WTF Dailies July 16, 2025

• US stock futures wobbled Tuesday evening as Wall Street braced for another inflation checkup after Tuesday's consumer price reading spurred traders to pare bets on Fed rate cuts in the coming months.
• Markets are reassessing in the wake of the CPI report showing inflation accelerated in June, rising at its fastest year-over-year clip since February, with signs of tariff-driven inflation starting to show up in the data.
• That has led to more speculation that the Federal Reserve will stand pat not just this month — an outcome that seems virtually guaranteed at this point — but also in September, even as President Trump pushes furiously for rate cuts.
• According to the CME Group, bets on a September cut are near 50-50, with bets on a hold surging over the last month. The moves weighed on Treasurys, with the 10-year yield (^TNX) rising to near 4.5% and the 30-year yield (^TYX) pushing past 5% for the first time since early June.
• Markets will get another inflation pulse check on Wednesday with the release of the Producer Price Index, which measures wholesale inflation before prices reach consumers. Like consumer prices, the PPI is expected to show a pickup in inflation last month.
• As the market attempts to digest the early effects of Trump's tariffs, he has plowed ahead with plans to impose increased duties next month on key trading partners, including the European Union, Canada, and Mexico. Trump announced Tuesday that the US had reached a deal with Indonesia as it continues talks.
• Most Asian stocks fell on Wednesday, tracking a weak overnight session on Wall Street as sticky inflation data and persistent concerns over President Donald Trump’s trade tariffs weighed. 
• Hong Kong shares were outliers, extending strong gains from the prior session as the technology sector was encouraged by NVIDIA Corporation (NASDAQ:NVDA) stating that it will resume sales of a popular artificial intelligence chip in China. 
• But mainland Chinese markets fell following a mixed gross domestic product reading for the second quarter, with analysts warning of a sustained slowdown in the coming months. The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes shed about 0.2% each.
• Hong Kong’s Hang Seng index was the best performer in Asia, rising as much as 0.8%.
• Access to Nvidia’s chips allows the three to proceed unhindered with their AI efforts. Along with ByteDance and DeepSeek, the three are at the forefront of China’s AI development. But bigger gains in Hong Kong markets were still held back by concerns over slowing growth in the mainland. 
• Regional markets took a weak lead-in from Wall Street, which ended below intraday peaks on Tuesday after U.S. consumer price index inflation read slightly hotter-than-expected for June.
• The print ramped up concerns over the inflationary effects of Trump’s trade tariffs, and also spurred bets that the Federal Reserve will keep interest rates unchanged for longer– a notion furthered by comments from Dallas Fed President Lorie Logan. Trump also kept up his tariff threats after outlining steep duties against several major economies. 
• In Asia, Japan’s Nikkei 225 fell 0.2%, as did the TOPIX, while South Korea’s KOSPI shed 0.7%. 
• Australia’s ASX 200 fell 0.9%, seeing heavy profit-taking after coming close to record highs this week. 
• Singapore’s Straits Times index rose marginally, while Gift Nifty 50 Futures for India’s Nifty 50 index were flat. 
• Concerns over Trump’s tariffs also remained in play, after he outlined 25% duties on South Korea and Japan, effective August 1. Trump on Tuesday set a 19% tariff on Indonesia, and hinted recently that a trade deal with India may be close. 

Market Close

• U.S. equity markets finished higher after the Nasdaq reached a new record high yesterday. Speculation that President Trump would fire Fed Chair Powell triggered some intraday volatility, but later markets recovered as Trump denied that he is seeking his removal. Investor sentiment remained upbeat, supported by a combination of softer-than-expected inflation data and strong corporate earnings. The health care sector led the gains, with shares of Johnson & Johnson surging over 5% after the company reported second-quarter earnings that beat expectations and raised its full-year sales outlook. In the financial sector, Goldman Sachs posted its best-ever quarter for stock trading, while Morgan Stanley also benefited from April’s market volatility. On the trade front, the White House announced a new trade agreement with Indonesia, though details remain limited. Trump also hinted at potential new tariffs targeting the pharmaceutical and semiconductor sectors. In Europe, the EU Commission approved Germany’s multiyear fiscal plan, allowing for increased government spending through 2029. The plan includes new borrowing equivalent to roughly 20% of Germany’s current annual GDP.
• Both the headline and core producer prices (PPI) were unchanged last month versus estimates for increases, marginally boosting expectations that the Fed will be cutting interest rates later this year. From a year ago, headline PPI rose 2.3%, the lowest since September 2024, and core PPI came in at 2.6% from May's 3.2%. Wholesale inflation was restrained by a decline in services, but goods prices saw the largest monthly increase since February. In the months ahead we expect an uptick in inflation as pre-tariff inventories are being drawn down and some companies pass through a portion of the higher costs of the imported products. But unlike the inflation surge in 2021, the potential increase in prices for goods could be temporary and may be offset by tame inflation for services. Fed officials will likely remain in wait-and-see mode until they have more clarity on how this process plays out. However, with policy currently restrictive and rates high, they may have some room to cut rates later this year as inflation trends back toward the 2% target in 2026 as tariff effects fade. 
• Despite ongoing uncertainty around trade policy and the Fed’s next moves, corporate earnings remain a key driver of market strength. The earnings season kicked off with strong results from major banks, and more companies are now reporting upside surprises. It is early days, but the solid results highlight the still positive macroeconomic environment, as the economy remains resilient and consumers continue to spend. Several Wall Street firms appear to be benefiting from the elevated volatility this year, which helped boost trading revenue, but they are also highlighting supportive consumer trends. More broadly, earnings growth for the S&P 500 is expected to slow in the second quarter to around 5% from the more than 10% in the prior two quarters. However, for the full year, estimates call for 8.5% growth, which, if realized, would be above the index's long-term average of 6.5%. Lingering uncertainties suggest that there could be some more volatility around these expectations, but next year's backdrop appears to be more favorable, as corporate profits may reaccelerate amid lower rates and modest fiscal stimulus from the tax bill.

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This daily briefing is curated from a wide range of reputable sources including news wires, research desks, and financial data providers. The insights presented here are a synthesis of key developments across global markets, intended to inform and spark thought.

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