Federal Circuit to hear Trump's tariff case after deal reached with South Korea

EU Mid-Market Update: Federal Circuit to hear Trump's tariff case after deal reached with South Korea; Powell comments suggest 'dont hold your breath' for imminent rate cuts; Earnings barrage takes center stage as Trump settles on 50% copper tariff.

Notes/observations

- European indices opened mostly higher amid heavy earnings slate during peak of Q2 season. Microsoft and Meta Capex guidance for future quarters help tech stock sentiment, though Tokyo Electron cut outlook citing citing some chip makers' investment plans.

- Trump confirmed South Korea trade deal with 15% tariffs, $350B US investment, and purchases of LNG and autos; He unveiled softened Brazil and copper tariffs (50%) and threatened 25% on India.

- Reminder yesterday the Fed held rates at 4.25–4.50%, with two dissents for first time since 1993. Comments from Powell were jarring, as he pointed to concern about resurgence of inflation citing influence of tariffs. Markets were expecting a path laid down for cuts. Market sold off heavily as he spoke but rose later as earnings held up valuations. Fed futures now price 40% chance for 25bps cut at Sept's meeting v 65% before Powell presser yesterday.

- This is despite behind yesterday’s headline 3 % Q2 US GDP growth stands a mechanically inflated five-percentage-point boost from collapsing imports and a narrow AI-capex surge, even as final sales to private domestic purchasers decelerated to 1.2 %, rate-sensitive housing and structures contracted, inflation hovered near target, and a cautious Federal Reserve risks tightening into an economy already losing underlying momentum.

- BOJ Gov Ueda after holding rates unchanged said that tightening monetary policy to deal with too-high inflation works nicely when inflation is driven by strong demand, but what's happening in Japan now is price rises driven by supply factors. USD/JPY tests above 149.59 level (200-day MA) as he offered less hints on further rate hikes.

- For economic data, German import prices fell; UK business barometer hit 10-year high; BRC warned UK food prices may rise 6% by year-end.

- Today, the Federal Circuit will hear V.O.S. Selections v. Trump en banc, a marquee test of whether a president can wield the International Emergency Economic Powers Act (IEEEA) to unilaterally rewrite the tariff schedule—an argument that squarely confronts the Supreme Court’s major-questions doctrine after lower courts have already ruled the duties illegal. If the court embraces that doctrine, Trump’s sweeping 10–50% “reciprocal” and sector-specific tariffs could be frozen before their August 1 launch and spark massive refund claims; if it does not, markets must brace for a new 15%+ baseline regime of bespoke carve-outs and diplomacy-by-letter until the justices decide whether emergency powers can become standing trade policy.

- Asia closed mixed with Hang Seng underperforming -1.6%. EU indices -0.2% to +0.8%. US futures +0.4-1.4%. Gold +1.1%, DXY -0.2%; Commodity: Brent -0.3%, WTI -0.2%; Crypto: BTC +0.3%, ETH +1.9%.

Asia

- Bank of Japan (BOJ) left Target Range unchanged at 0.50% (as expected). Statement noted that the vote was unanimous (9-0) to keep policy steady. Risk to prices wear now generally balanced and price trend to be in line with goal in 2nd half of Outlook. Inflation expectations were rising moderately.

- BOJ Quarterly Outlook for Economic Activity and Prices (aka Staff Projections) raised FY25/26 GDP growth forecast from 0.5% to 0.6% while maintaining the FY26/27 GDP growth forecast at 0.7%. Projections raised FY25/26 CPI forecast from 2.2% to 2.7% and raised FY26/27 CPI forecast from 1.7% to 1.8%. It raised FY25/26 CPI Core forecast from 2.3% to 2.8% and rased FY26/27 CPI Core forecast from 1.8% to 1.9%.

- Japan Jun Preliminary Industrial Production M/M: +1.7% v -0.8%e; YY: 4.0% v 1.3%e.

- Japan Jun Retail Sales M/M: 1.0% v 0.5%e; Y/Y: 2.0% v 1.8%e.

- Australia Jun Retail Sales M/M: 1.2% v 0.4%e; Q/Q: 0.3% v 0.1%e.

- China July Manufacturing PMI (Govt Official): 49.3 v 49.7e (4th month of contraction); Non-manufacturing PMI: 50.1 v 50.2e

- RBA's Hauser stated that recent CPI data were 'Very welcome. Reiterated that Central bank would look at monthly trimmed mean against the quarterly reading.

Taiwan

- Top Republican lawmaker will lead a congressional delegation to Taiwan in August.

Americas

- FOMC left Target Range unchanged at 4.25-4.50% (as expected) with the vote not being unanimous (9-2); Fed's Bowman and Waller were the two dissenters, seeking a 25 bps cut (first time there has been more than one dissenter since 1993).

- Fed Chair Powell post rate decision press conference noted that the economy was in a solid position; Inflation was somewhat above target; Tariffs were pushing up some goods prices, but the wider impact remained uncertain. Fed remained focus on its dual mandate and current policy stance left us well positioned.

- Brazil Central Bank (BCB) left the Selic Target Rate unchanged at 15.00% (as expected) for its 1st pause in 8 decisions under the current easing cycle.. Statement noted would remain vigilant, that future monetary policy steps could be adjusted and that it would not hesitate to amend the rate walk cycle if appropriate.

Trade

- Canada PM Carney stated that might not conclude trade talks with US by the Aug 1st deadline; Negotiations were ongoing and constructive.

- Pres. Trump noted that Canada had just announced that it was backing statehood for Palestine. That would make it very hard for us to make a Trade Deal with them.

- Trump announced trade deal with South Korea, setting tariffs at 15%> deat set blanket tariffs on the country’s exports to US at 15% and would set up a $350 billion fund.

- White House: Implements additional 40% tariff on Brazil, effective total tariff rate is 50%, citing Bolsonaro 'persecution' as cause; New tariff rate will take effect in seven days.

Energy

- US issued Iran sanctions which targeted 50 entities and vessels from the shipping empire controlled by Mohammad Hossein Shamkhani.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.07% at 550.60, FTSE +0.30% at 9,164.30, DAX +0.23% at 24,328.19, CAC-40 -0.16% at 7,849.35, IBEX-35 +0.88% at 14,495.62, FTSE MIB -0.24% at 41,538.00, SMI -0.02% at 11,930.09, S&P 500 Futures +1.00%].

Market Focal Points/Key Themes: European indices opened higher across the board and advanced through the early part of the session; risk appetite supported after US reaches trade deal with South Korea; among sectors leading to the upside are industrials and technology; lagging sectors include materials and consumer discretionary; Just Group to be acquired by Brookfield; JD.com launches offer to acquire Ceconomy; Euronext to acquire Athex; focus on German CPI and US PCE price index; earnings expected in the upcoming US session include Pirelli, Enel, Universal Music and Vivendi.

Equities

- Consumer discretionary: Ceconomy [CEC.DE] +2.0% (JD offer) - Consumer staples: Unilever [UNA.NL] +0.5% (earnings) - Energy: Shell [SHEL.UK] +2.0% (earnings; buyback).

- Financials: BBVA [BBVA.ES] +7.5% (earnings), Societe Generale [GLE.FR] +5.5% (earnings) - Healthcare: Sanofi [SAN.FR] -3.5% (earnings) - Industrials: BMW [BMW.DE] -1.0% (earnings), Rolls-Royce [RR.UK] +9.0% (earnings), Airbus [AIR.FR] -1.0% (earnings), Schneider Electric [SU.FR] -1.5% (earnings), Aker ASA [AKER.NO] +7.5% (Aker ASA and Nscale to establish Stargate Norway) - Technology: ASML [ASML.NL] +0.5% (Samsung, Microsoft and Meta results; Tokyo Electron cut outlook)

- Materials: ArcelorMittal [MT.NL] -4.0% (earnings).

Speakers

- BOJ Gov Ueda post rate decision press conference noted that the trade agreement with US was great progress and step forward. Reiterated overall assessment that domestic economy was recovering moderately although with some weakness. Growth outlook broadly unchanged and the economy to pick up after moderating. Price outlook for FY26/27 is broadly unchanged. Expect wage-price inflation cycle to be maintained. To closely monitor data for rate hike decision; not behind the curve. Policy decision would not solely depend on new CPI forecasts.

- Taiwan Central Bank (CBC) Jun Minutes noted that FX rate remained market-driven, but might intervene if volatility threatened financial stability.

Currencies/fixed income

- USD consolidated some of its recent gains after hitting a two-month high on Wednesday. Dealers noted that attention was switching back to US tariffs ahead of Friday's deadline for trade negotiations. President Trump stated that he wouldn't offer another extension for the pause in reciprocal tariffs. Greenback aided by the Fed sticking to its wait-and-see stance given data uncertainty and not caving into political pressure to cut rates. Dealers noted that next two months' data would be pivotal for any resumption of the Fed's easing cycle. The upcoming Sept Fed meeting now seen as coin flip between a cut and a hold.

- EUR/USD below the former key pivot point of 1.15. Dealers noted euro downward correction was driven by grim growth prospects for the Euro Zone after the U.S.-EU trade deal and the market scaling back Fed rate-cut bets.

- USD/JPY hovering around the 149 area as BOJ kept its policy steady (as expected). Yen was softer as BOJ Gov noted price trend was rising but still below 2% which was why it needed to maintain an accommodative policy. Current FX rate not diverging from assumptions and not seeing big FX impact on price outlook.

- The CAD currency was softer after President Trump signaled a trade deal with Canada was far from guaranteed.

- 10-year German Bund yield at 2.69% and 10-year Gilt yield at 4.57%. 10-year Treasury yield: 4.35%.

Economic data

- (FI) Finland Jun Retail Sales Y/Y: -1.1% v -3.8% prior.

- (DE) Germany Jun Import Price Index M/M: 0.0% v -0.2%e; Y/Y: -1.4% v -1.6%e.

- (CH) Swiss Jun Real Retail Sales Y/Y: 3.8% v 0.3% prior.

- (HU) Hungary Jun PPI M/M: -0.1% v -0.7% prior; Y/Y:5.1 % v 6.9% prior.

- (FR) France July Preliminary CPI M/M: 0.2% v 0.2%e; Y/Y: 1.0% v 1.0%e.

- (FR) France July Preliminary CPI EU Harmonized M/M: 0.3% v 0.2%e; Y/Y: 0.9% v 0.8%e.

- (FR) France Jun PPI M/M: -0.2% v -0.9% prior; Y/Y: 0.2% v 0.0% prior.

- (TR) Turkey Jun Trade Balance: -$8.2B v -$8.2Be.

- (TH) Thailand Jun Current Account Balance: $2.4B v $0.5Be; Overall Balance of Payments (BOP): $1.1B v $0.4B prior; Trade Balance: $3.3B v $3.4B prior; Exports Y/Y: 16.1% v 18.5% prior; Imports Y/Y: 13,8% v 19.2% prior.

- (DE) Germany July Unemployment Change: +2.0K v +15.0Ke; Claims Rate: 6.3% v 6.3%e.

- (TW) Taiwan Q2 Advance GDP Y/Y: 8.0% v 5.7%e.

- (DE) Germany July CPI North Rhine Westphalia M/M: 0.2% v -0.1% prior; Y/Y: 1.8% v 1.8% prior.

- (DE) Germany July CPI Hesse M/M: 0.3% v 0.1% prior; Y/Y: 2.4% v 2.3% prior.

- (DE) Germany July CPI Bavaria M/M: 0.3% v -0.1% prior; Y/Y: 1.9% v 1.8% prior.

- (DE) Germany July CPI Brandenburg M/M: 0.3% v 0.2% prior; Y/Y: 2.2% v 2.2% prior.

- (DE) Germany July CPI Saxony M/M: 0.2% v 0.2% prior; Y/Y: 2.1% v 2.4% prior.

- (DE) Germany July CPI Baden Wuerttemberg M/M: 0.4% v 0.2% prior; Y/Y:2.3 % v 2.3% prior.

- (IT) Italy Jun Unemployment Rate: 6.3% v 6.4%e.

- (ES) Spain May Current Account Balance: €6.4B v €1.4B prior.

- (NO) Norway Central Bank (Norges) Aug Net FX transactions (NOK): -150M v -276M prior.

- (PL) Poland July Preliminary CPI M/M: 0.3% v 0.2%e; Y/Y: 3.1% v 2.8%e.

- (CZ) Czech Jun M2 Money Supply Y/Y: 2.9% v 3.5% prior.

- 04:00 (TR) Turkey Jun Foreign Tourist Arrivals Y/Y: % v -1.8% prior.

- (HK) Hong Kong Q2 Advance GDP Q/Q:0.4 % v 0.1%e; Y/Y: 3.1% v 2.8%e.

- (HK) Hong Kong Jun Retail Sales Value Y/Y: 0.7% v 1.4%e; Retail Sales Volume Y/Y: -0.3% v +0.2%e.

- (HK) Hong Kong Jun M3 Money Supply Y/Y: % v 9.5% prior; M2 Money Supply Y/Y: % v 9.5% prior; M1 Money Supply Y/Y: % v 18.6% prior.

- (EU) Euro Zone Jun Unemployment Rate: 6.2% v 6.3%e.

- (BE) Belgium Jun Unemployment Rate: 6.5% v 6.5% prior.

- (GR) Greece Jun Retail Sales Value Y/Y: -5.6% v +7.4% prior; Retail Sales Volume Y/Y: -4.4% v +7.4% prior.

- (IT) Italy July Preliminary CPI M/M: 0.4% v 0.1%e; Y/Y: 1.7% v 1.5%e.

- (IT) Italy July Preliminary CPI EU Harmonized M/M: -1.0% v -1.1%e; Y/Y: 1.7% v 1.6%e.

Fixed income issuance

- (DK) Denmark sold total DKK0M (nil) in 3-month Bills (2 tranches); rejects all bids.

Looking ahead

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

- 05:30 (ZA) South Africa Jun PPI M/M: +0.2%e v -0.3% prior; Y/Y: 0.6%e v 0.1% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (IE) Ireland July CPI EU Harmonized Y/Y: No est v 1.6% prior.

- 06:00 (PT) Portugal July Preliminary CPI M/M: No est v 0.1% prior; Y/Y: No est v 2.4% prior.

- 06:00 (PT) Portugal July Preliminary CPI EU Harmonized M/M: No est v 0.1% prior; Y/Y: No est v 2.1% prior.

- 06:00 (PT) Portugal Jun Retail Sales M/M: No est v 4.2% prior; Y/Y: No est v 3.6% prior.

- 06:00 (IT) Italy Jun PPI M/M: No est v -0.7% prior; Y/Y: No est v 2.8% prior.

- 06:00 (VN) Vietnam Finance Ministry announcement on upcoming bond issuance (held on Wed).

- 06:00 (RO) Romania to sell combined RON800M in 2027 and 2032 bonds.

- 06:30 (IN) India Jun YTD Fiscal Deficit (INR): No est v 132B prior.

- 07:30 (US) July Challenger Job Cuts: No est v 48K prior; Y/Y: No est v -1.6% prior.

- 07:30 (BR) Brazil Jun Nominal (overall) Budget Balance (BRL): -105.7Be v -125.9B prior; Primary Budget Balance: -41.0Be v -33.7B prior; Net Debt to GDP: 62.3%e v 62.0% prior.

- 08:00 (DE) Germany July Preliminary CPI M/M: 0.2%e v 0.0% prior; Y/Y: 2.0%e v 2.0% prior.

- 08:00 (DE) Germany July Preliminary CPI EU Harmonized M/M: 0.4%e v 0.1% prior; Y/Y: 1.9%e v 2.0% prior.

- 08:00 (ZA) South Africa Jun Trade Balance (ZAR): 25.2Be v 21.7B prior.

- 08:00 (BR) Brazil Jun National Unemployment Rate: 6.0%e v 6.2% prior.

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

- 08:30 (US) Jun Personal Income: +0.2%e v -0.4% prior; Personal Spending: +0.4%e v -0.1% prior; Real Personal Spending: +0.1%e v -0.3% prior.

- 08:30 (US) Jun PCE Price Index M/M: 0.3%e v 0.1% prior; Y/Y: 2.5%e v 2.3% prior.

- 08:30 (US) Jun Core PCE Price Index M/M: 0.3%e v 0.2% prior; Y/Y: 2.7%e v 2.7% prior.

- 08:30 (US) Q2 Employment Cost Index (ECI): 0.8%e v 0.9% prior.

- 08:30 (US) Initial Jobless Claims: 223Ke v 217K prior; Continuing Claims: 1.95Me v 1.955M prior.

- 08:30 (CA) Canada May GDP M/M: -0.1%e v -0.1% prior; Y/Y: 1.1%e v 1.3% prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e July 25th: No est v $683.7B prior.

- 09:00 (CL) Chile Jun Retail Sales Y/Y: 2.9%e v 4.5% prior; Commercial Activity Y/Y: No est v 3.5% prior.

- 09:00 (CL) Chile Jun Industrial Production Y/Y: 4.8%e v 4.6% prior; Manufacturing Production Y/Y: 6.5%e v 2.9% prior;Total Copper Production: No est v 486.6K prior.

- 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to cut Interest rates by 25bps to 7.00%.

- 09:45 (US) July Chicago Purchase Managers Index (PMI): 42.0e v 40.4 prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (CO) Colombia Jun National Unemployment Rate: No est v 9.0% prior; Urban Unemployment Rate: 9.1%e v 9.0% prior.

- 11:00 (MX) Mexico Jun Net Outstanding Loans (MXN): No est v 7.011T prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 25bps to 9.00%.

- 18:00 (NZ) New Zealand July ANZ Consumer Confidence: No est v 98.8 prior.

- 18:45 (NZ) New Zealand Jun Building Permits M/M: No est v 10.4% prior.

- 19:00 (AU) Australia July Final Manufacturing PMI: No est v 51.6 prelim.

- 19:30 (JP) Japan Jun Jobless Rate: 2.5%e v 2.5% prior; Job-To-Applicant Ratio: 1.25e v 1.24 prior.

- 20:00 (KR) South Korea July Trade Balance: $5.7Be v $9.1B prior; Exports Y/Y: 5.0%e v 4.3% prior; Imports Y/Y: 2.0%e v 3.3% prior.

- 20:01 (IE) Ireland July PMI Manufacturing: No est v 53.7 prior.

- 20:30 (JP) Japan July Final Manufacturing PMI: No est v 48.8 prelim.

- 20:30 (KR) South Korea July PMI Manufacturing: No est v 48.7 prior.

- 20:30 (TW) Taiwan July PMI Manufacturing: No est v 47.2 prior.

- 20:30 (ID) Indonesia July PMI Manufacturing: No est v 46.9 prior.

- 20:30 (MY) Malaysia July PMI Manufacturing: No est v 49.3 prior.

- 20:30 (PH) Philippines July PMI Manufacturing: No est v 50.7 prior.

- 20:30 (TH) Thailand July PMI Manufacturing: No est v 51.7 prior.

- 20:30 (VN) Vietnam July PMI Manufacturing: No est v 48.9 prior.

- 21:30 (AU) Australia Q2 PPI Q/Q: No est v 0.9% prior; Y/Y: No est v 3.7% prior.

- 21:45 (CN) China July Caixin PMI Manufacturing: 50.2e v 50.4 prior.

- 22:00 (ID) Indonesia July CPI M/M: 0.2%e v 0.2% prior; Y/Y: 2.3%e v 1.9% prior; CPI Core Y/Y: 2.4%e v 2.4% prior.

- 22:00 (ID) Indonesia Jun Trade Balance: $3.5Be v $4.3B prior; Exports Y/Y: 10.2%e v 9.7% prior; Imports Y/Y: 6.5%e v 4.7% prior (revised from 4.1%).

- 23:30 (JP) Japan to sell 3-Month Bills.