Israel Steps Up Gaza Bombardment Ahead of White House Talks on Ceasefire

Political

Summary:

Palestinians in northern Gaza reported one of the worst nights of Israeli bombardment in weeks after the military issued mass evacuation orders on Monday, while Israeli officials were due in Washington for a new ceasefire push by the Trump administration.

A day after U.S. President Donald Trump urged an end to the 20-month-old war, a confidant of Prime Minister Benjamin Netanyahu was expected at the White House for talks on a Gaza ceasefire, Iran, and possible wider regional diplomatic deals.

But on the ground in the Palestinian enclave there was no sign of fighting letting up.

"Explosions never stopped; they bombed schools and homes. It felt like earthquakes," said Salah, 60, a father of five children, from Gaza City. "In the news we hear a ceasefire is near, on the ground we see death and we hear explosions."

Israeli tanks pushed into the eastern areas of Zeitoun suburb in Gaza City and shelled several areas in the north, while aircraft bombed at least four schools after ordering hundreds of families sheltering inside to leave, residents said.

At least 25 people were killed in Israeli strikes on Monday, health authorities said, including 10 people killed in Zeitoun.

There was no immediate comment from the Israeli military, which says Palestinian militants embed among civilians. The militant groups deny this.

The heavy bombardment followed new evacuation orders to vast areas in the north, where Israeli forces had operated before and left behind wide-scale destruction. The military ordered people there to head south, saying that it planned to fight Hamas militants operating in northern Gaza, including in the heart of Gaza City.

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A day after Trump called to "Make the deal in Gaza, get the hostages back", Israel's strategic affairs minister Ron Dermer, a confidant of Netanyahu's, was expected on Monday at the White House for talks on Iran and Gaza, an Israeli official said.

In Israel, Netanyahu's security cabinet was expected to convene to discuss the next steps in Gaza.

On Friday, Israel's military chief said the present ground operation was close to having achieved its goals, and on Sunday, Netanyahu said new opportunities had opened up for recovering the hostages, 20 of whom are believed to still be alive.

Palestinian and Egyptian sources with knowledge of the latest ceasefire efforts said that mediators Qatar and Egypt have stepped up their contacts with the two warring sides, but that no date has been set yet for a new round of truce talks.

A Hamas official said that progress depends on Israel changing its position and agreeing to end the war and withdraw from Gaza. Israel says it can end the war only when Hamas is disarmed and dismantled. Hamas refuses to lay down its arms.

The war began when Hamas fighters stormed in to Israel on October 7 2023, killed 1,200 people, most of them civilians, and took 251 hostages back to Gaza in a surprise attack that led to Israel's single deadliest day.

Israel's subsequent military assault has killed more than 56,000 Palestinians, most of them civilians, according to the Gaza health ministry, has displaced almost the entire 2.3 million population and plunged the enclave into a humanitarian crisis.

More than 80% of the territory is now an Israeli-militarized zone or under displacement orders, according to the United Nations.

Source: Reuters

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ING

Forex

Economic

According to the preliminary estimate, Polish CPI inflation in June rose to 4.1% year-on-year (ING: 4.0%, consensus: 4.0%) from 4.0% YoY in May. Food and non-alcoholic beverage price growth slowed, in line with our forecast, to 4.9% YoY from 5.5% YoY a month earlier. The year-on-year fall in fuel prices was 10.0% compared with 11.4% in May; this was steeper than our expectations, which took into account increases in petrol station prices in the second half of the month due to conflict in the Middle East. Energy prices increased by 12.8% YoY versus 13.0% a month earlier, in line with our forecasts. According to our estimates, core inflation – the main source of today's inflation surprise – rose to 3.4% YoY in July, up from 3.3% YoY in May.

Significantly lower-than-expected wage pressure in May and the government's decision to maintain the electricity price freeze for households in 2025 are signs of improvements made in the inflation outlook from the previous month. Despite today's data, our estimate is that CPI should be close to the National Bank of Poland's inflation target in July. This means that the Monetary Policy Council has room for further monetary easing.

In contrast, recent opinions from MPC members indicate that the chances of rate cuts in the coming months are low. They see wage growth above 6%, expansionary fiscal policy and tightening by other central banks in the region as arguments for a no-change policy. This week, the new NBP staff macroeconomic projection will be released, which, alongside NBP Governor Adam Glapiński's press conference on Thursday, should provide more insight into future monetary policy decisions.

We expect further interest rate cuts to be made in 25bp increments, occurring in September and November. At the end of 2025, we expect the reference rate to drop to 4.75%. Rate cuts should continue in 2026, when we estimate the main rate will hit 4.25%.

Source: ING

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Glendon

Economic

China will press on with levying anti-dumping duties on imports of stainless-steel products, including from Indonesia, as it seeks to protect a domestic industry battered by persistent oversupply and trade uncertainty.

Some traders and industry executives had expressed hopes the world’s largest metal consumer would reconsider its tariffs, particularly for Indonesia, given the role that Chinese companies have played in expanding nickel and stainless steel production in Indonesia, today among the top suppliers of both.

Beijing, however, has now ruled that lifting the measures would risk hurting its industry at home, according to a statement posted on the commerce ministry website on Monday. The levies — which cover stainless steel billet and hot-rolled coil from the European Union, the UK, South Korea and Indonesia — will remain in place for another five years.

When they were introduced in July 2019, China’s tariffs surprised the industry, given almost all stainless steel products from Indonesia in particular come from local ventures of large Chinese companies including Tsingshan Holding Group Co. Together, the two nations produce close to three-quarters of the world’s stainless steel.

But China’s slowing economy has hit demand, and both countries are threatened by the Trump administration’s aggressive tariff policies. Both nickel traded on the London Metal Exchange and stainless steel in Shanghai hit their five-year lows earlier this year amid sluggish demand and squeezed production margins. Tsingshan has been compelled to start suspending some stainless steel production at the Indonesia Morowali Industrial Park on the island of Sulawesi.

The levies on Indonesian producers will remain unchanged at 20.2%, China’s statement said. The trade ministry also kept a 43% duty on all stainless-steel products from EU and UK companies and 103.1% for most South Korean companies, according to the statement. Levies on products by Posco Holdings Inc, which has a price commitment with the Chinese government, will be kept at 23.1%.

In the domestic stainless market, privately owned Tsingshan and rival Jiangsu Delong Nickel Industry Co compete with state-owned titan China Baowu Steel Group Co.

Source: Theedgemarkets

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Gerik

Economic

Stock Market Reaches New Peaks Amid Softening Rate Outlook

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all closed last week at all-time highs, buoyed by increasing market confidence that the Federal Reserve will soon initiate interest rate cuts. The S&P 500 climbed 3.5% for the week, while the Nasdaq added over 4.1%, driven largely by waning inflation fears and a retreat in global tariff threats. This rally marks a 23% rebound from the market’s low on April 8, highlighting bullish investor sentiment even as economic indicators show signs of cooling.

Investor positioning suggests a growing belief that a rate cut could come as early as September. The CME FedWatch Tool shows a 93% chance of a rate cut by then, sharply up from 70% last week, reflecting a fast-changing policy outlook.

Fed’s Mixed Messaging Spurs Debate

Federal Reserve officials have recently offered a mixed view of upcoming policy action. Fed Governor Michelle Bowman noted that the labor market "appears less dynamic" and emphasized rising downside risks to employment. In contrast, Fed Chair Jerome Powell maintained a cautious stance, stressing the Fed is "well-positioned to wait." This divergence has left markets speculative but hopeful that softness in consumer demand and labor could prompt more dovish action by late summer.

EY’s Chief Economist Greg Daco expects a September rate cut, predicting further economic deceleration and weaker consumer spending as the quarter unfolds.

June Jobs Report in the Spotlight

This week’s economic focal point will be Thursday’s June nonfarm payrolls report, which analysts expect to show 116,000 new jobs added — a deceleration from May's 139,000. The unemployment rate is forecast to tick up to 4.3%, from 4.2% previously, suggesting further signs of slack in the labor market. Wage growth is expected to cool modestly to 3.8% year-over-year.

This jobs data will be critical for both the Federal Reserve’s interest rate path and investor confidence, especially as markets are closed Friday for Independence Day.

Tariff Pause Deadline Adds Geopolitical Risk

Investors are also closely monitoring President Trump’s July 9 deadline for resolving various global trade negotiations. The current 90-day pause on new tariffs is set to expire, and although deals with the UK, Canada, and potentially others are progressing, uncertainty remains—particularly concerning Europe and China.

The administration’s trade strategy has created planning instability, but for now, markets are betting on extensions or modest agreements to prevent major disruption.

Capital Flows Reflect Strategic Shifts

Despite US equity highs, global capital flows suggest cautious repositioning. As of late June, more than $100 billion has flowed into European equity funds—triple the amount from the same period last year—while US funds saw net outflows of nearly $87 billion. This underscores growing investor concern over US political volatility and a pivot toward perceived European stability.

The stock market’s momentum reflects optimism over easing monetary policy and calming trade tensions, but the foundation remains fragile. The June jobs report, upcoming service and manufacturing indices, and tariff decisions will all test the durability of current investor confidence. Markets may continue to climb in the short term, but unexpected softness in labor data or tariff escalations could prompt swift corrections. Investors are advised to stay cautious and closely monitor economic and political signals over the coming two weeks.

Source: Yahoo Finance

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Gerik

Economic

Tariff Relief Comes into Effect for British Exports

The UK government has officially confirmed the enactment of a bilateral trade deal with the United States that reduces tariffs on selected British exports. The deal, signed earlier this June between U.S. President Donald Trump and UK Prime Minister Keir Starmer, enables British automakers to export vehicles to the U.S. under a significantly reduced tariff quota of 10%, down from 27.5%. Simultaneously, the existing 10% tariffs on aircraft engines and related parts have been entirely eliminated.

This agreement represents one of the few concrete outcomes among the many framework discussions Trump’s administration has been pursuing as part of its global tariff reset initiative. For the UK, this is a notable win for its automotive and aerospace sectors, which rely heavily on transatlantic trade access.

Steel and Aluminum Tariffs Remain a Flashpoint

Despite the progress on autos and aviation, the more contentious issue of tariffs on British steel and aluminum remains unsettled. While the UK has temporarily avoided the blanket 50% tariffs that the U.S. has imposed on several trading partners earlier this month, that protection could expire after July 9 unless a supplementary deal is reached.

The British government emphasized that it is actively negotiating further to bring down tariffs on core steel products to 0%, suggesting ongoing dialogue but also highlighting the precarious nature of the current pause.

Strategic Significance and Broader Trade Climate

This partial agreement arrives amid Trump’s broader tariff campaign targeting dozens of countries under the justification of renegotiating imbalanced trade relationships. The U.S. is pushing for as many as 90 deals during a temporary moratorium set to expire on July 9. While many of these talks have yielded vague "frameworks," the UK’s deal stands out as one of the more specific and enforceable pacts.

Nonetheless, the unresolved metals issue is emblematic of the administration’s pattern — headline trade wins accompanied by unfinished negotiations and ambiguity. The risk for UK exporters is that without a finalized agreement, they may still be exposed to sudden tariff hikes, undermining the predictability necessary for supply chain planning and capital investment.

The effective implementation of the tariff reduction deal is a welcome development for British carmakers and aviation suppliers, offering immediate cost relief and export incentives. Yet, with the steel and aluminum chapter still open and July 9 drawing closer, the UK must remain diplomatically agile. As Trump’s trade team continues its fast-paced, often unilateral tariff diplomacy, even successful partners like the UK are not exempt from future shifts in U.S. trade posture.

Source: Reuters

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Michelle

Economic

Forex

Donald Trump's April tariff barrage felt like the height of hubris. It infuriated allies, damaged his popularity at home and triggered financial-market chaos so acute the whole thing was paused within days — the latest sign of America’s Icarus-like tendency to try to remake the world every few decades. Yet three months on, as the deadline for a compromise looms, Europe’s own syndrome risks emerging: a tendency to look more like a collection of Asterix villages than a cohesive whole.

It’s now looking increasingly likely that the European Union’s 27 members, whose common trade policy is led by Brussels, will be faced with what is called an “asymmetric” deal. There will be no removal of all tariffs imposed or threatened by Trump, including a baseline levy expected at 10%. If that’s the case, the UK’s bare-bones deal — which failed to cancel its own 10% tariff or a 25% levy on steel and aluminum — has become a kind of precedent: a few carve-outs, a gushing tweet and hope that Trump moves on. Canada has also become a precedent, withdrawing its digital services tax on tech companies after the US made it a red line for talks. Financial markets see cause for cheer as a de-escalation path takes form.

The question then becomes whether — or how — the EU retaliates. Aside from responding to the economic hit against an export flow worth $605.9 billion last year, from Airbus SE airliners to Volkswagen AG cars, not doing so might be a signal that bullying works. Last week, NATO allies agreed to more than double defense spending targets to 5% of gross domestic product (of which 1.5% would go on related infrastructure), addressing a Trumpian bugbear while also ensuring more orders for US arms. G-7 allies also appear to have offered concessions on global taxation of US companies in return for the dropping of a “revenge tax.” The EU has been offering other carrots for months, from buying more US imports to cooperating on China. Hence why Danish Prime Minister Mette Frederiksen warned it might soon be time to “respond in kind.”

The thing about retaliation is that it requires unity, especially if the idea is to go beyond goods and into services provided by dominant US firms like Alphabet Inc. or Amazon.com Inc. And even if the EU Commission is taking a strident tone, the combination of geopolitical risk and weak economic growth doesn’t generally inspire unity. Few heads seem willing to rise above the parapet. German Chancellor Friedrich Merz wants to get on with delivering on lofty promises of national renewal, not get bogged down in a tariff war. Italy’s Prime Minister Giorgia Meloni might want to preserve her relationship with Trump, which was on display at the North Atlantic Treaty Organization summit. Countries to the east, closer to the war in Ukraine, are more focused on access to American hard power, as displayed in spectacular fashion in Iran.

And while French President Emmanuel Macron will want to play the role of trade warrior, even his administration might see the value of a focus on securing protections for its own industries like aerospace. Spain, the most recent target of a verbal lashing from Trump, seems somewhat isolated and hasn’t rallied much of a wave of solidarity. During the Brexit saga, the UK’s oft-repeated mantra was “no deal is better than a bad deal.” Nobody is saying that in Brussels these days, even as officials try to uphold red lines on defending existing regulation. Such is life when faced with the closest thing the world has to a superpower — and when dependency on said superpower runs deep, from security to technology.

To be clear, the EU is hardly powerless in trade; and after deepening cooperation with Japan and Canada, there will be added impetus to cut new deals elsewhere. As for the US, a last dash for the finish line may produce a better outcome than the one currently on the table.

But either way, the lesson for the EU is it must address the dependencies that help the bullying work. That will require collective action: on a defense industrial base that reduces fragmentation and increases innovation, on a capital market that’s failing to create and scale up new companies and on the technological gaps that make talk of sovereignty unconvincing. Icarus syndromes are quickly shaken off, but Asterix syndromes last forever.

Source: Bloomberg Europe

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Gerik

Economic

Investment Migration: From Uncertainty to Stability

With just days remaining before the July 9 trade deal deadline and U.S. President Donald Trump threatening to impose a 50% tariff on EU goods, a significant investor migration is underway. Executives and fund managers across multiple sectors are pivoting towards Europe, seeking refuge from the policy volatility characterizing Trump’s second-term trade strategy.

Peter Roessner, CEO of Luxembourg-based hydrogen firm H2Apex, articulates the sentiment sweeping through the investment landscape. Faced with planning insecurity in the U.S. and limited supply chain predictability, Roessner’s firm has shifted focus to the European market, echoing a broader trend among energy and tech firms seeking policy consistency and logistical reliability.

Massive Inflows to Europe, Rising Outflows from the US

The data validates this shift. According to LSEG’s Lipper Funds, over $100 billion has been injected into European equity funds so far in 2025 — a threefold increase compared to the same period in 2024. In stark contrast, U.S. markets have suffered outflows of nearly $87 billion, more than doubling year-over-year.

ECB President Christine Lagarde welcomed the move, suggesting that capital flows reflect investor confidence in the EU’s policy clarity and economic recovery prospects. Similarly, foreign direct investment into Germany has soared to €46 billion in the first four months of 2025, its highest level since 2022, reinforcing this trend of transatlantic capital redirection.

Even among German corporates, the shift is evident. Recent Bundesbank data show that German firms have withdrawn more capital from the U.S. than they’ve invested in three of the first four months of this year, resulting in a negative net investment of €2.38 billion by April.

Real-Economy Reflections: Infrastructure and Green Industry Surge

The appeal of Europe is not merely speculative. Infrastructure-led spending across the EU, particularly in clean energy and defense, is helping the bloc attract long-term capital. Holcim’s decision to focus on European, Latin American, and North African markets has paid off — its stock has surged 15% — while the U.S.-centric spin-off Amrize faltered on debut.

Siemens Energy, which derives over 20% of its revenue from the U.S., also confirmed a noticeable shift in sentiment during a recent investor roadshow. Its stock has risen 84% year-to-date, buoyed by renewed European investor confidence.

The Political Premium: Trump's Risk Discount

Behind this capital reallocation lies a growing discomfort with Trump’s leadership style. The former president’s broad use of executive orders, repeated threats of sweeping tariffs, and mercurial decision-making have unnerved markets. Christoph Witzke of Deka Investment sums it up: while the U.S. has historically offered a capital-friendly environment, “political intervention” now clouds that image, making Europe comparatively attractive.

That said, the current enthusiasm for European assets is not without caveats. Investors like Stefan Wintels of KfW and Hajo Kroesche of Altor caution that this favorable window is temporary. Europe must act swiftly to translate sentiment into structural advantages — via regulatory reform, increased competitiveness, and consistent policy execution.

Investor migration from the U.S. to Europe underscores the high cost of unpredictability. Trump’s tariff-first strategy may yield short-term concessions, but it risks long-term capital flight and diminished U.S. market credibility. Meanwhile, Europe has a rare moment of global investor confidence — a moment that hinges on execution. If the EU can maintain policy cohesion and drive structural reform, it may solidify its position as a safe haven amid global economic realignment.