30th June 2025

Global markets are showing signs of optimism to start the week, with Eurostoxx50 futures climbing 0.319% following Friday's record close for the S&P500. The American benchmark gained 0.52% to end last week, while the Nasdaq continued pushing into new territory with an identical percentage gain. US futures are also pointing higher, suggesting that momentum will continue to carry forward. Asian markets presented a mixed picture overnight, with Japan's Nikkei surging over 1% while Hong Kong's Hang Seng retreated 0.33%.

Trade matters have taken centre stage as Canada withdrew its digital services tax on US technology companies, clearing a significant obstacle for the resumption of US-Canada trade negotiations. This development comes after President Trump halted talks last Friday, citing the tax as a major point of contention. Canadian officials have now set an ambitious July 21st target date for reaching a comprehensive agreement.

The move offers a glimmer of hope ahead of Trump's July 9th deadline for countries to avoid the return of reciprocal tariffs. Many market participants expect this deadline to be extended, with the White House having previously indicated the date was "not critical." This expectation has helped contain Treasury yields and limited further dollar weakness.

In Washington, the Senate is preparing for a final vote on the "Big Beautiful Bill" today. The legislation has generated some concern regarding government finances, though Treasury markets have shown only muted reactions thus far. With Republicans holding a slim majority, the vote could be a close call as lawmakers push to pass the bill before the July 4th holiday.

Gold prices have recovered slightly after Friday's drop below USD3,300 per ounce, trading around USD3,280 as the dollar softens. Oil markets remain relatively stable within their post-ceasefire trading ranges, with WTI crude trading approximately USD0.40 lower at USD65.15 per barrel.

The Federal Reserve remains in focus as markets price in approximately 65bps of rate cuts through the end of 2025. This represents a shift from last week when only 50bps were anticipated. While the probability of a July rate cut remains below 20%, a 25bp reduction is fully priced in for the Sept 17th monetary policy decision.

Recent weeks have seen increased government commentary regarding the Fed's cautious approach to rate cuts. Two Trump-appointed governors have publicly suggested cuts could come as early as July, while Treasury Secretary Bessent remarked that Fed Chair Powell could potentially remain on the board even if he steps down as Chairman.

Today's economic calendar features several key releases. The Eurozone will publish M3 Money Supply data, while Germany reports import prices, retail sales, unemployment claims, and inflation figures. The UK will release final first-quarter GDP readings along with trade numbers and consumer credit data.

In the US, May's Core PCE Price Index - the Fed's preferred inflation gauge - is forecast to remain steady at 0.1% MoM. Personal income is expected to grow 0.3%, moderating from April's 0.8% increase, while personal spending is projected to rise just 0.1%, reflecting potential consumer caution.

ECB officials will also be in the spotlight, with Vice President Guindos and President Lagarde scheduled to speak. The central bank will hold a press conference regarding the conclusion of its strategic review and will conduct a forum on central banking through Wednesday with international peers in attendance.

For more on latest developments see the European Breakfast Briefing.

Monday's supply prospects

Participants in our weekly survey predict supply flow will continue to taper down this week with a EUR19bn average estimate put forward. That comes on the back of the EUR33.1bn (EUR39.825bn incl HY) that priced last week. All the asset classes are anticipates to exhibit reduced activity. See IGM's Euro Issuance Estimates

Issuance is expected to slow in the US too, with the 4th of July holiday falling on Friday this week. Street estimates for ex-SSA supply range from as little as USD5bn to as much as USD20bn, with the average at USD14.2bn. Regardless of where the final tally lands, supply is expected to be front-loaded with an early close on Thursday and a full market holiday on Friday. See IGM's IG WEEKLY WRAP UP for all the latest news from the region.

What to Watch Monday (and for the week)

** Key data: JN May P Industrial Production (00:50), CH Jun Manufacturing/Non-Manufacturing PMIs (02:30), GE May Retail Sales (07:00), UK Q1 F GDP (07:00), GE Jun Unemployment Change (08:55), EC May M3 Money Supply (09:00), UK May Mortgage Approvals (09:30), IT Jun P CPI (10:00), GE Jun P CPI (13:00), US Jun MNI Chicago PMI (14:45) and US Jun Dallas Fed Manufacturing Activity (15:30)

** Key events/speakers: Fed’s Bostic (15:00) & Goolsbee (18:00) speak, as does ECB’s Lagarde (20:00) at the ECB forum in Sintra

** Auctions: No major term auctions scheduled for Monday 30^th Jun

** Viewpoint - The week ahead:

- Fedspeak heading into July 4th holiday. US May JOLTS (Tue), June ADP (Wed), Employment Report (Thu)

- Japan May IP (Monday). Q2 Tankan (Tuesday). May household spend (Friday)

- Australia June Melbourne CPI (Monday). May retail sales (Wednesday), household spending (Friday)

- ECB Sintra get together (Monday-Wednesday). May CES (Tuesday). Minutes (Thursday)

- German May import prices, June CPI/Italian CPI (Monday). EMU CPI (Tuesday)

- May EMU money supply (Mon), May EMU unemployment rate (Weds). German May factory orders (Fri)

- UK May mtg approvals/lending & Q1 final GDP (Mon). June BRC Shop Prices (Tue). BoE DMP (Thu)

All times BST