Market Report.
⏳ The crucial hours of the week and the last few days are approaching: we will have the Fed’s decision, labour market data and the deadline for Trump’s tariff war. Fasten your seatbelts, investors.
📉 The U.S. Federal Reserve is likely to leave interest rates unchanged at its upcoming policy meeting this week, despite pressure from President Trump for lower rates.
🤔 While a minority of Fed policymakers, including Governors Waller and Bowman, may dissent in favor of a rate cut, the majority remain concerned that Trump’s tariffs could undermine progress on bringing inflation back to the Fed’s 2% goal. Recent trade deals with Japan and the EU have lowered tariff levels, but U.S. tariffs are still at their highest level in 90 years, contributing to higher consumer prices.
📊 Friday’s employment data will give us a clue as to whether there is really a need to cut rates. Remember that, according to Trump, Powell had told him that the US economy is doing well, and if that is the case, what need is there for stimulus?
🎯 We will only see the Fed use the wild card of cuts in two scenarios: worrying data on the US economy or emergencies due to falls on Wall Street. At the moment, neither of these two scenarios seems to be the case.
🤝 U.S. and Chinese officials agreed to seek an extension of their 90-day tariff truce following constructive talks in Stockholm over the past two days. However, no major breakthroughs were announced, but U.S.
📜 U.S. negotiators, including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, stated that any extension of the tariff pause between the U.S. and China will not be agreed to until President Trump signs off on the plan. Bessent warned that if an extension is not reached by the deadline, U.S. tariffs on Chinese goods will “boomerang” back up to their previous April levels.
🌐 The discussions focused on China shifting its economy away from state-led, export-driven manufacturing towards increased consumer demand, which would benefit U.S. exports. But why should China change its economic model now that it is beating its competitors hands down? Perhaps a good reason is that the US continues to have the largest army in the world and its military budget is four times greater than that of China.
⚙️ Unlike the EU, China has more leverage in the trade negotiations due to its control over the global rare earth minerals market, which is critical for many industries, especially for the US defence industry. China established conditions for these exports that they not be used for military purposes, so bingo, that’s the key to everything.
💰 In any case, the large investment figures touted by Trump, such as $550 billion from Japan and $600 billion from the EU, appear to be exaggerated or misrepresented. The actual investment commitments are much smaller. There are discrepancies between how the U.S. and its trade partners are describing the terms of the deals, raising the potential for future disputes.
🇯🇵 Japan has clarified that the US$550 billion investment package with the US is not a direct capital transfer or traditional investment but primarily consists of credits, loans, and guarantees from government-backed financial institutions like JBIC and NEXI.
🛢️ A key wildcard is Trump’s threat to impose new tariffs on countries that buy energy from Russia, which could complicate the U.S.-China trade truce extension. Trump administration is rushing to claim victory on trade deals, but the actual substance and implementation remain uncertain, with many details still under negotiation.
Geopolitics:
🛳️ President Trump repeatedly declared his intention to “take back” the Panama Canal from Panama, claiming excessive tolls and concerns about it falling into “the wrong hands,” specifically referencing growing Chinese influence. However, no concrete policy or military action resulted in the U.S. regaining control over the canal, which has been under Panamanian sovereignty since 1999.
🏗️ Chinese companies operating key ports at either end of the canal since 1997 through the Hong Kong-based conglomerate CK Hutchison. In 2025, a U.S.-led consortium headed by BlackRock attempted to acquire control of these ports as part of a $23 billion deal, seen as an effort to counter Chinese strategic influence.
🚧 Faced with mounting pressure and regulatory obstacles from China, as well as Panama’s own oversight, the negotiation deadline expired without a finalized agreement. As a result, rather than reducing Beijing’s role, the collapse or revision of the BlackRock deal now puts China in a stronger position to increase its direct influence over the canal’s strategic ports.
🇸🇻 Prime Minister Keir Starmer has officially announced the UK will recognise Palestine as a state by the United Nations meeting in September, unless Israel agrees to a ceasefire. A similar announcement was made by Macron a few days ago.
✍️ According to The Times of Israel, rabbis and Jewish scholars from the United States, the United Kingdom, the European Union, and Israel have signed an open letter denouncing a ‘serious moral crisis’ within the Jewish people. In the letter, the signatories claim that Israel is using hunger tactics as a tool of pressure, which has drawn criticism from various sectors of the global Jewish community.
✝️ Leaders of the Church of Jerusalem condemn Israeli Jewish terrorist attacks ‘in the land of Christ,’ denouncing the car bombings in Taybeh as ‘systematic intimidation’ of Christians, and criticising the Israeli police and settler groups for downplaying the violence through ‘disinformation campaigns.’
Market Review:
📉 Markets are beginning to slow down as they await corporate earnings results, labour market data, and decisions from the Federal Reserve.
📊 The S&P 500 Mini futures have retreated compared to the last two days but remain stable at 6,415 points. The Nasdaq 100 futures are trading sideways, maintaining their position above 23,500 points.
💵 The Dollar Index, which surpassed 99 points during yesterday’s session, has now retreated to 98.85. This has led to declines in the EUR/USD pair, which fell sharply during yesterday’s session, reaching levels close to 1.1525.
📈 Meanwhile, European equities attempted to recover the ground lost on Monday following the misinterpretation of the humiliating trade agreement with the United States. DAX futures managed to recover and approach the 24,400-point pivot zone, currently trading at 24,325 points. EuroStoxx 50 futures reached 5,425 points during yesterday’s session but have since retreated to hover around the 5,400-point zone.
🛢️ The crude oil market has experienced a sharp upward movement, with Brent crude trading at $71.75 per barrel. This is attributed to President Trump confirming a 10-day deadline to end the war in Ukraine, which has heightened geopolitical tensions in the markets, particularly in hydrocarbons, as they could face new sanctions.
🪙 This likely also explains the upward movement in gold, with gold futures now trading at $3,380 per ounce.
💻 Finally, Bitcoin remains steady around $118,300, with its movements also appearing to be range-bound as it awaits new economic data from the United States.
