Oil Rebounds, Silver Hits 13-Year High (14-18 July)

Gold held around $3,350, supported by demand as Trump announced a 35% tariff on Canadian imports and pushed for a 300 bps Fed rate cut, raising inflation fears.

Falling jobless claims showed labor market strength. Markets still expect two cuts this year, but no change at the next meeting.

Silver topped $38, a 13-year high, on tariff worries and precious metal demand. Metal levies drove gains, though Fed caution and a firm dollar capped the rally.

Brent crude rose on strong demand and Saudi shipments to China, but oversupply fears linger as OPEC+ may strengthen output, and the IEA raised its forecast. OPEC trimmed long-term demand on China's slowdown; geopolitical risks added support.

The US 10-year yield neared 4.41% after Trump’s 35% tariff on Canada, plus 50% on Brazil and copper. Japan’s 10-year yield is heading to 1.52% with 25% US tariffs, with PM Ishiba urging reduced US reliance. A think tank sees a 1.9% GDP hit by 2029. Germany’s 10-year Bund yield is near 2.68%, a two-month high, as markets await US-EU tariff details (15–20% expected). The ECB may hold for now, but still cut this year. Germany unveiled a record 2025–2029 budget with heavy spending and debt to stabilize growth.

RBA Interest Rate Decision (Jul)

The Reserve Bank of Australia kept its cash rate at 3.85% in July, defying expectations for a 25bps cut. The decision was passed by a 6–3 majority. The RBA cited balanced inflation risks and labor market strength, but flagged uncertainty in demand and supply. Policymakers will wait for more data to confirm inflation is on track to return to the 2.5% target. The board remains ready to act if global events disrupt domestic conditions.

RBNZ Interest Rate Decision

The Reserve Bank of New Zealand held its OCR at 3.25% in July, as expected—its lowest since August 2022. The committee cited near-term inflation risks and uncertainty, preferring to reassess in August. Inflation hit 2.5% in Q1, within the 1–3% target. While the economy shrank 0.7% YoY in Q1, the pace improved from Q4’s 1.3% drop. Still, concerns linger about a slow recovery and cautious household behavior.

German CPI

Germany’s annual inflation eased to 2% in June, the lowest since October 2024, from 2.1% in May. Energy prices fell 3.5%, with motor fuel and heating costs notably lower. Food inflation slowed to 2%, while services rose 3.3%. Prices surged most for transport (+11.4%) and social services (+8.5%). Monthly inflation was flat after a 0.1% rise in May.

Initial Jobless Claims

US initial jobless claims fell by 5,000 to 227,000 in early July, the lowest in seven weeks and below expectations. The data suggests continued labor market resilience despite economic uncertainty. However, ongoing claims rose 10,000 to 1.965 million, the highest since 2021, hinting at slower hiring. Claims by federal workers dropped to 438, matching a seven-month low.

UK GDP (May)

The UK economy grew 0.7% QoQ in Q1 2025, matching initial estimates and marking the strongest pace in a year. Services rose 0.7%, led by admin (+3.7%) and trade (+1.6%). Manufacturing grew 1.1%, with strong gains in transport equipment (+2.8%) and machinery (+4%). Investment rose 2%, with aircraft and ICT leading. Exports rose 3.3%, imports 2%, and household consumption edged up 0.4%. Public spending fell 0.4%. YoY GDP rose 1.3%, down from 1.5% in Q4.

Currencies

The US dollar index is heading for a weekly close near 98, up 1%, supported by tariff headlines and hawkish Fed commentary. Trump announced a 35% tariff on Canadian imports and proposed 15–20% blanket duties on Japan and the EU. The Fed’s Goolsbee emphasized inflation control over debt concerns. Jobless data showed a still-firm labor market.

The euro fell below $1.17 on renewed trade tensions. Delays in finalizing an EU-US trade deal and expected US tariffs weighed on sentiment, though the euro remains up 13% YTD. The ECB is seen holding rates this month, with one more cut likely later in the year.

The yen dropped to a three-week low as Trump’s 25% tariff announcement reignited US-Japan friction. PM Ishiba urged less US reliance, while forecasts see Japan’s GDP shrinking 0.8% in 2025 due to the levies.

The pound slipped to $1.35, a two-week low, after May’s 0.1% GDP contraction followed April’s 0.3% decline. Weaker manufacturing and tax hikes fueled concerns. Despite a US trade deal, fears of a Q2 contraction persist. Markets expect a BoE rate cut in August.

Commodities

Gold ended the week near $3,350, supported by safe-haven flows after Trump announced major tariffs. His push for a 300bps Fed rate cut also raised inflation fears. Falling jobless claims reaffirmed labor market strength. While two rate cuts remain priced in, markets expect no change this month.

Silver jumped above $38, hitting a 13-year high on broad tariff concerns and inflation fears. Copper tariffs added to momentum, though Fed caution on rates capped upside.

Brent crude rose on strong summer demand and Saudi exports to China, set to hit a 2-year high. Yet, oversupply risks linger as OPEC+ eyes output increases and the IEA lifted its forecast. Long-term, OPEC cut demand expectations on China's slowdown. Trump’s rhetoric against Russia added geopolitical support.

Equities

US stocks faced pressure after Trump’s tariff announcements. The Dow lost ~1%, S&P 500 fell 0.4%, while tech-heavy Nasdaq gained 0.1%. Nvidia surged 5%, Google added 1%, but Tesla slipped 2.5%. Markets balanced trade risks with resilient tech performance.

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