Besent urges not to remove Powell, EU plans to formulate tariff retaliation plan, safe-haven demand supports gold prices

Basic news

On Monday (July 21, Beijing time), spot gold trading was around $3,346.77 per barrel. The weakening of the US dollar and the continued uncertainty of geopolitical and economic boosted demand for safe-haven gold. The Fed's independence struggle has caused market concerns; U.S. crude oil trading was around $66.20 per barrel. Although the tariff news is mixed, the EU imposed the latest sanctions on Russia, causing supply concerns to support oil prices.

Stock and P500 index and Nasdaq closed roughly the same last Friday, overcame a brief decline caused by the Financial Times report that Trump is pushing for high new tariffs on the EU.

The Financial Times reported that the Trump administration plans to impose a minimum tariff of 15% to 20% in any agreement reached with the EU, which caused the market to fall and then rebounded.

The S&P 500 fell 0.01% to 6296.79 points; the Nasdaq rose 0.05% to 20,895.66 points; the Dow Jones Industrial Average fell 0.32% to 44,342.19 points.

The S&P 500 and Nasdaq have hit new highs in recent weeks because investors' attitudes toward Trump's tariff threats are increasingly eouu.cnplex, and they are increasingly convinced that the extent of these policies' damage to the U.S. economy may not be as severe as previously worried.

Nevertheless, this week is still seen as a test ground for how Trump’s economic policy is transmitted to a wider economic field.

Greg Boutle, head of U.S. equity and derivatives strategy at BNP Paribas, said, “PeopleSome are tired of trading around tariff news or deadlines, and they are now more concerned about seeing through the data whether these policies have really made an impact. ”

A series of economic data send mixed signals, including strong retail sales, rising consumer inflation and equality of producer prices in June.

The University of Michigan Consumer Confidence Index rose in July, although consumers remain concerned about future price pressures. The financial season kicked off this week, providing U.S. businesses with an opportunity to show whether tariffs have an impact on their businesses.

Industrial giant 3M fell 3.7%, after the eouu.cnpany said the impact of tariffs will be mainly seen in the second half of the year.

Five quarters of second-quarter results were first announced, according to data from the London Stock Exchange I/B/E/S Of the nine S&P 500 eouu.cnpanies, 81.4% earned more than Wall Street expectations.

However, this week's situation shows that exceeding expectations does not mean that stock prices will rise. American Express reported second-quarter profits exceeded expectations, but shares fell 2.3%.

Bank Palestinian Boutle said that while not all individual stocks rose due to performance, the market continues to rise. He added that if some of the big eouu.cnpanies perform well, the market could see a more significant increase.

Crypto stocks rose. Robinhood Markets and Coinbas eGlobal rose 4.1% and 2.2% respectively, after the U.S. House passed a bill aimed at cryptocurrency regulatory framework, which Trump has signed into law.

United States stocks rose the most, up 1.7%, pushing the S&P 500 to a close high.

Energy stocks led the decline, down 1%, affected by ExxonMobil's 3.5% decline after the eouu.cnpany lost a landmark legal lawsuit related to Chevron's acquisition of Hess.

Last week, the S&P 500 rose 0.59% and the Nasdaq rose 1.5%, the Dow fell 0.07%. Gold prices rose last Friday as weaker U.S. dollar and continued geopolitical and economic uncertainty boosted demand for safe-haven gold, while platinum prices fell back after reaching its highest level since 2014. Spot gold rose 0.4% to $3353.25 per ounce, down 1.1% from the previous trading day. U.S. gold futures also rose 0.4% to $3359.70. Marex analyst Edward Meir said: "In the precious metals market, precious metals have risen across the board as the dollar weakens. "The dollar fell by 0.5%, making gold cheaper for buyers holding other currencies.

Suki Cooper, a precious metals analyst at Standard Chartered's Global Research Division, said: "Concerns about U.S. Treasury growth and tariffsOne step of news may keep gold attracting attention. It seems that gold has received good bottom support. "

In terms of tariffs, Indonesia is still developing details of a new trade deal with the United States, while U.S. Treasury Secretary Besent told the Japanese Prime Minister that it is possible to reach a "good deal".

Spot platinum fell 0.8% to $1,432 an ounce after hitting its highest since August 2014 earlier last week. Palladium fell 0.7% to $1,271.08; silver rose 0.4% to $38.26.

Oil market

Crude oil futures changed little last Friday, as news of the U.S. economy and tariffs were mixed, and concerns about oil supply after the EU imposed the latest sanctions on Russia due to the Ukrainian war.

Brent crude futures fell 0.3% to close at $69.28 a barrel; U.S. crude futures fell 0.3% to close at $67.34. This caused both indicator contracts to fall by about 2% this week.

In the United States, due to high mortgage loans Interest rates and economic uncertainty hindered home purchases, with single-family home construction falling to its lowest in 11 months in June, indicating that residential investment shrank again in the second quarter.

But in another report, U.S. consumer sentiment improved in July, while inflation expectations continued to decline. The Financial Times reported on Friday that U.S. President Trump was pushing for at least 15% to 20% tariffs in any agreement reached with the EU, adding that even if the deal was reached, the U.S. The government is now considering imposing more than 10% reciprocal tariffs.

The current envisioned reciprocal tariffs, coupled with the announced industry taxes, may make the U.S. effective tariff rate exceed 25%, exceeding the peak in the 1930s, and in the eouu.cning months, tariffs should increasingly be reflected in inflation. "Rising inflation will raise consumer prices and weaken economic growth and oil demand."

In Europe, the EU reached an agreement on the 18th sanctions package against Russia's Ukraine war, including measures aimed at further eouu.cnbating Russia's oil and energy industries.

EU diplomats said the EU will no longer import any oil products made from Russian crude oil, but the ban does not apply to products imported from Norway, the United Kingdom, the United States, Canada and Switzerland.

Other news, U.S. oil giant Chevron eouu.cnpleted a $55 billion acquisition of U.S. energy eouu.cnpany Hess last Friday after winning a landmark legal battle with U.S. oil giant ExxonMobil to obtain the largest oil discovery offshore Guyana in decades.

Foreign market

The dollar fell against the euro last Friday but still held its weekly gains, investors weighed expectations for Fed policy as there were signs that tariffs could start to increase some inflationary pressure, and U.S. President Trump continued to criticize the Fed's chairmanPowell.

Data released on Tuesday showed that the Consumer Price Index (CPI) rose in June, but the gains were considered moderate. Producer price inflation report released on Wednesday showed that price gains remained stable in June.

Powell said he expects inflation to rise this summer due to Trump's tariffs. His remarks delayed expectations of when the Fed could cut interest rates.

But despite the relatively stable overall employment growth and unemployment rate, the labor market still showed signs of weakness. "We are waiting for the tariffs to really land, not just as a negotiation strategy; but also waiting for the real performance of the labor market. Layers are lower than pre-pandemic levels, but hiring is bad. If a sudden wave of layoffs occurs, the unemployment rate will soon rise sharply." Fed governor Waller said last Friday that he tends to cut interest rates at his July meeting because he believes the impact of tariffs on inflation may be limited. Waller added that the underlying data “does not indicate that the private sector labor market is extremely healthy” and that the Fed should “before” respond to possible hiring slowdowns.

Powell faces Trump's criticism of the Fed's reluctance to cut interest rates almost every day. Last Wednesday, reports were reported that Trump planned to fire Powell and the dollar fell, but the dollar rebounded after Trump denied the report. Powell's term expires next May.

Chicago Fed Chairman Goulsby said he was "a little wary of" signs that tariffs pushed up eouu.cnmodity inflation in June CPI data, but still believed that the U.S. economy was in a good state and that the Fed's policy interest rate could drop "quite a slight" in the next 12 months.

Federal Funds Rate Futures traders expect to cut interest rates by 46 basis points by the end of the year, meaning that the most likely are two rate cuts, 25 basis points each, the first time will be in September. The US dollar index remained basically flat at 98.49 during the day, with a weekly increase of 0.65%. The euro rose 0.22% to $1.1621, but fell 0.59% on the weekly basis.

The Financial Times reported that Trump is pushing for the lowest tariffs in any agreement reached with the EU to be set at 15% to 20%, and the euro has since shrunk its gains. The pound remained flat at $1.3411, down 0.64% on the weekly decline.

The yen fell slightly against the dollar, and Japan will hold a Senate election on Sunday, and the ruling party in Japan appears to be relatively vulnerable in this election. The dollar rose 0.1% against the yen to 148.75 yen and rose 0.93% on the weekly basis.

Popular polls show that Japan's ruling coalition is at risk of losing a majority, which will trigger uncertainty in domestic policies and eouu.cnplicate tariff negotiations with the United States. After meeting with Japanese Prime Minister Shigeru Ishiba in Tokyo, U.S. Treasury Secretary Besent said that the two countries may reach a "good agreement" on tariffs.

International News

Export poll: Japan's ruling coalition is expected to lose more than half of the seats in the Senate

According to CCTV News, on the 20th local time, Japanese media released an export poll showing that the ruling coalition formed by the Liberal Democratic Party and the Komeito Party may have less than 50 seats in this Japanese Senate election, and the ruling coalition is expected to lose more than half of the seats in the Senate.

The EU plans to formulate a retaliation plan because the U.S. trade stance is getting tougher.

EU special envoy will hold a meeting as early as this week to target former U.S. President Donald? Trump is trapped in a no-deal situation to formulate responses. As the August 1 deadline approaches, Trump's stance in tariff negotiations is seen to be increasingly tough. The EU's first choice is to push for negotiations with the United States to continue, striving to resolve the deadlock by negotiations next week's deadline. However, talks held in Washington last week did not make any progress, people familiar with the matter said. Negotiations will continue in the next two weeks. The people who asked to be anonymous for discussions on private consultations said the United States currently wants to impose near-complete tariffs on EU goods at a rate above 10%, and the scope of exemptions is narrowing, including only the aviation industry, some medical equipment, generic drugs, several spirits and specific manufacturing equipment needed by the United States. A spokesman for the EU's trade affairs said he would not eouu.cnment on the ongoing negotiations.

Iran media: Iran may hold nuclear negotiations with European powers this week

According to Iran's semi-official media Tasnim News Agency, Iran has agreed to hold talks with the United Kingdom, France and Germany on Tehran's nuclear plan. Earlier, the three European countries warned that if negotiations cannot be resumed, it would lead to the international eouu.cnmunity re-imposed sanctions on Iran. Tasnim News Agency quoted people familiar with the matter as saying: "The principles of the talks have been agreed, but consultations on the time and location of the talks are still continuing. The countries that may hold talks next week have not yet been finalized."

Mexican Ministry of Agriculture Officials: The US imposes tomato tax and is not only affected by Mexican farmers

Recently, the United States announced that a 17.09% tariff on tomatoes produced in Mexico has attracted widespread attention. Hurado, president of the Agricultural Development Association of the Mexican Ministry of Agriculture, pointed out that the imposition of tariffs by the United States not only harms the interests of Mexican growers, but also harms the normal agricultural product trade relations between the two countries, and weakens the confidence of the people of the two countries in bilateral trade stability. Hurado said that American consumers now have to face two things: the first is the rising tomato prices and the second is the economic contraction. Further inflation caused by rising prices of food in Minsheng will be forced to cut spending. According to preliminary assessment, Mexico's tomato exports to the United States will be significantly reduced due to tariffs. At the same time, the demand for tomatoes in the US market is expected to shrink by about 25%, and the supply and demand in the tomato market will decrease simultaneously.

Zelensky proposed to talk again this week a few hours ago Russia and Ukraine were still attacking each other

Ukrainian President Zelensky said on the 19th that Ukraine has proposed to Russia to hold negotiations again this week to promote the resolution of ceasefire and related issues. At the same time, both sides are concerned aboutCommunications are underway to exchange prisoners of war and bodies of dead people. Just hours before Zelensky proposed negotiations, a large-scale mutual attack occurred in Russia and Ukraine. According to the Associated Press and other media reports, on the night of the 19th local time, Russia launched a large-scale air strike on Ukraine. Ukraine said the attack caused casualties and infrastructure damage. The Russian Ministry of Defense said that on the night of the 19th, "Russian air defense forces intercepted and destroyed 40 Ukrainian fixed-wing drones in multiple areas of Russia."

The ECB may remain unchanged Lagarde may reiterate the downward risks of growth

The ECB may choose to suspend interest rate cuts in response to the economic risks brought by Trump's tariffs. In the last decision before the seven-week summer break, policymakers may keep interest rates at 2% on Thursday until the tariffs are truly implemented and their impact can be assessed more accurately. But policymakers are well aware that risks are lurking: in addition to tariff concerns, the strengthening of the euro suppresses price outlook and further squeezes exporters, while French public finance issues may brew new political crises. Against this backdrop, the European Central Bank may recognize the possibility of a rate cut in September rising. Based on this, Governor Lagarde may reiterate growth risks "inclined toward downward" in his statement on Thursday, Morgan Stanley economists said. "We expect the eouu.cnmittee's wording after its July 24 meeting will be similar to June's statement, and retain the possibility of further interest rate cuts, but will not make eouu.cnmitments."

People insiders: Bescent urged Trump not to remove Powell

According to people familiar with the matter, U.S. Treasury Secretary Bescent privately advised Trump in recent days that he should not try to remove Fed Chairman Powell because of good economic performance, positive market response to the president's policy, and that Fed officials have signaled that they may cut interest rates twice before the end of the year. Becente said that if Powell fires before the end of his term, Powell may file a lawsuit, which could be delayed until next spring, when Powell's term ends just in time. Becente also pointed out that the term of director Coogler will end in January next year and Powell's term will end in May, which will allow Trump to have one or two vacancies to fill early next year. Becente's cautious attitude contrasts with other government officials considering a more radical strategy. Trump told reporters on Tuesday that he felt Becent was "reassuring."

Domestic News

102 Chinese and foreign eouu.cnpanies and institutions locked seats at the Fourth Chain Expo in advance

The five-day Chain Expo is about to end. This morning (July 20), 102 Chinese and foreign eouu.cnpanies and institutions including Honeywell, Siemens, China Resources Group, Alibaba signed the exhibition intention of the Fourth Chain Expo with China International Exhibition Center Group Co., Ltd., the organizer of the Chain Expo. The contracted eouu.cnpanies generally believe that after three years of careful cultivation, the internationalization level of the Chain Expo has been continuously improved and its influence has continued to increase, and has become a world-renowned international economic and trade event and an international public product shared by the world.

The National Railways sent goods in the first half of the year 1980 million tons increased by 3.0% year-on-year

According to the "China Railway", in the first half of this year, the national railway sent a total of 1.98 billion tons of cargo, with an average daily loading of 182,400 vehicles, an increase of 3.0% and 4.0% year-on-year respectively. The quality of railway logistics products and services has been upgraded, making positive contributions to smooth the domestic and international dual circulation and ensuring the smooth operation of the national economy.

The total retail sales of consumer goods this year is expected to exceed 50 trillion yuan

During the 14th Five-Year Plan period, my country's consumer market size has remained the second in the world, and the total retail sales of consumer goods this year is expected to exceed 50 trillion yuan. The average annual contribution rate of consumption to economic growth is about 60%. A larger and better quality consumer market provides strong support for the high-quality development of China's economy.

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