SWITZERLAND: Gov't-No US Tariff Countermeasures, "Trade War Not In Our Interest"
Speaking in a press conference (livestream) following an extraordinary Federal Council meeting, the president of the Swiss Confederation Karin Keller-Sutter says that the gov't will continue trade negotiations with the US. Keller-Sutter: "We will also shortly engage in detailed discussions on potential relief measures for Swiss businesses and continue to assess the need for further economic policy action." She calls the situation "extraordinarily difficult" but says "At present, tariff countermeasures in response to the US tariff increases are not being considered."
- Vice President and Economy Minister Guy Parmelin says that "As of today, nearly 60% of Swiss exports to the US are subject to additional tariffs." Parmelin says, "A trade conflict is not in Switzerland's interest,"
- Parmelin: "The newly-imposed US tariffs place a substantial strain on Switzerland's export-oriented economy...If these tariffs remain in place for an extended period, the economic outlook is likely to worsen further compared to the June projections." Says, "The Federal Council also intends to make full use of its scope for action under forthcoming legislation and existing regulations to east the burden on businesses."
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US DATA: Redbook Data Continues To Suggest Gradual Slowdown In Retail Sales
Johnson Redbook Retail Sales closed June on a high, rising 5.9% Y/Y in the final week (ending Jul 5 - June is a 5-week month on the retail calendar), after 4.9% in the prior week. This brought month-to-date sales to 5.1% Y/Y (lower than retailers' targeted 5.7% rise).
- Johnson Redbook notes that their preliminary target is for 4.8% Y/Y growth, with the estimate to be finalized next week. "July is a four-week month that ends on August 2nd and typically experiences relatively low sales volume, with promotions driving sales as stores clear out summer inventories and restock for fall."
- Anecdotes in the report were brief, and again didn't mention tariffs: "Significant increases in temperatures nationwide, combined with Independence Day promotions and increased demand for summer merchandise, encouraged consumers to visit air-conditioned stores. Many people also stocked up on groceries in preparation for the long holiday weekend."
- The Redbook series suggests continued resilience in retail sales through early July albeit continuing a gradual slowdown since some apparent tariff front-running to April. Next week brings the June advance Retail Sales report, which is expected to see a bounce vs May (headline 0.0% M/M after -0.9%, ex-auto 0.3% after -0.3%). A flat rate of headline M/M growth would roughly translate into a pickup in Y/Y activity to the high 3s from a 7-month low 3.3% in May.
US TSY OPTIONS: BLOCK, Aug25 5Y Call Buyer
- +10,000 FVQ5 109.25 calls, 3 ref 108-03.5 (laid off on screen) at 0920:47ET
USDJPY TECHS: Bounce Extends
- RES 4: 149.28 High Apr 3
- RES 3: 148.65 High May 12 and a reversal trigger
- RES 2: 148.03 High Jun 23
- RES 1: 146.77/83 76.4% of the Jun 23 - Jul 1 bear leg / Intraday high
- PRICE: 146.79 @ 14:26 BST Jul 8
- SUP 1: 144.95 50-day EMA
- SUP 2: 144.23/142.68 Low Jul 7 / 1
- SUP 3: 142.12 Low May 27 and a key short-term support
- SUP 4: 141.96 76.4% retracement of the Apr 22 - May 12 upleg
USDJPY continues to appreciate. The latest recovery has resulted in a breach of the 50-day EMA, at 144.95, and the daily close above the EMA highlights a stronger reversal. 146.19, the Jun 24 high, has been cleared. Sights are on 146.77, a Fibonacci retracement. It has been pierced, a clear break would open 148.03, the Jun 23 high. Support points to watch are 144.95, the 50-day EMA, and 144.23, the Jun 7 low.
