Japan’s $550 Billion US Fund Revealed to Be Mostly Loans, Not Investment

Economic

Summary:

Despite headline figures, Japan's $550 billion US fund will consist mostly of loans and guarantees, with just 1–2% allocated to direct investment...

Breakdown of the Fund: Loans, Not Large-Scale Investment

Japan’s chief trade negotiator Ryosei Akazawa revealed that only a sliver 1% to 2% of the highly publicized $550 billion US fund agreed in the recent US-Japan trade deal will be actual investment. The majority will be structured as loans and loan guarantees by Japanese state-backed financial institutions such as the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI).

This sharply reduces Japan’s financial risk, with Akazawa emphasizing that “it’s not that $550 billion in cash will be sent to the US.” In effect, Japan retains control over capital while leveraging the framework to deepen bilateral cooperation and influence US-based projects, including those involving third-country firms like Taiwanese semiconductor manufacturers.

Revenue Mechanics: Profits for the US, Interest for Japan

Japan has agreed to let the US keep 90% of the profits from the limited equity portion of the fund up from an initial 50-50 proposal. However, Akazawa dismissed concerns of a sellout, arguing the equity exposure is so small that the net loss will be marginal, amounting to “a couple of tens of billions of yen” at most.

For the loan components, Japan expects to collect interest, while loan guarantees if unused will generate fee income. These mechanisms suggest Japan stands to benefit financially, flipping the narrative from concession to smart capital deployment.

Tariff Cuts Offset Investment Asymmetry

The US has agreed to reduce its universal tariffs on Japanese goods to 15%, effective as early as August 1, 2025, subject to a pending executive order. These cuts could yield tariff savings of approximately ¥10 trillion ($68 billion) for Japan, offering a strong economic rationale for the deal’s structure. The fund’s role, then, is not just about economic stimulus, but also a strategic tradeoff for securing more favorable access to the American market.

The fund also signals Japan’s commitment to President Trump’s economic agenda during his second term, aligning with parallel agreements the US has struck with the European Union and other allies. The White House has promoted the Japan deal as a model for future trade frameworks, pairing tariff alignment with large capital pledges.

Nonetheless, the lack of a formal, signed joint document raises implementation concerns. Akazawa said Japan is pushing for immediate action via US executive order to lock in tariff reductions, even without finalized paperwork, highlighting Tokyo’s urgency to cement gains before delays or political shifts threaten momentum.

Japan’s $550 billion fund may appear massive, but the details show a cautious, strategic deployment of financial tools favoring loans and risk mitigation over direct spending. In return, Japan secures significant tariff relief and strengthens its geopolitical alliance with the US under Trump’s second term. As global trade policy realigns along security and investment lines, Tokyo’s approach reflects a pragmatic blend of diplomacy and financial prudence.

Source: Reuters

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Adam

Economic

Apple Inc., Amazon.com Inc. and Microsoft Corp. are among the bluechip names reporting that will underscore how companies are confronting tariff-fueled cost increases even as consumer confidence falters and artificial-intelligence investment needs grow.

Meta Platforms Inc., seen as the most exposed to an ad spending pullback in the US by large Chinese advertisers, is likely to be quizzed about its unusually high compensation offers to lure AI talent.

Highlights to look out for:

Monday: Waste Management’s (WM US) adjusted earnings per share should rise after falling two consecutive quarters with its purchase of Stericycle already proving to be “more accretive than initially projected,” Bloomberg Intelligence said.

Tuesday: Procter & Gamble (PG US) could detail more productivity efforts beyond the office job cuts it has planned over the next two years as it seeks to jumpstart stalling profit growth. Adjusted EPS is seen up 1.6% versus 2.2% a year ago.

UnitedHealth (UNH US) is unlikely to reinstate guidance it withdrew in May, BI said, but any medical cost trend comments will be scrutinized after spiraling costs marred its peers’ results. The insurer is set to report its first adjusted EPS drop in four years. It also faces questions about federal spending cuts and Justice Department probes .Boeing (BA US) revenue should surge 29% as total commercial plane deliveries hit their highest in six quarters. Its defense segment is recovering from money-losing, fixed-price contracts, BI said.

Apple, Meta, Amazon Face Mounting Tariff Pressures Amid AI Push: US Earnings Week Ahead_1

UPS (UPS US) adjusted EPS could fall the first time in a year on tariffs and weak industrial demand. Management could skip guidance for the fourth quarter, BI said.Starbucks (SBUX US) US same-store sales are forecast to contract for sixth straight quarter even as international traffic expands for the first time in a year and a half. The US turnaround spearheaded by CEO Brian Niccol is taking longer than expected, probably due to stiff competition and the brand’s large footprint, BI said.Visa’s (V US) profit should be in line with its guidance, bolstered by healthy leisure and service spending, BI said. Like PayPal (PYPL US) and Mastercard (MA US), which reports Thursday, Visa faces concerns of volume share and margin erosion with stablecoins emerging as a possible payment tool. The threat isn’t immediate given regulatory hurdles and stablecoin’s prolonged consumer adoption curve, BI noted.

Wednesday: Meta (META US) sales growth should be the slowest in two years. Ad pricing gains are stable due to its AI-driven ad targeting, BI said. Margins remain pressured near term by higher AI spending as exemplified by recent high-profile hires, Jefferies said.

Microsoft (MSFT US) faces questions over the ramifications of a cyberattack on its SharePoint servers. Revenue is forecast to rise 14%, supported by gains in its intelligent cloud unit. Critical software and AI sales are less suspectible to tariff shocks and should prove resilient, BI said.Ford’s (F US) adjusted earnings may land at the low end of estimates, dragged down by tariffs and a production halt at its Chicago plant, BI said. The automaker has warned of $570 million in costs from a vehicle recall that will be treated as a special item in the quarter’s results. With US auto sales sputtering after a springtime surge, investors will want more clarity on prospects for the rest of the year.Qualcomm (QCOM US) sales growth is set to be the slowest in more than a year. PC and handset chips demand has stabilized but remains vulnerable to abrupt policy shifts, BI said.Altria (MO US) cigarette shipments are forecast to fall 10% as the flagship Malboro brand cedes market share to cheaper rivals. Higher selling prices and cost-saving efforts should offset the impact and pave the way for a 5-6% EPS gain, BI said.

Thursday: Apple’s (AAPL US) Greater China revenue is seen rising for the first time in two years. Aggressive promotions there should have helped its product sales firm while its services segment chalks up its eighth quarter of double-digit gains. European Union antitrust moves have yet to slow App Store sales growth, Citi said. Continued delays with AI offerings and US trade policy will weigh on iPhone demand for the rest of the year, Citi added.

Amazon’s (AMZN US) core retail business remains healthy in the face of tariffs thanks to its cost discipline, as evidenced in recent headount cuts, Jefferies said. Cloud computing is forecast to grow 5.1% sequentially amid persistent capacity limits. Modest margin compression is likely as the firm pursues automation and AI improvements.Reddit (RDDT US) ad sales likely rose 54%, versus 41% a year ago. User growth has stabilized on consistent Google Search traffic, Citizens said.AbbVie (ABBV US) revenue probably rose for a sixth straight quarter, buoyed by demand for its Skyrizi and Rinvoq therapies. Bristol-Meyers Squibb (BMY US) could raise profit guidance on the back of persistent dollar weakness, BI said. Merck (MRK US) — reporting Tuesday — should see sales shrink for a second quarter in a row due to a 50% drop in sales of its Gardasil vaccine.Coinbase (COIN US) likely lost market share as trading volume grew at the slowest pace in a year and a half. Healthy stablecoin growth could lift subscription and services revenue above its guidance of $600 million to $680 million, BI said.Comcast (CMCSA US) could post record broadband defections, with as many as 300,000 customers lost, BI said. Stepped up promotions to fend off competition will hit earnings with adjusted EPS forecast to contract for the first time since 2020.

Friday: Chevron’s (CVX US) competitive inventory will be strengthened vis-a-vis arch rival Exxon Mobil’s (XOM US), following the close of its long-delayed Hess Corp. acquisition, BI said. Exxon, expected to post a 14% drop in revenue, may be asked about reports that it’s in talks to explore for oil and gas off the coast of Trinidad and Tobago.

Source: Bloomberg

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Olivia Brooks

Economic

Key Points:

●Dallas Fed Manufacturing Index increased from -12.7 to +0.9.

●Production Index improved from +1.3 to +21.3.

●Capacity Utilization Index grew from -1.0 to +17.3.

On July 28, 2025, the Federal Reserve Bank of Dallas released Dallas Fed Manufacturing Index report for July. The report indicated that Dallas Fed Manufacturing Index improved from -12.7 in June to +0.9 in July, compared to analyst forecast of -8.

Production Index increased from 1.3 in June to 21.3 in July, while Capacity Utilization grew from -1.0 to 17.3. It should be noted that Production Index reached its highest level in more than three years.

Prices Paid for Raw Materials declined from 43.0 in June to 41.7 in July, while Wages and Benefits decreased from 13.4 to 13.2.

U.S. Dollar Index settled near session highs as traders reacted to the better-than-expected Dallas Fed Manufacturing Index report. Currently, U.S. Dollar Index is trying to settle above the 98.30 level. U.S. dollar is also supported by the U.S. – EU trade deal.

Gold is trading near session lows as traders focus on the strong U.S. dollar. Gold has recently made an attempt to settle below the $3300 level.

SP500 pulled back towards the 6400 level as traders took some profits off the table near historic highs. It remains to be seen whether the encouraging Dallas Fed Manufacturing Index report will provide sufficient support to SP500 as traders may stay focused on Trump’s tariff policy.

Source: FX Empire

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Adam

Economic

This is a big week on the monetary policy front, with the Federal Reserve, Bank of Japan, and Bank of Canada all holding policy meetings. Naturally, the main event will be the Federal Open Market Committee’s widely expected decision (Wed) to leave the federal funds rate unchanged. We are among those expecting no change.

However, we do expect that Fed Chair Jerome Powell’s press conference (Wed) will be relatively dovish, raising the odds of a September rate cut. Nevertheless, we remain in the one-and-done camp in 2025 for now.

On Friday, the markets will receive a highly anticipated update on US employment. We expect the data to confirm, yet again, that the economy remains resilient. By the way, Friday is also August 1, the drop-dead day for many trade deals with the US.

This week is full of reports that could influence the Fed’s thinking on whether slowing growth or accelerating price pressures is the bigger risk:

Employment

We expect to see July payrolls (Fri) rise by around 115,000, down from 147,000 in June. It will likely reach yet another record high, consistent with the record high in corporate earnings, since profitable companies tend to expand their payrolls (chart). We expect any slowdown in payroll gains to be related to a shortage of workers rather than a shortage of jobs.

Markets Week Ahead: Fed Set to Hold Rates With September Cut on the Table_1

GDP

After dropping 0.5% y/y in Q1, real GDP growth (Wed) is likely to expand at a 2.4% y/y rate. That is in line with the latest Atlanta Fed GDPNow tracking model (chart). While much of the rebound will likely be driven by a narrowing trade deficit, domestic demand should provide some support.

Markets Week Ahead: Fed Set to Hold Rates With September Cut on the Table_2

Job openings

On Tuesday, the ob openings data in June’s JOLTS report should show that this series remains relatively high, as suggested by June’s jobs plentiful series in the Consumer Confidence Index survey. That probably remained relatively high again in July (chart).

Markets Week Ahead: Fed Set to Hold Rates With September Cut on the Table_3

Personal income

June’s personal income and consumer spending (Thu) should rise based on the increase in payroll employment and retail sales during the month.

Inflation

June’s headline and core PCE inflation rates (Thu) are projected to be up 2.5% and 2.7% y/y, according to the Cleveland Fed’s Inflation Nowcasting tracking model (chart). Both could be a bit hotter.

Markets Week Ahead: Fed Set to Hold Rates With September Cut on the Table_4

Source: investing

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Damon

Economic

The United States and European Union have agreed a trade deal in which a 15% tariff is set to be placed on most EU exports entering the US market, though a final decision is yet to be made on alcohol.

Yesterday (27 July), the EU Commission announced that besides the 15% levy, the US and EU had also agreed on "zero-for-zero tariffs" on several goods, including "certain agricultural products".

When asked in a press conference following the deal whether the zero-for-zero agreement included alcohol, spirits and wine, president of the Commission Ursula von der Leyen said "no decision” had been made yet.

She added that the topic was something that would be discussed in the “next days".

In the Commission's statement, the president added that the deal creates "more predictability for our businesses".

She added: "We are ensuring immediate tariff relief. This will have a clear impact on the bottom lines of our companies. And with this deal, we are securing access to our largest export market. At the same time, we will give better access for American products in our market.

"This will benefit European consumers and make our businesses more competitive. This deal provides a framework from which we will further reduce tariffs on more products, address non-tariff barriers, and cooperate on economic security."

Secretary general of The Brewers of Europe, Julia Leferman said that the United States is the "second most significant export market for European breweries, accounting for over a quarter of total European beer exports."

She added: “As it emerges that no decision has yet been taken on the treatment of alcoholic beverages and negotiations continue on the list of products - including agri-food, that could be covered by a zero-for-zero arrangement - The Brewers of Europe calls on EU and US negotiators to put beer on this list and also remove beer from the aluminium derivatives tariffs set by the US."

Reflecting on the news, president of the European wine trade body Comité Européen des Entreprises Vins (CEEV) Marzia Varvaglione said: "We are still awaiting the full details of the agreement reached today and are watching with great anticipation the outcome of the upcoming negotiations regarding the list of products that will be included under the zero-for-zero tariff arrangement, among them some agricultural products”

"We truly believe the trade of wine is of great benefit for both EU and U.S. companies, and it must be included in the zero-for-zero tariff arrangement.

Source: Yahoo Finance

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Samantha Luan

Economic

Cryptocurrency

The Genesis of Skepticism: Crypto Adoption’s Rocky Start

Cast your mind back to 2017. The cryptocurrency landscape was a wild west of innovation mixed with rampant speculation. While Bitcoin was making headlines with its parabolic surge, it was also attracting its fair share of critics. Many traditional financial experts and media outlets openly questioned its legitimacy, often labeling it as a Ponzi scheme or a tool for illicit activities. The term ‘scam’ was frequently associated with digital assets, fueled by:

● ICO Mania and Scams: The Initial Coin Offering (ICO) boom saw countless projects emerge, many with little more than a whitepaper and grand promises. Unfortunately, a significant number turned out to be fraudulent, leaving investors with worthless tokens and reinforcing the ‘scam’ narrative.

● Regulatory Ambiguity: Governments and financial bodies around the world struggled to categorize and regulate cryptocurrencies, leading to an environment of uncertainty and fear. Without clear guidelines, many viewed the space as inherently risky and unregulated.

● Technical Complexity: For the average person, understanding blockchain technology, private keys, and decentralized networks was daunting. This complexity often bred mistrust, as people tend to be wary of what they don’t understand.

● Media Portrayal: Early media coverage often sensationalized crypto’s volatility and its association with dark web activities, painting a largely negative picture for the general public.

During this period, Crypto Adoption was primarily driven by early tech enthusiasts, libertarians, and risk-tolerant investors who saw its revolutionary potential despite the prevailing skepticism.

The Unstoppable Tide: Catalysts for Crypto Adoption’s Transformation

Fast forward to today, and the conversation around crypto couldn’t be more different. Richard Teng’s observation of crypto’s journey from ‘scam’ to ‘sensation’ is a testament to several pivotal developments that have fueled this incredible transformation. What exactly ignited this shift in public and institutional perception, accelerating Crypto Adoption to unprecedented levels?

● Technological Maturation: Beyond Bitcoin, the ecosystem has evolved dramatically. The rise of DeFi (Decentralized Finance), NFTs (Non-Fungible Tokens), Layer 2 scaling solutions, and Web3 applications has showcased tangible utility for blockchain technology beyond speculative trading. These innovations are building a new digital economy.

● Institutional Embrac: Perhaps the most significant catalyst. Major financial institutions, once staunch critics, are now actively participating. The approval of spot Bitcoin ETFs in various regions, the entry of major banks into crypto custody, and the exploration of tokenized assets by traditional finance giants signal a profound shift. These moves lend immense legitimacy and liquidity to the market, paving the way for broader Crypto Adoption.

● Regulatory Clarity (Emerging): While still a work in progress, many jurisdictions are developing clearer regulatory frameworks for digital assets. This increasing clarity provides a safer environment for both institutions and retail investors, reducing uncertainty and fostering trust.

● Increased Awareness and Education: As crypto gains mainstream media attention, more resources are available for people to understand its fundamentals. Educational initiatives, podcasts, and accessible platforms have demystified the technology for millions, making Crypto Adoption more approachable.

This confluence of factors has propelled crypto from the fringes to the forefront of global finance and technology, making its presence undeniable.

Navigating the Future: What’s Next for Crypto Adoption?

As we look towards 2025 and beyond, the trajectory for Crypto Adoption appears to be one of continued growth and integration. Richard Teng’s remarks underscore that we are merely at the cusp of this transformative era. What does this mean for the future?

Mainstream Integration and Tokenization

Expect to see cryptocurrencies and blockchain technology seamlessly integrated into everyday life. This could manifest in:

● Payments: More businesses accepting crypto for goods and services, driven by lower transaction fees and faster settlement times.

● Asset Tokenization: Real-world assets, from real estate to fine art, being represented as digital tokens on a blockchain, increasing liquidity and accessibility.

● Central Bank Digital Currencies (CBDCs): Governments exploring and launching their own digital currencies, further legitimizing the underlying technology.

● Web3 Applications: A shift towards decentralized internet services where users have more control over their data and digital identities.

Persistent Challenges in Crypto Adoption

While the outlook is overwhelmingly positive, the path to full Crypto Adoption isn’t without its hurdles. Key challenges include:

● Scalability: Ensuring blockchain networks can handle a massive influx of users and transactions without compromising speed or cost.

● User Experience (UX): Simplifying interfaces and processes to make crypto accessible for non-technical users.

● Regulatory Harmonization: The need for consistent global regulations to prevent arbitrage and foster cross-border innovation.

● Security: Protecting users from hacks, scams, and cyber threats remains paramount as the ecosystem grows.

The Benefits of Widespread Crypto Adoption

Despite the challenges, the benefits of widespread Crypto Adoption are compelling:

● Financial Inclusion: Providing banking services to the unbanked and underbanked populations worldwide.

● Enhanced Efficiency: Streamlining cross-border payments, supply chain management, and data verification.

● Economic Empowerment: Enabling individuals to have greater control over their assets and participate directly in new digital economies.

● Innovation Catalyst: Fostering new business models and technological breakthroughs that were previously unimaginable.

Actionable Insights for the Crypto Curious

If Richard Teng’s insights have piqued your interest in the evolving world of crypto, here are some actionable steps:

1.Educate Yourself: Start with the basics. Understand what blockchain is, how cryptocurrencies work, and the different types of digital assets. Reliable sources are key.

2.Start Small: You don’t need to invest a fortune. Begin with a small amount you’re comfortable losing, and gradually increase as your understanding and confidence grow.

3.Prioritize Security: Learn about wallet security, two-factor authentication, and how to protect your digital assets from scams. Never share your private keys.

4.Explore Use Cases: Look beyond just trading. Investigate DeFi protocols, NFT marketplaces, or Web3 applications that align with your interests.

5.Stay Informed: The crypto space is dynamic. Follow reputable news sources, industry leaders, and regulatory updates to stay abreast of developments.

Richard Teng’s observation is more than just a comment; it’s a powerful reflection of a monumental shift. What was once dismissed as a dubious experiment has blossomed into a vibrant, dynamic force shaping the future of finance and technology. The journey from widespread skepticism in 2017 to the growing institutional embrace of 2025 highlights not just the resilience of crypto, but its undeniable potential. As Crypto Adoption continues its phenomenal rise, it promises to unlock new possibilities, redefine traditional systems, and empower individuals globally. This isn’t just a sensation; it’s a revolution in progress.

Source: CryptoSlate

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Michelle

Economic

Political

Top U.S. and Chinese economic officials resumed talks in Stockholm on Monday to resolve longstanding economic disputes at the centre of a trade war between the world's top two economies, aiming to extend a truce by three months.

U.S. Treasury Chief Scott Bessent was part of a U.S. negotiating team that arrived at Rosenbad, the Swedish prime minister's office in central Stockholm, in the early afternoon. China's Vice Premier He Lifeng was also seen at the venue on video footage.

China is facing an August 12 deadline to reach a durable tariff agreement with President Donald Trump's administration, after Beijing and Washington reached preliminary deals in May and June to end weeks of escalating tit-for-tat tariffs and a cut-off of rare earth minerals.

Trump touched on the talks during a wide-ranging press conference with British Prime Minister Keir Starmer in Scotland.

"I'd love to see China open up their country. So we're dealing with China right now as we speak," Trump said.

Without an agreement, global supply chains could face renewed turmoil from U.S. duties snapping back to triple-digit levels that would amount to a bilateral trade embargo.

U.S. Trade Representative Jamieson Greer said he did not expect "some kind of enormous breakthrough today" at the talks in Stockholm that he was attending.

"What I expect is continued monitoring and checking in on the implementation of our agreement thus far, making sure that key critical minerals are flowing between the parties and setting the groundwork for enhanced trade and balanced trade going forward," he told CNBC.

The Stockholm talks follow Trump's biggest trade deal yet with the European Union on Sunday for a 15% tariff on most EU goods exports to the United States.

XI-TRUMP MEETING?

Trade analysts said another 90-day extension of a tariff and export control truce struck in mid-May between China and the United States was likely.

An extension would facilitate planning for a potential meeting between Trump and Chinese President Xi Jinping in late October or early November.

The Financial Times reported on Monday that the U.S. had paused curbs on tech exports to China to avoid disrupting trade talks with Beijing and support Trump's efforts to secure a meeting with Xi this year.

Meanwhile, in Washington, U.S. senators from both major parties plan to introduce bills this week targeting China over its treatment of minority groups, dissidents, and Taiwan, emphasizing security and human rights, which could complicate talks in Stockholm.

Previous U.S.-China trade talks in Geneva and London in May and June focused on bringing U.S. and Chinese retaliatory tariffs down from triple-digit levels and restoring the flow of rare earth minerals halted by China and Nvidia's (NVDA.O), opens new tab H20 AI chips, and other goods halted by the United States.

So far, the talks have not delved into broader economic issues. They include U.S. complaints that China's state-led, export-driven model is flooding world markets with cheap goods, and Beijing's complaints that U.S. national security export controls on tech goods seek to stunt Chinese growth.

"Geneva and London were really just about trying to get the relationship back on track so that they could, at some point, actually negotiate about the issues which animate the disagreement between the countries in the first place," said Scott Kennedy, a China economics expert at the Center for Strategic and International Studies in Washington.

Bessent has already flagged a deadline extension and has said he wants China to rebalance its economy away from exports to more domestic consumption -- a decades-long goal for U.S. policymakers.

Analysts say the U.S.-China negotiations are far more complex than those with other Asian countries and will require more time. China's grip on the global market for rare earth minerals and magnets, used in everything from military hardware to car windshield wiper motors, has proved to be an effective leverage point on U.S. industries.