Take five: tick-tock, almost O’Clock rates
The deadline for US President Donald Trump August 1 for trading partners to sign an agreement or face a large tariff is getting closer, and investors play it coolly.
Stocks close to the highest record and low volatility, even with a federal reserve meeting and US work data on the blackboard, while Trump beef with the Chairperson of the Central Bank Jerome Powell does not show the signs of loosening.
This is your week from Dhara Ranasinghe, Yoruk Bahceli and Naomi Rovnick in London, Rocky Swift in Tokyo and Lewis Krauskopf in New York:
1/ want, necessary
As a time limit for Trump August 1 for countries to reach trade agreements or face a steep tariff approach, high market optimism.
Japan and the US recently reached an agreement, investors felt Trump would not make a 30% tariff threat and Minister of Finance Scott Besent thinking the quality of the agreement was more important than time.
The European Union, meanwhile, said an agreement with Washington who prevented 30% of tariffs from reach.
No doubt, the scope of disappointment remains (the European Union has agreed to overcome in the case of collapse). Any market reaction to negative headlines can be easily exacerbated by summer trading and knocking on world shares from the highest record.
For now, investors and negotiators can hang their hopes on compromise signs: You can’t always get what you want, but if you sometimes try, you will get what you need.
Drama 2/ Fed
The pressure increased from the White House at Federal Reserve and Chairman Jerome Powell could add drama to the upcoming US central bank meeting.
Investors expect Fed to hold stable interest rates again on Wednesday. Powell and the others have been aware of the easing level too quickly without more confirmation that the tariff causes the revival of inflation.
Trump has condemned Powell for not cutting the tariff, repeatedly calling him to resign before his term of office ended in May 2026, even though he said he would not fire him.
Fed Governor Christopher Waller, a candidate who might be to replace Powell, said Fed had to cut the tariff at the coming meeting.
An important view into the economy follows with a job report on July July – it is expected to show that work increased 102,000, after an increase of 147,000 June, according to Reuters estimates.
3/ Return to the level of increase?
Bank of Japan has many things to consider when meeting as a US trade agreement that has just cleaned up several economic clouds, while the political scenes at home become more hazi.
Boj, who ended the meeting two days on July 31, had seen its mission to normalize the monetary policy that was delayed by the economic chaos and the market released by the Trump chaotic tariff policy.
The Trade Pact has reduced economic uncertainty and increases the possibility that Japan will achieve the Boj inflation target, said Deputy Governor Shinichi Uchida. Meanwhile, speculation is growing that Fiscal Prime Minister Shigeru Ishiba will resign after a bad election shows, opening the way for more waste policies.
The economist expects BOJ to increase its key level with at least 25 basis points at the end of the year, and prices market better than 50% to move in October.
4/ Highlights in Europe
This is a crowded data calendar for the euro zone this week, with Flash July inflation data and the first estimated growth of the second quarter at the MAP on Wednesday.
But no one might move the needle to traders, which focuses on the laser on what US rates will be seen and on how long the ECB policy break takes place.
Inflation returned to the 2% ECB target in June, but had to fall from here. ECB sees it as low as 1.4% early next year, which has involved several policy makers.
On the growth side, traders will look for signs of tariff impact. BLOC grows 0.6% which is far stronger than expected in the first quarter, but that reflects the surge in US imports in front of the tariff.
Data on business activities in the future offers a beautiful picture, getting faster than estimates to the highest 11 months in July.
5/ Loonie Bonds
Because it confuses the economic prospects for tariffs that make tense bond investors, the Bank of Canada is widely expected to keep the interest rates held at 2.75% on July 30.
The results on Canadian bonds for 30 years (Ca30YT = RR), which set Ottawa loan costs, have enlarged nearly 70 bps higher since the beginning of April, because the debt performs poorly even from the UK who are equally challenged fiscal.
Bonds that have long been dating presenting investors with most inflation risk, and while Canadian unemployment rates 6.9% show that consumer prices cannot skyrocket, BOC has been uneasy about Canadian retaliation rates on US goods that prove inflation.
The Canadian Debt Market is increasingly attracting a fast -grade hedging fund, DOC noted that in May, regulating it for too large sales of the British type was known when inflation concerns the surge.
The chart that shows changes in the 30 -year bond results for Canada, England and the US in base points since July 2024.
Source: Reuters
