The U.S. will impose 25% tariffs on imports from Brazil, the world's 10th-largest economy.
The U.S. cited Brazil's unfair trade practices, including weak anti-corruption enforcement and trade barriers, despite running a goods trade surplus with the country for years. Some products include Beef, chicken meat and coffee will be exempt from the new tariffs. The tariffs will take effect on July 22. Source: Bull Theory
Net foreign inflows into U.S. equities hits record high
Source: Hedgeye, Apollo
Very cool prices in the June CPI were across the board.
US Headline inflation (CPI) comes in lower than expected, at 3.5% vs expected 3.8%. This is the biggest drop in MoM headline CPI (-0.4%) since covid crash. It is also much lower than expected (-0.1%). Core CPI is also the lowest since covid at +2.6% yoy (vs. +2.8% expected). The core CPI *declined* on a MoM basis, falling -0.02%. This is the first MoM drop since May 2020. Source: Bloomberg
US 2 year yield is tumbling -7 basis points as US CPI number came in cooler than expected.
Odds of a July rate hike are now 14% (vs. 45% this morning). Source: www.investing.com, CME Fed Watch tool
🚨 The labor market still refuses to crack.*
Initial jobless claims remain stuck in a remarkably stable range of 200,000–230,000, while continuing claims are hovering around 1.8 million. For more than two years, recession fears have dominated headlines. Yet the one indicator that typically flashes red before a downturn still isn't doing it. Yes, workers who lose their jobs are taking longer to find new ones, pushing continuing claims higher. But companies are not laying off employees at the pace you would expect ahead of a recession. That's the key distinction. 📌 The labor market is cooling, not collapsing. For the Federal Reserve, that's an important signal. As long as layoffs remain contained, policymakers can stay focused on inflation instead of rushing to support the economy. Jobless claims remain one of the strongest pieces of evidence that the U.S. economy is slowing—but not yet heading into an imminent recession. Source: YCC Macro
U.S. Strategic Petroleum Reserve (SPR) stocks fall to 43-year low
Source: Hedgeye
🚨 Very interesting note by Eric Balchunas: Has the US stock market become "too important to fail"?
More than 55% of Americans now own stocks, the highest participation rate in the world. With new retirement programs bringing millions more investors into the market, Wall Street is becoming deeply intertwined with household wealth, retirement security, and even politics. The implication is profound: future policymakers may face overwhelming pressure to prevent prolonged bear markets. Some believe that, in the next major crisis, the Federal Reserve could even follow Japan and China by purchasing equity ETFs to stabilize markets. Whether or not that happens, one thing is clear: the growing financialization of the US economy is reshaping how investors think about downside risk—and may help explain why markets continue to recover so quickly after every sell-off. Source: Eric Balchunas, Bloomberg
🚨 Donald Trump has escalated pressure on Europe, warning that the US could withdraw all American troops from the continent unless allies do more on defense.
He also renewed his demand for US control of Greenland, arguing the Arctic island is strategically vital against growing Chinese and Russian influence. The remarks revive one of the biggest sources of tension within NATO, as European leaders fear a weakening of the US security commitment. With around 80,000 US troops stationed across Europe, any significant withdrawal would mark a historic shift in transatlantic security and reshape the continent’s defense landscape. Source: FT
