📊 Market Report.
🇺🇸 President Donald Trump announced a “massive” trade deal with Japan that includes “reciprocal” tariffs of 15% on Japan’s exports to the U.S., with auto duties reportedly being lowered to that level as well. Trump said Japan will invest $550 billion in the U.S. and the U.S. will “receive 90% of the Profits” from the deal, which he claimed would create “Hundreds of Thousands of Jobs.” Japanese Prime Minister Shigeru Ishiba said auto tariffs on Tokyo will be lowered from the current 25% to 15%, which was seen as a relief for Japan’s auto industry.
🍚 Japan will also increase purchases of U.S. agricultural products like rice, though the deal does not “sacrifice” Japan’s own agriculture sector.
📈 Japan’s stock market reacted positively to the deal, with major auto stocks soaring over 10% and the broader Nikkei 225 index gaining more than 2%. The benchmark 10-year Japanese government bond yield increased 9 basis points as the lowered uncertainty helped pave the way for the Bank of Japan to resume interest rate hikes.
🌏 The deal is the most significant of a series of trade agreements Trump has reached since unveiling sweeping global tariffs in April, and includes a potential joint venture between Japan and the U.S. to support a gas pipeline project in Alaska that the Trump administration has long sought.
🇰🇷 South Korea’s industry minister said Seoul will closely examine the terms of the new U.S.-Japan trade deal, as it puts pressure on South Korea to reach a similar level of tariff reduction by the August 1 deadline. South Korean stocks, particularly automakers and suppliers, rallied on the news of the U.S.-Japan deal, as investors see it as a positive precedent for South Korea.
📦 To reach a similar outcome as Japan, South Korea may need to increase imports of U.S. farm goods and energy, as well as boost investments in the U.S., according to experts.
🇪🇺 The European Union is considering using its “Anti-Coercion Instrument” (ACI) as a potential “nuclear option” to deter trade disputes with the U.S., as the threat of a 30% tariff on EU imports looms. The ACI is designed as a deterrent against “economic coercion” from third-party countries, with the goal of inducing the cessation of the perceived coercion.
🤔 It seems ironic to believe this could happen. In recent years, the United States has dictated Europe’s business dealings, threatening German companies over Nord Stream 2, Dutch semiconductor firms over trade with China, and even Italy over a 2019 agreement with China. The destruction of Nord Stream 2 was particularly humiliating, given Austria and Germany’s investment, yet Germany demanded no accountability despite accusations against the United States.
🇩🇪 This underscores Europe’s inability to resist U.S. coercion, despite claims to the contrary. Germany, the EU’s most influential nation, has been under U.S. military occupation since World War II, which may explain this lack of response.
🤝 However, The EU is currently focused on last-minute talks to reach a trade deal with the U.S., targeting a 10% baseline tariff with exemptions to shield key industries like autos, agriculture, and aerospace. Deploying the ACI would be an escalatory measure, with the EU initially focusing on hitting U.S. goods with more tariffs before potentially using this ACI to block access on US companies to European markets.
🌐 Meanwhile, China’s Commerce Minister Wang Wentao and the EU’s Trade Commissioner Maros Sefcovic had a “candid and in-depth” discussion on economic and trade cooperation, as well as other issues facing both sides. The call comes just days before the China-EU summit on Thursday, where EU leaders plan to press China on rare earth supplies and the war in Ukraine. China has called the EU’s accusations against the two financial institutions “groundless” and said it opposes the unilateral sanctions that lack basis in international law.
🛠️ The two economic giants are also trying to reconcile their positions: U.S. Treasury Secretary Scott Bessent will meet with his Chinese counterparts in Stockholm next week for the third round of trade talks aimed at extending the current tariff truce between the U.S. and China. Bessent said the negotiations can now cover a broader array of topics, potentially including China’s continued purchases of “sanctioned” oil from Russia and Iran. President Trump said he could meet with Chinese leader Xi Jinping “in the not too distant future”, and there are signs of a de-escalation in tensions, such as China suspending an antitrust investigation into a U.S. chemical company.
📉 The U.S. is likely to seek ways to shrink its trade deficit with China, including securing commitments for more U.S. goods purchases. China may push for further concessions on U.S. export controls for advanced technologies. Bessent expressed hope that China will “pull back on some of this glut of manufacturing” and focus more on building a consumer economy, addressing U.S. and EU concerns about Chinese industrial overcapacity.
💼 Treasury Secretary Scott Bessent asserted that Federal Reserve Chair Jerome Powell does not need to resign, despite President Trump’s calls for him to quit. Bessent said he knows Powell and believes he has been a “good public servant”, and that if Powell wants to see out his term ending in May, he should be allowed to do so.
📝 There have been no indications from Powell that he plans to step down, despite criticism from the Trump administration over the Fed’s $2.5 billion building renovation project.
📜 In fact, Senator Mike Lee, a Republican from Utah, briefly shared and then deleted a fake, apparently AI-generated letter purporting to show Federal Reserve Chair Jerome Powell resigning. The letter featured a garbled Fed seal, unusual text spacing, and claimed Powell was resigning “effective at the close of business today, July 22, 2025.” A spokesperson for the Federal Reserve declined to comment on the fake letter, stating “We don’t have any comment on a fake letter.”
🌍 Geopolitics:
🇺🇦 Ukrainian President Volodymyr Zelenskyy approved a law that strips the National Anti-Corruption Bureau of Ukraine (NABU) of its powers, placing it under the control of the Prosecutor General’s Office. The move is seen as a setback in Ukraine’s anti-corruption reforms, which were established at the request of Western donors a decade ago. It could jeopardize further foreign aid and Ukraine’s efforts to join the European Union. It is likely that Zelensky also fears the United States may have utilised independent anti-corruption agencies to remove him from power, prompting him to suppress their activities.
⚖️ Yesterday, President Trump accused Barack Obama of orchestrating an intelligence assessment to undermine his 2016 election victory, calling for criminal charges against Obama and describing the actions as “treason.” Trump claimed Obama led a coordinated effort involving top officials, including then-Vice President Joe Biden, FBI Director James Comey, CIA Director John Brennan, and DNI James Clapper, to damage his presidency. Declassified documents suggest Obama ordered a report on Russian interference in the 2016 election, which Trump alleges was intended to delegitimise his surprise victory over Hillary Clinton.
🚨 Current DNI Tulsi Gabbard referred the matter to Attorney General Pam Bondi, citing evidence that the 44th president may have acted unlawfully by seeking to undermine Trump’s electoral win. Trump described Obama’s actions as irrefutable proof of sedition and claimed it was part of a coup attempt orchestrated by Obama, Clinton, and other officials.
📂 Earlier in July, the Trump administration claimed that certain Epstein-related documents, including a client list, did not exist and reiterated that Epstein had died by suicide in prison, contradicting Trump’s previous campaign promises.
🕵️♂️ This stance alienated Trump’s base, which had embraced the theory that Epstein was murdered to cover up a client list implicating powerful figures in sex crimes. Attorney General Bondi previously referred to the list as real, while Elon Musk, tweeted in June that Trump was implicated in the files. As a result, public dissatisfaction with Trump’s handling of the Epstein files was evident in July, with only 17% of U.S. voters approving—ranking it the lowest among major issues, including immigration and foreign conflicts.
📜 Last Thursday, President Trump directed Attorney General Pam Bondi to release files related to the Jeffrey Epstein investigation, including Grand Jury testimony, which requires judicial approval.
📧 The decision followed over a week of controversy, intensified by a Wall Street Journal report revealing a letter from Trump for Epstein’s 50th birthday, containing a drawing of a naked woman—denounced by Trump as fake, prompting a defamation lawsuit.
📊 Market review:
📈 Futures of the S&P 500 are rising again following the announcement of a trade agreement between Japan and the United States. Currently, the futures of the Mini S&P 500 have reached 6,360 points, close to their all-time highs. In the case of the Nasdaq 100, the increase is less pronounced but is currently near 23,250 points.
💵 The US dollar suffered a setback during yesterday’s session, the second this week, falling below 97.50 points and attempting to recover in the past few hours. This has caused pairs such as EUR/USD to rally strongly in recent hours towards the 1.1750 zone, before slightly retreating to 1.1735.
📊 European equities also appear to be gaining momentum. Futures of the DAX 40 are climbing and approaching 24,400 points, still below last week’s levels but showing improvement. Futures of the Euro Stoxx 50 have also risen and are currently above 5,350 points.
🛢️ Once again, the crude oil market remains in a lateral trend, with Brent barrel prices hovering around the $68.50 mark.
🥇 Gold has rallied once more, ascending in recent hours to the $3,450 per ounce zone, with slight pullbacks to the current $3,435. This movement is driven by the weakness of the US dollar this week.
₿ Bitcoin has also resumed its upward trend, climbing towards $120,000 before retreating in the past few hours to its current level of $118,585.
