EU CREDIT MACRO: EU/US iTraxx/Cash Moves

"*BESSENT: CAN KEEP NEGOTIATING ON TRADE PAST AUG. 1 IF NO DEALS" Bloomberg

Recall Trump on Truth earlier today: "THE AUGUST FIRST DEADLINE IS THE AUGUST FIRST DEADLINE — IT STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA!!!""

Asked about whether the BoC thinks there is a need to cut rates later this year in its "current tariff" MPR scenario, Macklem doesn't give much away, repeating the language in the rate decision statement. 

• "We're going to take our decisions one decision at a time, and our future decisions are going to depend what happens in the future."
• "I think the first message is, the situation hasn't changed that much since our last decision. We continue to proceed carefully. Given the unusual amount of uncertainty, we're continuing to put more weight on the risks, and we're ready to respond to new information."
• "The second thing I would say is we have been very clear about what we're watching most closely, what we're particularly focused on. And those are the four things I outlined. We're looking at how much are US tariffs impacting our exports? How much is the weakness in exports spilling over into business investment, into employment and into household spending. How quickly, you know, how big are those direct costs? How quickly are those getting passed through to consumer prices, and what's happening with inflation expectations?"
• "And then the other thing we've said is that, you know, looking ahead, if the weakness in the economy creates further downward pressure on inflation, and the those upward pressures from from tariffs and disrupt trade disruption are contained, there could be a need for a further cut in our interest rate."

MNI's Greg Quinn asks Gov Macklem about the BOC's projections showing core inflation remaining above 3% through the rest of this year.

• Macklem says: "yes that has got our attention. And going forward, we are going to be watching closely what happens with those pressures and underlying inflation." He notes multiple countervailing factors on inflation, saying "I think the message overall, Greg is, you know, monetary policy is going to continue to support the economy, while ensuring that inflation remains well controlled, that's what's on our mind, that's what will guide our decisions."
• When asked about whether a 2.5% inflation rate is "uncomfortably high, Macklem finds an opportunity to repeat what he's said previously about the current uncertainty making it hard to be "forward-looking". He says "if inflation is currently 2.5%, but we think the evidence is suggesting that inflation pressures will unwind and we're heading back to 2%, yes, we're comfortable. If we think inflation pressures are building further and we're moving further away from the target, we're uncomfortable.... One of the messages today is, it's hard to be as forward looking as usual when you've got an unusual amount of uncertainty. And that's why we presented three scenarios, and you can see that the inflation outturn is different in those different scenarios. And the reason we presented three scenarios is, again, against a background of unusual uncertainty, we need to be thinking more about the risks. So as we're thinking about policy, we're not thinking about a single forecast. We're thinking of a range of scenarios."