This daily macroeconomic update reviews key themes shaping markets, from the dollar’s slide to multi-year lows and Trump’s $3.3 trillion fiscal package to looming tariff deadlines, European heatwave risks, and commodity price shifts.
Summary
US markets showed mixed dynamics, with the S&P 500 and Nasdaq slightly lower while the Dow climbed, as investors awaited next week’s jobs data and monitored Fed Chair Powell’s caution on rate cuts. Global attention focused on Senate action on Trump’s $3.3 trillion fiscal bill and escalating tariff risks. In Europe, heatwaves threatened GDP, while central banks—including the IMF advising the ECB—took cautious stances based on inflation and currency trends. Trade uncertainty remained a key factor across Asia and EMEA.
Daily Macroeconomic Update: U.S. Market Overview
Market indices & trends
- The S&P 500 and Nasdaq edged down on Powell’s comments urging patience on rate cuts pending inflation data; however, the Dow rose slightly.
- Oil inventories dropped, pushing energy stocks higher; Nvidia hit a new high, overtaking Microsoft as the world’s most valuable company.
Rates & Fed
- Powell confirmed the Fed will “wait for more data” before cutting rates, citing tariff-induced inflation outlook uncertainty.
- Treasury yields ticked higher amid this cautious tone.
Fiscal policy
- The Senate advanced Trump’s $3.3 trillion tax and spending package; debate continues in the House.
- The extended session has dragged the US dollar to its weakest levels in nearly 4 years.
Currency & foreign investor behavior
- The dollar continues to fall YTD (~10%), prompting foreign investors to up their hedging from ~50% to ~75% using FX forwards and options.
Economic data watch
- Markets are eyeing Thursday’s nonfarm payrolls for clearer direction on wage inflation and Fed policy.
Daily Macroeconomic Update: Eurozone and UK Developments
Economic growth & climate impact
- Europe is experiencing record-breaking heatwaves, which Allianz warns could shave 0.5 ppt from GDP in 2025 directly via worker productivity losses.
Inflation & ECB outlook
- Eurozone inflation hit the ECB target of 2.0% in June, with core inflation steady at 2.3%.
- IMF advised the ECB to hold rates at ~2% unless new shocks emerge; expectations are for a pause this month.
- ECB officials warn that any further euro appreciation above $1.20 could undermine export-driven growth.
Markets
- European shares edged higher, boosted by strength in bank stocks amid hope for eased US tariffs.
- Barclays raised its year-end STOXX 600 forecast to 570, citing reduced trade tensions.
UK specifics
- UK house prices fell in June; Marks & Spencer continues its recovery from a cyberattack.
China and Asia Economic Trends
Manufacturing & trade risks
- China’s Caixin PMI rose modestly to 50.4; Japan’s manufacturing also expanded, while South Korea slowed. India saw its best growth in 14 months.
- However, the looming US tariff deadline on July 9 is casting a shadow over regional factory sentiment.
EMEA Developments and Emerging Markets
Hungary
- Hungary’s central bank ruled out rate cuts as long as inflation remains outside the target band (above 4%).
Switzerland
- The IMF warned that full US tariffs could impact Swiss growth, though inflation is projected to stay low (~0.1% by end-2025).
Daily Macroeconomic Update: Commodities and Crypto
Commodities
- Oil prices rose on declining US inventories; Brent crude traded near $68/bbl.
- Gold dipped slightly (~$3,329/oz), while copper and soybeans saw minor gains.
Crypto
- Coinbase stock jumped ~5%, reflecting broader crypto resilience.
Key Takeaways and Market Themes
- Tariffs: July 9 deadline heightens trade risk globally.
- Fed stance: Powell wants hard data—especially payrolls—before cutting rates.
- Temperatures: European heatwaves threaten GDP and inflation dynamics.
- Currency: Dollar decline prompting elevated hedging by foreign investors.
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