Musk's step back from politics was short-lived, announcing 'America Party'

EU mid-market update: Trade deals still main focus; Musk's step back from politics was short-lived, announcing 'America Party'.

Notes/observations

- EU indices flat to mixed as the Trump issued July 9th deadline for trade talks approaches this Wednesday. Euro also lower. US futures are red due to Trump Truth Social post confirming tariff letters and deals will be delivered today at 12:00 ET, he said any country aligning with BRICS policies will face additional 10% tariff. China opposes the move.

- Tesla down approx 7% in pre-market after Musk confirmed he is forming ‘America Party’ a third political party in US which Musk said strategy would involve an extremely aggressive move on a very small and precise location to ensure momentum builds and disrupt the current two-party system. Musk’s company boards have expressed dissatisfaction with the distraction.

- Data front, UK Halifax house price index showed continued weakness, remaining flat MoM for Jun. Sterling falls further, due to fiscal concerns and failure of Chancellor Reeves to rule out tax rises in Autumn Budget in an interview released by Guardian on Friday. German industrial production beat concensus. Swedish CPI higher than estimates, with analysts seeing additional likelihood Riksbank stays on hold for policy.

- China recorded 8th straight month of gold purchases again.

- Asia closed mixed with Nikkei225 underperforming -0.6%. EU indices -0.1% to +0.3%. US futures -0.2% to -0.6%. Gold -0.8%, DXY +0.2%; Commodity: Brent +0.4%, WTI +0.6%; Crypto: BTC +0.9%, ETH +2.9%.

Asia

- Japan labor cash earnings fell at the fastest pace in nearly two years (Real Cash Earnings Y/Y: -2.9% v -1.7%e).

Global conflict/tensions

- Israel Military: It attacked Houthi targets in Ports of Hodeidah, Ras Isa and Salif and Ras Qantib power plant.

Europe

- France Industry Min Ferraci noted Europe must shore up its tariff barriers to counter Chinese imports that risk harming the continent’s industrial economy.

- Eurogroup meeting later today to decide on new president.

Americas

- President Trump said he had signed letters to 12 countries outlining the various tariff levels they would face on goods they export to the United States, with the "take it or leave it" offers to be sent out on Monday.

- Elon Musk announced the creation of the “America Party” following a public break with President Trump.

Trade

- Japan Econ Min Akazawa held "in-depth exchanges" over the phone with US Commerce Sec Lutnick.

- Trump posted out a ‘no exceptions’ extra 10% tariff on all BRICS nations that “align themselves with its ‘anti-American’ policies”.

Energy

- OPEC+ delegates agreed to an accelerate raise of oil production to 548K bpd (from 411K bpd) in August. The eight OPEC+ countries that voluntarily restricted their oil production agreed to boost their combined output by 548K barrels per day in July from the June level.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.1% at 542, FTSE 0.0% at 8821, DAX +0.3% at 23887, CAC-40 -0.1% at 7692, IBEX-35 -0.1% at 13957, FTSE MIB 0.0% at 3886, SMI -0.1% at 11959, S&P 500 Futures -0.5%].

Market focal points/key themes: European indices open mixed and failed to gain direction in the early hours of trading; markets uncertain amidst trade news over the weekend; among better performing sector sare financials and industrials; underperforming sectors include energy and materials; oil & gas subsector under pressure after OPEC+ increases production by a larger amount than initially expected; Capgemini to acquire WNS; no major earnings expected in the upcoming US session.

Equities

- Energy: Shell [SHEL.UK] -3.0% (Q2 guidance, narrows production).

- Financials: Plus500 [PLUS.UK] +2.0% (prelim H1 results).

- Industrials: Weir Group [WEIR.UK] +1.5% (analyst upgrade).

- Technology: Capgemini [CAP.FR] -4.0% (to acquire WNS for $3.3B; FY25 guidance unchanged).

Speakers

- ECB's Centeno (Portugal) stated that saw an undershooting of the 2% inflation target as the main risk. Timing and size of further rate cuts was hard to determine. Weak Euro area economy could see the EUR currency correct against the USD.

- ECB’s Nagel (Germany) noted that taking into account the stronger than expected Q1 growth, a slight increase in GDP year-on-year appears possible

- Portugal Fin Min Sarmento stated that hoped it would be possible to have agreement on tariffs with US; Agreement with low tariffs was possible as tariffs hurt economic growth.

- China Foreign Ministry opposed tariffs being used as tool to coerce others; Use of tariffs served no one.

Currencies/fixed income

- The USD was a tad firmer as the trading week began. Sentiment saw renewed concerns about a global trade war and tariffs keeping uncertainty high. President Trump hinted of an extra 10% tariff on BRICS member allies.

- Japan JGB yields were higher across tenors with larger rises in longer-duration ones. The 20-year JGB yield hit highest level since early June amid growing concerns over fiscal health ahead of upper house election on July 20th.

- 10-year German Bund yield at 2.60% and 10-year Gilt yield at 4.53%. 10-year Treasury yield: 4.34%.

Economic data

- (FI) Finland May Industrial Production M/M: 0.0% v 0.2% prior; Y/Y: 5.8% v 7.1% prior.

- (DE) Germany May Industrial Production M/M: +1.2% v -0.2%e; Y/Y: +1.0% v -0.3%e.

- (UK) Jun Halifax House Price Index M/M: 0.0% v -0.4% prior; Y/Y: 2.5% v 2.5% prior.

- (SE) Sweden Jun Preliminary CPI M/M: 0.5% v 0.1%e; Y/Y: 0.8% v 0.4%e.

- (SE) Sweden Jun Preliminary CPI CPIF M/M: 0.5% v 0.2%e; Y/Y: 2.9% v 2.5%e.

- (SE) Sweden Jun Preliminary CPI CPIF (ex-energy) M/M: 0.7% v 0.4%e; Y/Y: 3.3% v 3.0%e.

- (SE) Sweden Jun Budget Balance (SEK): -81.7B v 51.5B prior.

- (NO) Norway May Industrial Production M/M: -0.5% v +2.2% prior; Y/Y: -0.4% v +0.3% prior.

- (NO) Norway May Manufacturing Production M/M: -1.7% v +2.9% prior; Y/Y: 5.7% v 10.3% prior.

- (DK) Denmark May Industrial Production M/M: 0.1% v 2.1% prior.

- (ZA) South Africa Jun Net Reserves: $65.2B v $64.8B prior; Gross Reserves: $68.4B v $68.1B prior

- (HU) Hungary May Retail Sales Y/Y: 2.1% v 3.7%e.

- (AU) Australia Jun Foreign Reserves (A$): 101.9B v 105.6B prior.

- (CH) Swiss Jun Foreign Currency Reserves (CHF): 713.0B v 703.6B prior.

- (CZ) Czech May Industrial Output Y/Y: -0.9% v +0.7%e.

- (CZ) Czech May Trade Balance (CZK): 13.3B v 19.0Be.

- (AT) Austria Jun Wholesale Price Index M/M: +0.2% v -0.3% prior; Y/Y: +0.6% v -0.5% prior.

- (MY) Malaysia Jun Foreign Reserves: $120.6B v $119.9B prior.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 459.8B v 460.7B prior; Domestic Sight Deposits: 424.4B v 425.8B prior.

- (CN) China Jun Foreign Reserves: $3.317T v $3.313Te.

- (EU) Euro Zone July Sentix Investor Confidence: 4.5 v 1.0e.

- (HK) Hong Kong Jun Foreign Reserves: $431.9B v $431.0B prior.

- (EU) Euro Zone May Retail Sales M/M: -0.7% v -0.6%e; Y/Y: 1.8% v 1.4%e.

- (IS) Iceland Jun Preliminary Trade Balance (ISK): -41.7B v -63.1B prior.

- (SG) Singapore Jun Foreign Reserves: $405.0B v $401.7B prior.

Fixed income issuance

- None seen.

Looking ahead

- (IL) Israel Jun Foreign Currency Balance: No est v $223.6B prior.

- (MX) Mexico CitiBanamex Survey of Economists.

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

- 05:30 (DE) Germany to sell combined €4.0B in 6-month and 12-month Bubills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell combined 3.5B in 3-month and 6-month bills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel to sell bonds.

- 06:00 (TR) Turkey to sell bonds (2 tranches).

- 07:00 (BR) Brazil Jun FGV Inflation IGP-DI M/M: -1.7%e v -0.9% prior; Y/Y: 4.0%e v 6.3% prior.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (PL) Poland Jun Official Reserves: No est v $243.6B prior.

- 08:00 (MX) Mexico Jun Vehicle Production No est v 358.2K prior; Exports: No est v 301.1K prior.

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 08:30 (CL) Chile Jun Trade Balance: $1.6Be v $1.5B prior; Exports: No est v $8.5B prior; Imports: No est v $7.0B prior; Copper Exports: No est v $4.5B prior.

- 08:30 (CL) Chile Jun International Reserves: No est v $45.8B prior.

- 08:30 (CL) Chile Central Bank Traders Survey.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.9-7.5B in 3-month, 6-month and 12-month bills.

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 4.50%.

- 09:00 (RU) Russia Jun Official Reserve Assets: No est v $680.4B prior.

- 09:00 (CL) Chile May Nominal Wage Y/Y: No est v 8.3% prior.

- 09:00 (EU) European Finance Ministers (Eurogroup) meeting.

- 09:00 (AT) ECB’s Holzmann (Austria).

- 10:00 (BR) Brazil Jun Vehicle Production: No est v 214.7K prior; Vehicle Sales: No est v 225.7K prior; Vehicle Exports: No est v 51.5K prior.

- 10:30 (TR) Turkey Jun Cash Budget Balance (TRY): No est v 247.1B prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 12:00 (US) President Trump on trade letters.

- 16:00 (US) Weekly Crop Progress Report.

- 19:00 (CO) Colombia Jun CPI M/M: 0.2%e v 0.3% prior; Y/Y: 4.9%e v 5.1% prior.

- 19:00 (CO) Colombia Jun CPI Core M/M: 0.2%e v 0.3% prior; Y/Y: 5.0%e v 5.1% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 87.2 prior.

- 19:50 (JP) Japan May Current Account Balance: ¥3.006Te v ¥2.258T prior; Adjusted Current Account Balance: ¥2.581Te v ¥2.307T prior; Trade Balance (BOP basis): -¥517.2Be v -¥32.8B prior.

- 19:50 (JP) Japan Jun Bank Lending Y/Y: No est v 2.4% prior; Bank Lending (ex-trusts) Y/Y: No est v 2.6% prior.

- 20:01 (IE) Ireland Jun Construction PMI: No est v 49.2 prior.

- 21:00 (PH) Philippines May Unemployment Rate: No est v 4.1% prior.

- 21:30 (AU) Australia Jun NAB Business Confidence: No est v 2 prior; Business Conditions: No est v 0 prior.

- 23:00 (ID) Indonesia Jun Consumer Confidence: No est v 117.5 prior.

- 23:35 (JP) Japan to sell 5-year JGB bonds.