its current level of 1.1685.
📉 In Europe, equities remain static as markets await the outcome of trade negotiations between the European bloc and the United States. The DAX 40 futures are currently at 24,290 points, while the Eurostoxx 50 futures have retreated compared to last week’s levels, standing at 5,335 points at the moment.
🛢️ The crude oil market remains around the $68 per barrel mark for Brent, weakening slightly since last week but staying close to this reference zone, currently trading at $68.85 per barrel.
🥇 Gold experienced a significant advance during yesterday’s session, with futures climbing above $3,415 per ounce before retreating to the current level of $3,400.
₿ Finally, Bitcoin continues to test support around the $117,000 zone, and we believe it still has potential to break through the three descending highs formed over the past two weeks, possibly indicating a bullish pattern on the intraday wedge chart.
