Macro Wrap

Trade deal hopes continued to run high while tech stocks were bolstered by positive results from a major tech company. US Treasury yields and the USD rose. The DJIA fell 0.7%, the S&P500 edged up 0.1%, and the Nasdaq Composite Index rose 0.2%. The Eurostoxx 50 rose 0.2%. The Dollar Index rose 0.2% to 97.38. The US 2Y yield rose 4bp to 3.92% and the 10Y yield gained 2bp to 4.40%. The German 10Y yield rose 6bp to 2.70% while the UK 10Y yield edged down 1bp to 4.62%. Brent crude oil prices rose 1% to USD69.18. Gold fell 0.6% to USD3,369.

Global PMIs showcased quicker growth in Australia, slower growth in the UK, and little change in the Eurozone, Japan and India. In the US, it was a mixed bag with services PMI at a 7-month high, but manufacturing touched a 7-month low. However, business confidence has declined for both manufacturing and services amid concerns on tariffs and federal spending cuts, while companies have also increasingly passed on to customers higher input prices inflation, suggesting that inflation will continue to accelerate in 2H2025. Sentimentally negative for broader markets.

US initial jobless claims fell by 4,000 to 217,000 in the third week of July, defying expectations of a rise to 227,000 and marking the sixth consecutive decrease. Outstanding claims edged up to 1,955,000, slightly below expectations, indicating slowed hiring momentum despite low unemployment. Positive for USD

The ECB kept the main refinancing rate unchanged at 2.15%, the deposit facility rate at 2%, and the marginal lending rate at 2.4%, all in line with market expectations. The ECB stated it would adopt a data-dependent and meeting-by-meeting approach to determine the appropriate monetary policy stance, without pre-committing to any specific rate path. Sentimentally positive for Euro.