Powell moves to the front line

Economic

Summary:

Powell’s hawkish tone dimmed hopes for a September rate cut, but stellar earnings from Microsoft and Meta lifted markets. Tariff tensions rise globally, while AI momentum drives Big Tech-led optimism.

In just over two hours last night, investors got a clear snapshot of the U.S. economy and markets heading into the second half of 2025. It began with the Federal Reserve holding interest rates steady, followed by earnings from Microsoft and Meta.

Starting with the Fed: the U.S. central bank has kept rates elevated for months to contain inflation and maintain flexibility in case the economy struggles with Trump administration policies. President Trump, on the other hand, wants lower rates to stimulate growth, reduce the dollar’s strength, ease federal financing, and support his broader economic agenda. In typical Trump fashion, he blasted the Fed as “morons” running a “sadomasochistic” policy, and again targeted Chair Jerome Powell—especially after Powell’s comments last night.

Markets expected rates to remain in the 4.25%–4.50% range—and they did. But investors were also looking for Powell to signal a likely cut in September. That didn’t happen. Powell struck a more cautious tone than expected. In central bank jargon, that’s “hawkish,” the opposite of “dovish.” So hawkish, in fact, that odds of a September cut dropped below 50% for the first time in weeks.

Economists note the Fed’s message shifted from “we’re waiting for positive data to cut” to “we need convincing evidence before we cut.” It’s a subtle but meaningful change. Two FOMC members, Michelle Bowman and Christopher Waller, pushed for a cut at this meeting, which was anticipated given their prior comments. Bank of America summed it up: the theme of the night was “effective.” Powell stressed that as long as the economy holds up, keeping rates steady is more effective than cutting too soon and risking an emergency hike later. In short, the Fed remains firmly in risk-control mode.

Hawkish signals usually dampen equity sentiment—but not last night. Why? Microsoft and Meta delivered blowout earnings that overshadowed rate worries. After-hours trading showed Microsoft up 8% and Meta soaring 11.5%. These two giants—worth more together than the entire French stock market—lit a fire under global markets. Futures turned sharply higher, and European and Asian indexes followed suit. The driver? Explosive growth in AI adoption, where Microsoft and Meta dominate thanks to their vast ecosystems.

Elsewhere, the U.S. signed a 15% tariff deal with South Korea, matching the EU agreement. But tensions with India are rising as Washington moves forward with a 25% surcharge and sanctions over Russian oil imports. A compromise may come this week, but the tone is hardening. Relations with Brazil are also strained; Washington hit the country with a 40% tariff hike to force compliance. Meanwhile, China’s latest PMI data signaled industrial contraction and near-flat services activity, while Japan’s central bank held rates steady and raised inflation forecasts.

The earnings calendar is also in overdrive—July 30 ranks among the busiest days of the year for corporate reports, setting up more market-moving news.

In Asia, Japan’s Nikkei 225 snapped a four-day losing streak, gaining 1%. South Korea and India, under tariff pressure, slipped 0.5%. Hong Kong’s Hang Seng fell 0.6%, and Australia edged down 0.1%. European futures opened higher but trimmed some overnight gains.

Source:marketscreener

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Adam

Stocks

Economic

According to a new report from Vanda Research, investor appetite for meme stocks like Kohl’s (KSS), Krispy Kreme (DNUT), and GoPro (GPRO) has dropped sharply as traders shift their attention to Big Tech earnings and broader market drivers.

“Just like that, the meme stock frenzy of July 2025 has seemingly fizzled out,” Vanda’s Marco Iachini wrote. Across a basket of popular meme names, average daily turnover plunged as much as 90% in recent weeks. The lone exception is the fintech SoFi (SOFI), which saw a recent jump in trading tied to its common stock offering.

The cooldown in retail-driven trades comes as major companies like Meta (META), Microsoft (MSFT), and Apple (APPL) deliver earnings that could set the tone for the broader market. Thus far, Meta and Microsoft have reported robust quarterly earnings, powered in part by their AI efforts.

“It’s not surprising to see retail activity take a breather,” Iachini noted. With Big Tech earnings underway and a Federal Reserve meeting now in the rearview mirror, retail investors are reallocating toward more established players rather than high-risk names. While meme stock flows made headlines, they didn’t ignite the kind of broad-based retail frenzy seen during the GME episode in 2021, he added.

Over the past month, Kohl’s is down 88%, and Krispy Kreme has shed roughly 84%. Other onetime favorites like Opendoor Technologies (OPEN) and SharpLink Gaming (SBET) have also lost steam.

Meanwhile, institutional investors are playing a bigger role in driving the market. Since April, the rally has largely been fueled by retail and systematic flows. But for stocks to keep climbing through the second half of the year, "discretionally institutional investors may need to play a larger role,” per Iachini.

Still, retail traders haven’t disappeared — they’ve just become more selective. Shares of Kohl’s spiked 2,589% in trading volume the week of July 21 after it became the target of a meme stock trading frenzy fueled by users on Reddit's WallStreetBets.

Krispy Kreme saw an even steeper 4,371% surge during that period, powered by similar circumstances, despite weak first quarter earnings results and ending a partnership with McDonald’s (MCD). GoPro (GPRO), which has emerged as a favorite among speculative traders, didn’t miss out on the action. Its trading volume ballooned 2,727% that same week.

But the recent meme stock pop hasn’t come close to its 2021 peak. This brief shift toward riskier assets, sparked by hopes for rate cuts, easing inflation, and a soft landing, now appears to be under reconsideration.

“Speculative trading tends to resurface when bullish momentum in risk assets stretches over multiple months,” Iachini wrote. “But behavior may lean more opportunistic than momentum-driven in the days ahead.”

Source: finance.yahoo

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Owen Li

Central Bank

U.S. inflation increased in June as tariffs boosted prices for imported goods like household furniture and recreation products, supporting views that price pressures would pick up in the second half of the year and delay the Federal Reserve from resuming cutting interest rates until at least October.

The report from the Commerce Department on Thursday showed goods prices last month posting their biggest gain since January, with also solid rises in the costs of clothing and footwear. The U.S. central bank on Wednesday left its benchmark interest rate in the 4.25%-4.50% range and Fed Chair Jerome Powell's comments after the decision undercut confidence the central bank would resume policy easing in September as had been widely anticipated by financial markets and some economists.

"The Fed is unlikely to welcome the inflation dynamics currently taking hold," said Olu Sonola, head of U.S. economic research, Fitch Ratings. "Rather than converging toward target, inflation is now clearly diverging from it. This trajectory is likely to complicate current expectations for a rate cut in September or October."

The personal consumption expenditures (PCE) price index rose 0.3% last month after an upwardly revised 0.2% gain in May, the Commerce Department's Bureau of Economic Analysis said. Economists polled by Reuters had forecast the PCE price index climbing 0.3% following a previously reported 0.1% rise in May.

Prices for furnishings and durable household equipment jumped 1.3%, the biggest gain since March 2022, after increasing 0.6% in May. Recreational goods and vehicles prices shot up 0.9%, the most since February 2024, after being unchanged in May. Prices for clothing and footwear rose 0.4%.

Outside the tariff-sensitive goods, prices for gasoline and other energy products rebounded 0.9% after falling for four consecutive months. Services prices rose 0.2% for a fourth straight month, restrained by cheaper airline fares and steady prices for dining out and hotel stays.

In the 12 months through June, the PCE price index advanced 2.6% after increasing 2.4% in May.

The data was included in the advance gross domestic product report for the second quarter published on Wednesday, which showed inflation cooling, though remaining above the Fed's 2% target. Economists said businesses were still selling inventory accumulated before President Donald Trump's sweeping import duties came into effect.

They expected a broad increase in goods prices in the second half. Procter & Gamble (PG.N), opens new tab said this week it would raise prices on some products in the U.S. to offset tariff costs.

The Fed tracks the PCE price measures for monetary policy.

Excluding the volatile food and energy components, the PCE price index increased 0.3% last month after rising 0.2% in May. In addition to higher goods prices, the so-called core PCE inflation was lifted by rising costs for healthcare as well as financial services and insurance.

In the 12 months through June, core inflation advanced 2.8% after rising by the same margin in May.

Stocks on Wall Street were mixed. The dollar was steady against a basket of currencies. U.S. Treasury yields fell.

A line chart titled "Annual change in US Personal Consumption Expenditures Price Index" that compares two key inflation metrics over the past five years.

CONSUMER SPENDING STEADY

The BEA also reported that consumer spending, which accounts for more than two-thirds of economic activity, rose 0.3% in June after being unchanged in May. The data was also included in the advance GDP report, which showed consumer spending growing at a 1.4% annualized rate last quarter after almost stalling in the first quarter.

In the second quarter, economic growth rebounded at a 3.0% rate, boosted by a sharp reduction in the trade deficit because of fewer imports relative to the record surge in the January-March quarter. The economy contracted at a 0.5% pace in the first three months of the year.

Spending is being supported by a stable labor market, with other data from the Labor Department showing initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 218,000 for the week ended July 26.

But a reluctance by employers to increase headcount amid uncertainty over where tariff levels will eventually settle is making it harder for those who lose their jobs to find new opportunities, which could hamper future spending.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, was unchanged at a lofty seasonally adjusted 1.946 million during the week ending July 19, the claims report showed.

The government's closely watched employment report on Friday is expected to show the unemployment rate rising to 4.2% in July from 4.1% in June, according to a Reuters survey of economists.

Economists expect pressure from tariffs and a slowing labor market will put a brake on consumer spending in the third quarter. Slow growth is likely already in the works as inflation-adjusted consumer spending edged up 0.1% in June after declining 0.2% in May.

Precautionary saving could also curb spending. The saving rate was unchanged at 4.5% in June.

Though a third report from the Labor Department showed wage growth picking up in the second quarter, inflation-adjusted annual gains moderated to 0.9% from 1.1% in the 12 months through March.

The BEA report showed inflation cutting into income for households after accounting for taxes, which was flat in June.

Signs of financial strain are also emerging among higher-income households, who have largely been driving spending. Lower- and middle-income families have been disproportionately affected by tariff-related price increases, higher borrowing costs and slowing economic activity.

"While consumer spending has thus held up — supported by solid income gains — it now faces mounting headwinds from a cooling labor market and renewed inflationary pressures," said Gregory Daco, chief economist at EY-Parthenon.

Source: Reuters

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Adam

Commodity

A major exemption to President Donald Trump’s 50% copper tariff has shocked traders and sent U.S. market prices plummeting.

The final order on copper tariffs, which the Trump administration says will boost the domestic copper production industry, applies to semi-finished products such as pipes, rods, sheets and wires. It also impacts copper-intensive items like cables and electrical components. But crucially, it does not include the raw input material copper cathode, copper ores, concentrates or scraps, as had been widely expected.

However, analysts say that may not be enough to avoid prices for a range of consumer goods containing the metal, from cookware to air conditioning units to plumbing parts, being pushed higher as a result of the tariffs.

U.S. copper prices on the Chicago Mercantile Exchange (CME) shot to a record high earlier this month, also hitting an all-time premium over the global benchmark London Metal Exchange (LME), following the initial July announcement of a 50% tariff. While importers had already sent refined copper flooding stateside at record levels through the first half of the year in anticipation of new duties, the scale of a blanket 50% rate jolted markets and put severe upward pressure on U.S. prices.

The eventual reveal on Wednesday of a tariff targeting only semi-finished products has provided yet another massive shock. In the minutes after the news, COMEX copper (metals futures contracts on the CME) fell 19% in the biggest intraday fall on record, according to bank ING.

The gap between COMEX above LME prices has been around 30% since the initial July 8 announcement, implying continued uncertainty that the overall tariff rate would end up at 50%.

However, traders were instead considering possible exemptions for countries such as major exporter Chile, or for delays to full implementation of tariffs, Albert Mackenzie, copper analyst at Benchmark Mineral Intelligence, told CNBC.

The actual situation is almost a 180-degree pivot from what was expected and what was being priced in to the CME, which was tariffs on refined copper, Mackenzie continued.

The deviation sent the CME price premium plummeting from around $2,637 at the start of Wednesday to just $90 on Thursday morning in Europe, Mackenzie said — a scale of a drop that would look like a mistake were it not for the tariff context, he added.

Downward U.S. price pressure

While traders were taking advantage of a price arbitrage, part of the reason for the huge redirection of copper supply into the U.S. has been that it would take decades for the country to be able to sufficiently increase domestic production of the metal to meet demand. The U.S. currently imports around half its copper, with major exporters including Chile, Canada, Peru and Mexico.

Analysts at Deutsche Bank stressed the “huge shock to the market” this week, noting Thursday that shares of Arizona-based miner Freeport-McMoRan— the copper company most exposed to tariffs on refined copper driving up U.S. prices — closed over 9% lower the previous day.

“Fundamentally, this does not change the copper supply-demand balance (and arguably improves it due to less demand destruction risk), but is likely to put COMEX under heavy pressure,” they wrote.

Downward price pressure is likely to follow through onto the LME on a less dramatic scale, they said, in the wake of the massive build-up in refined inventories in the U.S. so far this year. The overhang “could see high shipments from the U.S. back into the global market,” they said, where supply has become tight.

Duncan Wanblad, CEO of mining giant Anglo American– which has major copper operations around the world – told CNBC’s “Squawk Box Europe” on Thursday that while there was currently a “material dislocation” in the placement of inventories, the demand fundamentals for copper “look great.”

“Through a medium- to long- term lens, the fundamentals of copper are really underpinned by the fact that demand is looking to be very strong still in terms of the world’s need for an energy transition, for the likes of battery-electric vehicles, for the likes of new energy supply, data centers, AI,” he said. Supply on that longer-term outlook remains constrained, he added, amid difficulties obtaining permits and getting product into market.

Consumer goods impact

One policy revealed Wednesday is that the copper tariffs will not stack on top of Trump’s new duties on automobile imports, meaning only the latter rate would apply to an impacted product.

However, Benchmark Mineral Intelligence’s Mackenzie pointed out that a lower U.S. market price premium does not mean no feed-through into prices for consumer products.

“If you’re a manufacturer of fridges or air conditioning units, or even houses, you don’t buy copper cathode. You buy wiring and other semi-finished copper products, which are the things being tariffed. So it’s reasonable to assume the price increase will be reflected in some end goods,” Mackenzie said.

Russ Bukowski, president of manufacturing software company Mastercam, agreed.

“Although there are currently high inventories of copper in the country, the 50% increase on copper tariffs is going to hurt manufacturers in the long run and lead to higher production costs,” Bukowski told CNBC.

“To stay afloat, manufacturers may have to pass these costs to consumers, which will likely drive-up prices on various goods.”

Michael Reid, senior U.S. economist at RBC Capital Markets, said the impact on consumer prices would be “nuanced.”

“The largest sectors that use copper as inputs include motor vehicles, plumbing fixtures and valve fittings, communications wire (i.e., cable and internet providers), and various electrical components. To that end, the manner by which those products are made matters – which is to say, if a car is imported, its copper content won’t be tariffed,” Reid said by email.

“Where we would expect to see it impact consumer prices the most would be in the housing/construction sector where copper inputs play a big role for electric wiring and plumbing.”

“But in the context of the overall cost of a house, the impact is not as harsh as the 50% may sound – assuming the typical cost of plumbing and electric components is $10k then an aggressive full passthrough to the end consumer would mean costs rise to $15k. In the overall cost of a home, that $5k increase would be around 10%,” he added.

Source: cnbc

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Adam

Economic

Tariff-related price hikes may start to bite at the end of the third quarter as companies may by then have sold off U.S. stockpiles built up ahead of the new duties, according to the International Chamber of Commerce.

Businesses making everything from cars to drugs and cheese and wine have expedited deliveries to the United States this year to get ahead of U.S. President Donald Trump's tariffs.

They have about four months of inventory, about one month more than average, Andrew Wilson, International Chamber of Commerce deputy secretary general, estimated on Thursday, helping some delay hiking prices.

"You could expect it to bite at the end of Q3," he told Reuters once they have sold off that inventory. Wilson previously forecast tariff-related price hikes would show up in U.S. inflation in the fourth quarter or early next year.

Data on Thursday showed U.S. inflation increased in June as tariffs started raising the cost of some goods, supporting economists' expectations that price pressures would pick up in the second half.

Some of the world's biggest companies have warned for months that they would be squeezed by duties.

They have now started to outline how they plan to pass on the costs and change their businesses to try to cushion the blow of rising costs, uncertainty over U.S. trade policy, and waning consumer confidence.

Companies are testing how much they can pass tariffs onto U.S. customers.

But global retailers including sandal maker Birkenstock and jeweller Pandora have also looked at raising prices across multiple markets to avoid hurting U.S. sales.

"There's a logic taking hold that (price hikes) won't be just borne by the U.S. consumer," he said.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Forex

APAC currencies have struggled over the past month, with NZD among the laggards amid a strong US Dollar comeback.

The FOMC kept rates unchanged at its latest meeting yesterday, and FX Markets are now preparing for the upcoming RBNZ decision, slated for August 14.

NZDUSD has been relatively rangebound within a 2-handle zone since May, following a sharp April down-move sparked by volatility around Trump's infamous Liberation Day.

Before attacking the multi-timeframe technical analysis of NZDUSD, here is a small reminder that this morning, the reports for the Core PCE—which came slightly above expectations (2.8% y/y vs 2.7% estimate)—and an as-expected Canadian GDP (-0.1% m/m) also got released, both of which helped anchor further USD flows.

For the Kiwi, tonight’s NZ Consumer Confidence and Building Permits data will provide insight into local momentum heading into August's policy window.

NZDUSD Multi-timeframe technical analysis

NZDUSD Daily Chart

NZDUSD Daily Chart, July 31, 2025

Bears have taken control of the Kiwi throughout July sending the pair down around 3.50% from its 2025 Highs as the month concludes – NZDUSD has also recently broken out of a Monthly upwards Channel (light blue)The Daily picture is not showing many signs of reversals after forming a strong bearish inverted hammer.The pair is now entering the Main 0.59 Support Zone, surely prompting reactions as Month-end flows commence – Daily RSI is flattening just above the oversold level.Looking closer will allow us to spot if more balanced price action is into play here.

NZDUSD 4H Chart

NZDUSD 4H Chart, July 31, 2025

The downwards correction had taken a small break in the beginning of last week but got met with another sharp response which marked some lower highs (0.60580) right below the Monthly Channel.One element that would give back some balance for NZD buyers would be the reactions at the highs of the July Hourly steep downwards channel that also got broken, within the 0.59 Support Zone.Failure to rebound from here would maintain seller strength – Looking at the Dollar Index would be very beneficial also to spot reactions as the Index arrives at the 100.00 level.

NZDUSD 1H Chart

NZDUSD 1H Chart, July 31, 2025

Looking even closer, we spot reactions to the Support Zone that is currently being tested at a break-retest of the Hourly downwards channel, last line of defense for the Monthly range.Buyers are stepping in, attempting to form a hourly double bottom at the 0.5890 level.Momentum is coming back slightly from oversold levels, therefore reactions here are key.A 4H Candle closing below the daily lows would cancel the double bottom formation, but in the meantime, the action looks more balance in shorter timeframes

Source: marketpulse

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Devin

Economic

President Trump announced in a Truth Social 网站 that he is extending trade talks with Mexico for another 90 days. Yahoo Finance Washington Correspondent.

President Trump announcing on Truth Social he is extending Mexico's current tariff rates for 90 days to allow more time for trade negotiations with the country. That announcement coming after Trump threatened last month to increase Mexico's country-based duty to 30% starting August 1st. The president's decision coming shortly after he said he would not extend his Friday deadline. Joining us now, Washington correspondent Ben Werschkull. Ben, we were just talking about the countries that have been left out in the cold so to speak. Mexico was one of them, but it seems like they're getting a little more time, but the time that they're getting comes still with these high tariffs attached.

For sure. Yeah. So this is, this is the 90 day pause that Trump announced just a few minutes ago, and it'll, it'll keeps the rates at 25%. So it's not a 5% increase to, to 30%. I do think it's significant that Trump talked about this call as very successful. He had a lot of kind words for Mexican president Claudia Sheinbaum, um, as, as they met this morning to, to kind of work out these deals considering how, how many, how many issues they have to work out over the next 90 days on the border and these other things. Um, other things Trump announced today in this post will be that the 25% headline rate will continue, the 25% auto rate will continue. That's, that's a big one in focus. And then as with all the other deals, the 50% tariffs on steel, aluminum and copper, which is also coming tomorrow, will, will, will stay in place. So those, those rates will stay now. Um, Trump also announced that Mexico has agreed to terminate its non-tariff trade barriers without providing any additional details there. the President Sheinbaum did already respond to confirm this call and to confirm the 90 day pause. What she says she's focused on for the next 90 days is building a long-term deal with President Trump on all these other more complex trade issues.