The market on July 9th next week is destined to be turbulent.
On July 9th, the U.S.-EU tariff "deadline" will take effect on the same day. Trump has postponed the 50% tariff on EU goods until July 9th to allow time for negotiations.
- If the tariffs take effect, the European export sector and the U.S.-EU exchange rate will experience increased short-term volatility.
- If postponed, the market will interpret it as a political bargaining chip rather than a policy inevitability, leading to a rebound in risk assets.
The FOMC minutes for June will also be released on July 9th. This round of minutes will fully present the divergences among the committee members regarding the impact of Trump's tariffs:
Doves emphasize employment and corporate financing costs, while hawks worry about secondary inflation.
The market will use this to predict the likelihood of a rate cut in September.
If the minutes show that a considerable number of committee members lean towards a preemptive rate cut, the 2-year U.S. Treasury yield may instantly plunge to around 4.00%, benefiting non-U.S. and venture assets (especially cryptocurrencies).
China's June CPI/PPI data will also be released on July 9th.
This data serves as a crucial window to observe input inflation vs. weak domestic demand:
Either 1. CPI remains around 0% and PPI continues to be negative ➜ weak recovery in domestic demand, renewed pressure on the renminbi depreciation, and potentially weakened inflation momentum in the global commodity chain.
Or 2. CPI returns to above +0.5% ➜ resonating with the recent rebound in industrial metals and energy prices, intensifying the global re-inflation narrative.