S&P Affirms US 'AA+' Credit Rating, Cites Tariff Revenue

Economic

Summary:

S&P Global on Monday affirmed its 'AA+' credit rating on the U.S., saying the revenue from President Donald Trump's tariffs will offset the fiscal hit from his recent tax-cut and spending bill.

Trump signed the massive package of tax-cut and spending bill, dubbed the 'One Big Beautiful Bill Act', into law in July. The bill, which delivered new tax breaks, also made Trump's 2017 tax cuts permanent."Amid the rise in effective tariff rates, we expect meaningful tariff revenue to generally offset weaker fiscal outcomes that might otherwise be associated with the recent fiscal legislation, which contains both cuts and increases in tax and spending," S&P said in a statement."At this time, it appears that meaningful tariff revenue has the potential to offset the deficit-raising aspects of the recent budget legislation."

The U.S. reported a $21 billion jump in customs duty collections from Trump's tariffs in July but the government budget deficit still grew nearly 20% in the same month to $291 billion.

Since returning to power in January this year, Trump has launched a global trade war with a range of tariffs that have targeted individual products and countries. The president has set a baseline tariff of 10% on all imports to the United States, as well as additional duties on certain products or countries.S&P said the outlook on the U.S. rating remains stable. The ratings agency expected the Federal Reserve, which Trump has often criticized for not cutting rates fast, "to navigate the challenges of lowering domestic inflation and addressing financial market vulnerabilities."

It projected the country's general government deficit to average 6.0% of GDP during the 2025-2028 period, down from the 7.5% in 2024, and from an average 9.8% of GDP in 2020-2023.

Peer Moody's downgraded the U.S. sovereign debt rating in May citing rising debt.

Source: Kitco

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

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Adam

Economic

U.S. stock futures slipped slightly lower Tuesday ahead of the release of the earnings from big-box retailer Home Depot , as well as comments from Fed officials. The search for peace in Ukraine continues after talks between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky, while Palo Alto impresses with its new forecasts.

Trump-Zelensky meet in Washington

The quest for peace in Ukraine continues after U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky met on Monday in Washington.

The meeting to discuss an end to the longstanding conflict between Russia and Ukraine ended with both sides appearing optimistic about the future, a sharp contrast to the shouting match that marred the previous gathering of the two presidents.

Trump said that the U.S. would help guarantee Ukraine’s security, but did not specify the terms of any guarantees. This followed a Financial Times report suggesting that Ukraine could offer to buy $100 billion of U.S. weapons, funded by European aid, to get the said guarantees.

Trump also raised the possibility of trilateral talks, also including Russian President Vladimir Putin, following a meeting with Putin in Alaska last week.

Still, a peace deal appears far from imminent, especially given that Putin has shown little indication of agreeing to a ceasefire.

The most significant sticking point is the land that Russia has occupied in fighting, which Ukraine wants back. The Russian leader reportedly wants Ukraine to hand over the remainder of the Donbas region to Moscow to end the war, something Zelensky will be very reluctant to do.

U.S. futures slip slightly

U.S. stock futures edged slightly lower Tuesday, with investors cautious ahead of the release of key retail earnings as well as speeches from Federal Reserve officials.

At 02:45 ET (06:45 GMT), the S&P 500 futures traded 10 points, or 0.2%, lower Nasdaq 100 futures dropped 45 points, or 0.2%, and Dow futures fell 50 points, or 0.1%.

The major indices closed Monday mixed after trading in tight ranges, as investors await the start of the Federal Reserve’s Jackson Hole symposium later in the week, looking for clues from Chair Jerome Powell as to what will happen at the central bank’s remaining policy meetings this year.

Fed Governor Michelle Bowman, one of two dissenting voices favouring a rate cut at last month’s meeting, is due to speak later today.

Markets are indicating an 83% chance for a quarter-point rate cut at the Fed’s next policy meeting in September.

On the earnings front, investors will be keeping tabs on reports from a host of big-box retailers and home improvement chains, starting later in the session with results from Home Depot (NYSE:HD).

Investors will also keep an eye on data on housing starts and building permits for July, for clues about the health of the housing market.

Home Depot heads up major retailers’ earnings

The retail sector takes center stage on Wall Street this week, with reports due from a host of big-box retailers and home improvement chains.

Home Depot starts the ball rolling later in the session, to be followed as the week progresses with numbers from peers such as Lowe’s (NYSE:LOW), Target (NYSE:TGT), and Walmart (NYSE:WMT).

The figures could present a fresh take on the state of the American consumer heading into the second half of the calendar year.

Home Depot is likely to report a 5.1% jump in revenue for its second quarter ending July, compared to a 0.6% rise last year, data compiled by LSEG showed.

However, tariffs remain a wild card, even if Home Depot sources more than half its goods from within North America. The retailer has touted plans to further diversify its supply chain, and said on last quarter’s earnings call it would not raise prices due to tariffs - but that some items could disappear altogether.

Palo Alto impresses with healthy forecast

Palo Alto Networks (NASDAQ:PANW) reported strong quarterly results after the close on Wall Street Monday, while the cybersecurity company also offered up a positive fiscal 2026 forecast, betting on growing demand for its artificial intelligence-powered cybersecurity solutions.

Its stock soared 5% in premarket trading.

The company has been benefiting from an AI-driven upgrade cycle as enterprises accelerate their cloud adoption and modernize security operations amid rising data breach incidents.

A wave of high-profile cyberattacks has hit a number of global companies, prompting the need for robust security solutions.

The company projected annual revenue between $10.48 billion and $10.53 billion, above analysts’ average estimate of $10.43 billion, according to data compiled by LSEG.

It expects adjusted profit per share of $3.75 to $3.85, above estimates of $3.67 for the fiscal year.

Palo Alto Networks also said its founder and chief technology officer Nir Zuk has retired after more than 20 years. Chief Product Officer Lee Klarich will take over as CTO and join the board.

Crude falls on increased peace hopes

Oil prices fell Tuesday as traders assessed the potential for three-way talks to end the war in Ukraine, which would likely lead to the lifting of sanctions on Russian crude.

At 02:45 ET, Brent futures slipped 0.4% to $66.35 a barrel, and U.S. West Texas Intermediate crude futures fell 0.4% to $62.44 a barrel.

Both contracts rose nearly 1% on Monday after U.S. Trade Adviser Peter Navarro criticized India’s purchases of discounted Russian crude as funding the war, renewing supply flow worries.

Following talks between Trump and Zelensky in Washington, the U.S. president floated the possibility of a subsequent three-way discussion, including Russia’s Vladimir Putin, keeping alive hopes for a pathway to negotiations.

“There was no critical breakthrough. It appears the next step is a meeting between Zelensky and Putin, possibly within two weeks,” ING analysts said in a note.

Source: Investing

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

Risk Warnings and Disclaimers

Add to Favorites

Samantha Luan

Forex

Political

Economic

Japan must raise interest rates and get its fiscal house in order to strengthen a weak yen that has pushed up inflation and brought pain to households, veteran ruling party lawmaker Taro Kono told Reuters on Tuesday.The Bank of Japan (BOJ) ended a massive, decade-long stimulus programme last year and raised short-term rates to 0.5% in January, on the view that Japan was on the cusp of durably hitting its inflation target of 2%.Kono, a former foreign minister who is touted as being among the candidates to become a future prime minister, said it was undesirable for inflation-adjusted real borrowing costs to stay negative for a long time.

"I think it's better to start early," he said in an interview, replying to a question on how soon the central bank should resume interest rate hikes."It's important to send out a message that Japan will pull out of a situation where real interest rates are negative," he said, stressing the need for the BOJ to keep raising rates gradually.Asked about market expectations for the BOJ to raise rates again by year-end, Kono said, "I won't comment on each move. But I feel like (rate hikes) have already come too late."

While consumer inflation has kept above 2% for well over three years, the bank's Governor Kazuo Ueda has stressed the need to tread cautiously on further rate hikes, due to an expected hit to the economy from U.S. tariffs.Critics have blamed the slow pace of BOJ rate hikes for keeping the yen weak and pushing up import costs.Once seen as a boon for Japan's export-heavy economy, the weak yen is now the root cause of crippling inflation that is eroding corporate margins and hurting pensioners, Kono said.

The government and the BOJ must agree on a new economic framework that replaces so-called "Abenomics", a mix of massive monetary and fiscal stimulus deployed by former premier Shinzo Abe in 2013 to end deflation, he said."The BOJ should gradually raise interest rates, while the government should restore fiscal health under a new accord that replaces 'Abenomics'," Kono said."The best step to combat rising living costs would be to reverse the weak yen and seek a somewhat stronger yen."

Kono ran unsuccessfully in last year's race to lead the ruling Liberal Democratic Party (LDP) that was won by incumbent premier Shigeru Ishiba.The LDP's huge loss in last month's upper house election has provoked growing calls within the party for Ishiba to step down, and to hold another race to choose a new leader.

Source: Yahoo Finance

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

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Economic

The Pound to Euro exchange rate (GBP/EUR) is projected to remain under pressure as markets focus on the UK's unsavoury debt dynamics.

"If the UK gilts market hits the headlines, it is usually a sign of bad news," says Jane Foley, Senior FX Strategist at Rabobank. A well-balanced gilts market tends to be a dull and boring one that steers away from the limelight. Unfortunately, there are a number of factors around inflation and (the lack of) welfare reform that have kept gilts relatively lively in recent months."

The cost of borrowing - measured by the interest rate paid to investors in UK government debt - is rising again.

We have seen all tenors of debt maturity rise, but it is the long-dated 30-year yield that is catching the headlines approaching levels last seen in 1997 at 5.606%. (When bonds selloff, the yield the offered rises, as the yield and the value are inversely related.)

"Jitters over inflation and public finances lift the 30-year UK government bond yield to levels last seen when Geri Halliwell walked away from the Spice Girls," reports the Times in its Tuesday edition.

Sky News also went for the music hook: "Just yesterday, the yield on the government's 30-year bonds - the best measure out there of the UK government's long-term cost of borrowing - closed at the highest level since 1998, not long after Oasis released the album Be Here Now."

"Today, gilts are back in the headlines again and inevitably comparisons have again been drawn between the level of long-term interest rates now and those that were hit after the September 2022 mini-budget under the Truss leadership. While circumstances behind the rise in yields in September 2022 are very different to today, there is a common factor given the high level of prevailing government debt in the UK," says Foley.

Usually, bonds and the Pound move inversely (bond price down = bond yield up = pound up). However, in periods of heightened anxiety over UK debt, the result is a selloff in both bonds and the Pound as yields surge.

These selloffs happened in 2022 when Liz Truss tried to pass her 'mini budget' and there have been brief episodes under Chancellor Rachel Reeves' leadership.

UK borrowing has risen sharply under the new Labour government which wants to boost investment while continue to fund Britain's generous social benefits schemes. To pay for it all, Chancellor Rachel Reeves is floating new ideas to boost the Treasury's tax intake, to ensure lenders retain their confidence in the UK debt markets.

Ideas like new property wealth taxes are being floated by the Treasury, as well as pension savings raids.

However, nothing has yet been proposed that will adequately cover the sizeable fiscal hole that is opening up.

"It is difficult to figure out exactly how she will balance the books in the Autumn budget given that Labour MPs have baulked at cutting welfare spending and in view of her own set of strict fiscal rules. The market is therefore likely to remain sensitive to fiscal matters in the UK," says Foley.

Rabobank sees the fiscal issue as a potentially negative factor for GBP in the run-up to Autumn's budget.

"Despite the support offered recently by better-than-expected UK GDP data and the fall in market expectations for another BoE rate cut this year. We continue to see scope for a grind back to EUR/GBP0.87 on a 1-to-3-month view," says Foley.

EUR/GBP at 0.87 gives a Pound into Euro cross rate of 1.15.

Source: Poundsterlinglive

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

Risk Warnings and Disclaimers

Add to Favorites

Adam

Commodity

Crude Oil Holds Below Key Levels as Geopolitical Risk Premium Fades

Daily Light Crude Oil Futures

Light crude oil futures traded nearly flat on Tuesday, holding below key technical resistance levels, with price action skewing to the downside. Traders are focusing on a cluster of resistance that has capped the market for two weeks, beginning with the 200-day moving average at $63.26, followed by the 50% long-term retracement at $64.56, the 50-day moving average at $65.00, and a minor pivot at $65.88.

A breakout above $65.88 could fuel momentum and force short-covering, but until then, technical pressure remains in play. To the downside, support is thin. A break below $61.12 on strong volume could accelerate losses toward the May 30 low at $56.09—a key level many bears have in focus.

Russia-Ukraine Negotiations Pressure Oil Prices

Traders are also digesting geopolitical headlines after a White House meeting between U.S. President Donald Trump, Ukrainian President Volodymyr Zelenskiy, and European leaders. Trump later announced that he had spoken with Russian President Vladimir Putin and that a trilateral summit may be on the horizon. The talks have introduced the possibility of sanctions relief for Russian crude—a potential bearish development for oil prices.

While no ceasefire or agreement is finalized, DBS Bank’s Suvro Sarkar said the risk of tighter sanctions appears to be receding. Trump’s softened tone on secondary sanctions has further lowered perceived supply disruption risks. Zelenskiy described the talks as “very good,” and Trump confirmed that the U.S. would offer Ukraine security guarantees, though specifics remain vague.

Sanctions Relief Could Unlock Russian Supply

Oil traders are particularly sensitive to developments surrounding Russian exports. Easing restrictions could boost global supply at a time when demand concerns persist. TD Securities’ Bart Melek noted that if political risk fades further, prices could drift toward their $58 per barrel average target for late Q4-2025 and early Q1-2026.

The combination of reduced geopolitical tension and technical resistance is weighing on sentiment. With no immediate catalyst to lift crude above key levels, buyers remain hesitant.

Oil Prices Forecast: Bearish Tilt Below $65.88

Unless crude can decisively break above the $65.88 pivot, the near-term oil prices forecast remains bearish. The path of least resistance appears to be lower, especially if Ukraine-Russia diplomacy accelerates and sanctions threats diminish. A clean break below $61.12 would confirm a technical breakdown, potentially opening the door for a move toward $56.09.

Source: fxempire

Risk Warnings and Disclaimers

Add to Favorites

Glendon

Economic

Forex

Housing starts in the US climbed in July to five-month high, led by the fastest pace of multifamily construction in more than two years.

New residential construction increased 5.2% last month to an annualized rate of 1.43 million homes, according to government figures released Tuesday. That was above all forecasts in a Bloomberg survey of economists.

Multifamily starts increased nearly 10% to an annualized 489,000 units in July, the strongest pace since mid-2023. New construction of single-family homes rose 2.8% in July to an annualized 939,000.

Despite the July pickup in starts, the nation’s homebuilders have grown more cautious in the past couple of years as a doubling of mortgage rates kept many homeowners locked in place. That’s restrained demand and contributed to the biggest supply of new homes since 2007. While builders have cut prices and offered generous incentives, residential construction has been a drag on the economy in four of the last five quarters.

The home construction figures will help economists shape their estimates for third-quarter gross domestic product. Prior to the starts report, the Federal Reserve Bank of Atlanta’s GDPNow forecast had penciled in essentially no contribution from residential investment.

Building permits, an indicator of future construction, decreased 2.8% to an annual rate of 1.35 million — the weakest in five years. Single-family authorizations climbed for the first time since February. Permits for new multifamily projects declined.

Source: Bloomberg Europe

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

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Stocks

London stocks had edged higher by midday on Tuesday as investors mulled the prospect of an end to the Ukraine war, after US President Trump said he was arranging a meeting between his Ukrainian and Russian counterparts.

The FTSE 100 was up 0.2% at 9,178.95.

Susanah Streeter, head of money and Amarkets at Hargreaves Lansdown, said: "There’s relief that talks between Trump, Zelensky and European leaders appear to have made good progress. With the US President sounding highly positive on giving security guarantees and protection to Europe, it has bolstered hopes for a longer lasting settlement. Ukraine is offering to purchase around $90 billion of American-made military equipment as part of the deal. As the re-armament of Europe continues, to counter the threat of further Russian aggression, it’s likely to keep giving a tailwind to defence contractors.

"However, with Trump extracting commitments to buy more US hardware from European leaders, it’s giving American contractors the edge."

Streeter added: "The threat of further barriers to trade with Moscow is still hovering over proceedings, with the next step expected to be a meeting between Zelensky and Putin."

On home shores, industry data showed that grocery price inflation edged lower in August but still remains significantly elevated, with consumers adapting their shopping behaviour as the cost of living continues to rise.

According to data from market research firm Worldpanel, the year-on-year change in grocery prices slowed to 5.0% over the four weeks to 10 August, down from 5.2% in July, while take-home sales at supermarkets were 4.0% higher than last year.

Despite the slight easing of inflation, Fraser McKevitt, head of retail and consumer insight at Worldpanel, said: "We’re still well past the point at which price rises really start to bite and consumers are continuing to adapt their behaviour to make ends meet."

He said that casual and fast-service restaurants have borne the brunt of the change in consumption patterns, with visitor trips to such establishments down 6% in the three months to mid-July when compared with last year.

However, coffee shops were the one category that has bucked this trend.

Worldpanel reported that as consumers are seeking savings outside the home, they are increasingly swapping meals out for "little treats at home", with sales of branded grocery items up 6.1%, compared with a 4.1% increase in cheaper, own-label alternatives.

In equity markets, JD Sports jumped to the top of the FTSE 100 as Deutsche Bank hiked its price target on the stock to 100p from 85p.

Copper mining giant BHP rallied as a better-than-expected dividend helped to offset the fact that full-year profits have fallen to a five-year low, with sluggish demand from China weighing on iron ore prices.

Fintech group Plus500 rose as announced its first strategic expansion into Latin America after establishing a representative office in Colombia.

Defence firms BAE Systems, Babcock and Rolls-Royce were among the worst performers on the FTSE 100, dented by Ukraine peace hopes. Chemring and Qinetiq also slumped on the FTSE 250.

International Workplace Group tumbled as it said full-year earnings would be at the lower end of its forecast range as the Regus owner invested more cash to grow its managed and franchise segments.

The company, which operates serviced offices, reported a rise in adjusted core earnings to $262m for the six months to June from $247m a year ago. It expects annual earnings of $525m-$565m.