Morning Brew July 31 2025

Good morning,

The data spree is underway with one day down and two to go, and the market moves have been spectacular. Despite strong GDP figures and somewhat hawkish comments from Fed Chair Jerome Powell, equities closed a bit lower yesterday. However, strong earnings from Microsoft and Meta helped mitigate losses.

Powell stated it was too soon to determine whether the central bank would cut rates at its next meeting in September, noting that current policy is modestly restrictive but not holding back the economy. Futures traders have adjusted their expectations, now pricing in a 46% probability of a rate cut by September, down from about 65% a day earlier. The projected year-end rate is 10 basis points higher than yesterday. Donald Trump will not be happy, he wants rates to be lowered faster. For the first time since the 1990s, two members formally dissented with the rate decision and wanted to cut rates. Looking at the headline data, there is no reason for a cut, inflation remains firmly above the 2% target and unemployment low. 

Meta and Microsoft added half a trillion dollars in market capitalization, causing Nasdaq futures to rise 1.2% and the S&P 500 to increase by 0.8%. Meta gained more than 10% after hours, while Microsoft rose by 8.5%.

Charu commented on Meta’s strong quarter: "Meta’s blowout quarter: AI payoff fueling bigger bets." Key points include:

• Strong Q2 beat: Meta experienced 22% revenue growth and a 36% jump in profits, driven by AI-enhanced ad targeting and increased engagement across Reels and WhatsApp Business.
• Evolving AI strategy: Meta is transitioning from open-source models to a more closed, consumer-first approach with its “personal superintelligence” vision, setting itself apart from enterprise AI competitors.
• Rising capex, rising stakes: With annual AI infrastructure spending projected to reach $105 billion, Meta’s execution will be closely watched—particularly if economic headwinds slow ad revenue growth.

China's cyberspace regulator has requested U.S. semiconductor maker Nvidia to explain whether its H20 artificial intelligence chips have any backdoor security risks. Meanwhile, Renault reported a loss of €11 billion, driven by a first-half net loss attributable to the group of €11.19 billion.

Current market data:

• The US 500 is trading at 4423, the US tech 100 is at 23,655, the GER40 stands at 24,300.

The U.S. dollar surged higher yesterday, with the USD Index testing the 100 level before reverting to 99.70. EURUSD fell to 1.1430, GBPUSD to 1.3266, and USDJPY is at 148.80 following the Bank of Japan's rate decision.

Metals sold off due to the strong USD and upcoming 50% tariffs on semi-finished goods in copper, set to take effect tomorrow. Refined Copper was exempt, causing the US price to revert to the London one. Gold is trading just below 3300, having found buyers at the 3250 support yesterday. Silver is at 37.20, 2 Dollars down from the high, Platinum at 1327, and copper futures fell sharply from above 560 to 443.

Today, we anticipate a plethora of data, with the PCE deflator being the highlight—this is the Fed's key inflation measurement. Economists expect a reading of 2.4%, with the core seen at 2.7%. French and German CPI would need a massive surprise to impact markets significantly.

After the bell, we expect earnings releases from Apple, Amazon, Coinbase, Reddit, Roku, and Cloudflare. Also, tomorrow marks the effect of Trump's tariffs against several trading partners: 25% tariffs against India, 50% against Brazil, and 15% against Korea, which may significantly shift local markets.

Finally, please note that tomorrow is the Swiss National Holiday, so there will be no updates from my side.

Have two great days ahead and trade safely!

Thursday, July 31, 2025

• Swiss retail Sales-

Bank of Japan Interest Rate Decision & JGB Purchases: Critical for yen and global bond markets

- Chinese PMI (July): Update on manufacturing activity in the world’s second-largest economy

European CPI`s and EU Unemployment rate

- US PCE Price Index (June): The Fed’s preferred inflation metric

- Key Earnings: Apple, Mastercard, Amazon.com AbbVie, , Comcast, Roku, Reddit, Coinbase

Friday, August 1, 2025

- Swiss National Holiday

- US Nonfarm Payrolls (July): Flagship labor market report, forecast to show slowdown in hiring

- Japan Rate Decision

- US Unemployment Rate (July): Expected at 4.2%

- Average Hourly Earnings (July): Monitoring wage growth pressures

- US ISM Manufacturing PMI (July): Vital for near-term growth signals

- Eurozone Consumer Price Inflation (July): Crucial inflation readout

- Chinese Manufacturing PMI (July): Health of the world’s manufacturing engine

- Key Earnings: Chevron, Exxon Mobil, Colgate-Palmolive, Linde,