MNI ASIA OPEN: Take US/EU Trade Deal Story w/Salt: Navarro

EXECUTIVE SUMMARY

• MNI TARIFFS: Navarro: Take EU-US Trade Deal Reports With "Grain Of Salt"
• MNI TARIFFS: US And EU Closing In On 15% Tariff Deal - FT
• MNI US: Trump Pins Lagging Housing Market on Fed's Powell
• MNI US: Trump Weighs In On Japan Trade Deal
• MNI JAPAN-EU: Emphasis On Security & Econ Coercion, No Mention Of Rare Earths Deal
• MNI US DATA: Existing Home Sales Weaken, Rising Inventories To Pressure Prices

US

MNI TARIFFS: Navarro: Take EU-US Trade Deal Reports With "Grain Of Salt"

A brief risk-off move on a comment by White House adviser Peter Navarro on Bloomberg TV referring to earlier reports of a EU-US trade deal nearing completion that would include a 15% baseline tariff - Navarro says: "We don't negotiate in public. These other countries aspirationally negotiate in public to try to get us to where they want us to go. I would say even though it was reported on Bloomberg, I would take it with a grain of salt. Never assume anything is fixed until the boss says it is fixed... Let's see what happens."

MNI TARIFFS: US And EU Closing In On 15% Tariff Deal - FT

The Financial Times reports that the United States and European Union are closing in on a deal that would impose 15% tariffs on European imports, potentially heading off a threat issued by President Donald Trump earlier this month to hit the EU with a 30% tariff rate on August 1. FT notes: "Both sides would waive tariffs on some products, including aircraft, spirits and medical devices... [sources] said they understood the 15 per cent minimum tariff would include those existing duties, so Brussels views the deal as cementing the status quo. Tariffs on cars, which are currently 27.5 per cent, would therefore fall to 15 per cent."

NEWS

MNI US: Trump Pins Lagging Housing Market on Fed's Powell

POTUS Trump via Truth Social: "Housing in our Country is lagging because Jerome “Too Late” Powell refuses to lower Interest Rates. Families are being hurt because Interest Rates are too high, and even our Country is having to pay a higher Rate than it should be because of “Too Late.” Our Rate should be three points lower than they are, saving us $1 Trillion per year (as a Country). This stubborn guy at the Fed just doesn’t get it — Never did, and never will. The Board should act, but they don’t have the Courage to do so!"

MNI US: Trump Weighs In On Japan Trade Deal

President Trump posts the following on Truth Social "Remember, Japan is, for the first time ever, OPENING ITS MAKET TO THE USA, even to cars, SUV’s, Trucks, -and everything else, even agriculture and RICE, which was always a complete NO, NO. The Open Market Japan may be as big a profit factor as the Tariffs themselves, but was only gotten because of the Tariff Power. They also agreed to buy BILLIONS OF DOLLARS WORTH OF MILITARY AND OTHER EQUIPMENT, and give us 90% of 550 BILLION DOLLARS - AND MORE!!! MAGA!!!"

MNI TARIFFS: US' Bessent: EU Threats On Retaliatory Tariffs A Negotiating Tactic

European Commission President Ursula von der Leyen, Council President Antonio Costa, and Japanese PM Shigeru Ishiba have just finished a joint press conference following the conclusion of the Japan-EU summit in Tokyo. Ishiba says that the EU and Japan "agreed to work towards [an] industry dialogue to strengthen defence industries". The PM also confirms that Japan agreed with the EU to start talks on an information protection agreement. Says Japan and the EU will "work to maintain and strengthen the rules-based free and fair economic order."

MNI JAPAN-EU: Joint Statement Highlights Critical Mineral Supply Chains As Focus

Following on from the earlier bullet regarding the EU-Japan summit (see 'JAPAN-EU: Emphasis On Security & Econ Coercion, No Mention Of Rare Earths Deal', 11:00BST), within the joint statement and attached Competitiveness Alliance, there no detail on the prospective rare earths procurement deal that had been mooted as one of the potential concrete outcomes of the talks. The statement did, though, outline efforts to cooperate on the broader area supply chains for critical minerals. 

US TSYS

MNI US TSYS: Trade Sentiment, Strong Earnings Add to Risk-On Tone

• Treasuries look to finish near session lows Wednesday, improved sentiment tied to trade and better than expected equity earnings added to the risk-on tone after Pres Trump announced deal with Japan late Tuesday.
• Financial Times article posited US/EU were closing in on a 15% deal added to the positive sentiment - despite WH advisor Navarro saying to take the FT story "with a grain of salt".
• Existing home sales fell more than expected in June, to 3.93M (seasonally-adjusted annualized rate), vs 4.00M expected and 4.04M in May (upwardly revised by 10k). That's a 9-month low, breaking an 8-month streak of sales above 4 million.
• MBA composite mortgage applications inched up 0.8% (sa) last week, essentially flat after -10% and +9.4% in the previous two weeks. New purchase applications outperformed after some rare trend underperformance since June, rising 3.4% after -11.8% compared to -2.6% after -7.4% for refis.
• Stocks surged (new record high for SPX eminis at 6393.75), US$ retreated back to early July levels (BBDXY -2.74 at 1193.06).
• Focus turns to Thursday's data: weekly claims, S&P Global US Mfg/Services PMIs and New Home Sales.

OVERNIGHT DATA

MNI US DATA: Existing Home Sales Weaken, Rising Inventories To Pressure Prices

Existing home sales fell more than expected in June, to 3.93M (seasonally-adjusted annualized rate), vs 4.00M expected and 4.04M in May (upwardly revised by 10k). That's a 9-month low, breaking an 8-month streak of sales above 4 million. This is about 25% below the level of sales pre-pandemic (2019), and 40% below the level seen at the height of the pandemic frenzy in 2020-21. Sales dropped in 3 of four regions (sales in the West grew slightly), with all 4 below end-2024 levels.

MNI US DATA: Mortgage Activity Stalls, Jumbo Rates Continue To Trade Inside Regular

MBA composite mortgage applications inched up 0.8% (sa) last week, essentially flat after -10% and +9.4% in the previous two weeks. New purchase applications outperformed after some rare trend underperformance since June, rising 3.4% after -11.8% compared to -2.6% after -7.4% for refis.

• Relative levels: composite at 54% of 2019 levels vs 64% for new purchases and 43% for refis. The 30Y conforming mortgage rate increased 2bp last week to 6.84% after a 5bp increase the week prior. The 6.77% in the first week of July was the lowest since early April.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 463.89 points (1.04%) at 44967.31
S&P E-Mini Future up 41.5 points (0.65%) at 6388
Nasdaq up 99.4 points (0.5%) at 20992.44
US 10-Yr yield is up 4.4 bps at 4.3877%
US Sep 10-Yr futures are down 12.5/32 at 111-0.5
EURUSD up 0.0019 (0.16%) at 1.1773
USDJPY down 0.1 (-0.07%) at 146.53
Gold is down $41.33 (-1.2%) at $3389.96

European bourses closing levels:
EuroStoxx 50 up 53.77 points (1.02%) at 5344.25
FTSE 100 up 37.68 points (0.42%) at 9061.49
German DAX up 198.92 points (0.83%) at 24240.82
French CAC 40 up 106.02 points (1.37%) at 7850.43

US TREASURY FUTURES CLOSE

3M10Y +1.832, 3.708 (L: -0.127 / H: 4.504)
2Y10Y -1.142, 49.709 (L: 49.51 / H: 52.751)
2Y30Y -2.532, 105.646 (L: 105.542 / H: 110.499)
5Y30Y -2.117, 100.93 (L: 100.651 / H: 104.29)
Current futures levels:
Sep 2-Yr futures down 3.625/32 at 103-20.625 (L: 103-20.625 / H: 103-24.125)
Sep 5-Yr futures down 8.25/32 at 108-10 (L: 108-09.5 / H: 108-17) 
Sep 10-Yr futures down 12.5/32 at 111-0.5 (L: 110-31 / H: 111-10.5)
Sep 30-Yr futures down 20/32 at 113-11 (L: 113-03 / H: 113-25) 
Sep Ultra futures down 29/32 at 115-31 (L: 115-22 / H: 116-18)

MNI US 10YR FUTURE TECHS: (U5) Breaches Resistance

• RES 4: 112-15   61.8% retracement of the Apr 7 - 11 sell-off
• RES 3: 112-12+ High Jul 1 and a bull trigger
• RES 2: 111-28   High Jul 3
• RES 1: 111-14+ High Jul 22
• PRICE:‌‌ 111-05 @ 11:04 BST Jul 23
• SUP 1: 110-30/08+ 50-day EMA / Low Jul 14 & 16       
• SUP 2: 110-03   76.4% retracement of the May 22 - Jul 1 bull leg
• SUP 3: 109-28   Low Jun 6 and 11
• SUP 4: 109.25   Low May 27

Treasury futures traded higher again Tuesday, extending the firm start to the week. The move higher has resulted in a break of the 20-day EMA, strengthening the recovery, and resistance at 111-13+, the Jul 10 high, has been pierced. A clear break of this hurdle would highlight a stronger reversal. This would open 111-28, the Jul 3 high. Key support is 110-08+, the 14 and 16 low. A move through this support would reinstate a bearish theme.

SOFR FUTURES CLOSE

Sep 25 -0.005 at 95.830
Dec 25 -0.025 at 96.090
Mar 26 -0.055 at 96.335
Jun 26 -0.075 at 96.570
Red Pack (Sep 26-Jun 27) -0.085 to -0.08
Green Pack (Sep 27-Jun 28) -0.075 to -0.06
Blue Pack (Sep 28-Jun 29) -0.05 to -0.05
Gold Pack (Sep 29-Jun 30) -0.05 to -0.045

REFERENCE RATES (PRIOR SESSION)
​​​​​​​
US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.28% (-0.02), volume: $2.692T
• Broad General Collateral Rate (BGCR): 4.27% (+0.00), volume: $1.115T
• Tri-Party General Collateral Rate (TCR): 4.27% (+0.00), volume: $1.092T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $107B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $273B

FED Reverse Repo Operation

RRP usage slips to $189.632B this afternoon from $196.374B yesterday, total number of counterparties at 30. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021 - compares to July 1: $460.731B highest usage since December 31.

MNI PIPELINE: Corporate Bond Update: $2B Lockheed Martin 3Pt Launched

• Date $MM Issuer (Priced *, Launch #)
• 07/23 $2B #Lockheed Martin $500M 3Y +37, $750M 5Y +50, $750M 10Y +65
• 07/23 $750M *JFM (Japan Finance Org for Munis) 5Y SOFR+63

MNI BONDS: EGBs-GILTS CASH CLOSE: Late Tariff Surprise Sinks Bunds, Gilts Pre-ECB

EGBs and Gilts weakened Wednesday, with bear steepening in the German and UK curves.

• Core yields had gapped higher to start the day on positive trade news (US-China, US-Japan developments) and a poor 40-year Japanese bond auction, but were broadly flat/lower over the course of the session as concerns lingered over EU countermeasures against proposed US tariffs.
• That seemingly set yields on course to rise modestly for the day, with slight bear steepening. But there was a late twist when just before the cash close, the Financial Times reported that the EU and US were close to reaching a trade deal (including 15% tariffs on US imports from the EU) which would stave off a harsher regime being imposed from Aug 1.
• That news saw core EGB and Gilt yields spike to their highest levels of the day into the close, and judging from futures would have headed higher yet.
• The bear steepening move in the German and UK curves was reinforced, with Gilts underperforming on the day.
• As we noted in our latest Europe Pi update  (PDF  Here), longs have been building going into the ECB decision which may have helped exacerbate the move.
• Periphery/semi-core spreads tightened smartly into the close as well, leaving them tighter on the day led by Spain and Portugal.
• Thursday's calendar highlights are July flash PMIs and of course the ECB decision.
• MNI's ECB preview is here - we will be closely watching Lagarde's characterisation of risks at the press conference, which will likely shape the market reaction.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.2bps at 1.844%, 5-Yr is up 4.2bps at 2.194%, 10-Yr is up 4.9bps at 2.639%, and 30-Yr is up 5.6bps at 3.173%.
• UK: The 2-Yr yield is up 3.9bps at 3.881%, 5-Yr is up 4.7bps at 4.044%, 10-Yr is up 6.6bps at 4.635%, and 30-Yr is up 8.2bps at 5.482%.
• Italian BTP spread down 2.1bps at 82.3bps / Spanish down 2.5bps at 58.9bps

MNI FOREX: Antipodean FX Outperforms Amid Resolute Equities

• AUD and NZD remain the clear outperformers on Wednesday, benefitting from the buoyant price action for major equity benchmarks on the back of a US/Japan trade deal being reached overnight. Renewed bearish dollar sentiment this week is underpinning the move higher for antipodean FX, with the latest comments from Tsy Sec Bessent stating that negotiations with China are on track also providing a tailwind.
• Specifically for AUDUSD, spot pierced a cluster of daily highs to reach a fresh recovery high of 0.6601. The renewed strength has been bolstered by the pair failing to close below its 50-day EMA, keeping the bullish trend setup intact. Above 0.66, resistance is scant until 0.6688, the Nov 07 high, printed shortly after the US election last year. Additionally, 0.6700 represents the 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg.
• Following a very volatile APAC trading session, USDJPY traded with a moderately dovish bias across Wednesday, reaching a new weekly low of 146.11. Spot has since bounced back to unchanged levels as markets continue to assess the offsetting forces of a Japan/US trade deal and the uncertain future of PM Ishiba. Today’s low came within 23 pips of key 50-day EMA support, which now intersects at 145.88.
• The euro received a boost in late European trade as financial times reported that the EU and US are closing in on a trade deal that would impose just 15% tariffs on European imports, similar to the agreement Donald Trump struck with Japan this week. EURUSD had been trading in negative territory prior to the headlines, but rose to a fresh weekly high of 1.1761 in the aftermath.
• Overall, EURUSD has operated in a contained range as we approach tomorrow’s flash PMI data and the ECB decision and press conference. Bullish trend conditions continue to prevail with focus remaining on 1.1829, the Jul 1 high and the bull trigger.

THURSDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
24/07/2025	0600/0800	*	DE	GFK Consumer Climate
24/07/2025	0645/0845	**	FR	Manufacturing Sentiment
24/07/2025	0700/0900	**	ES	PPI
24/07/2025	0715/0915	**	FR	S&P Global Services PMI (p)
24/07/2025	0715/0915	**	FR	S&P Global Manufacturing PMI (p)
24/07/2025	0730/0930	**	DE	S&P Global Services PMI (p)
24/07/2025	0730/0930	**	DE	S&P Global Manufacturing PMI (p)
24/07/2025	0800/1000	**	EU	S&P Global Services PMI (p)
24/07/2025	0800/1000	**	EU	S&P Global Manufacturing PMI (p)
24/07/2025	0800/1000	**	EU	S&P Global Composite PMI (p)
24/07/2025	0830/0930	***	GB	S&P Global Manufacturing PMI flash
24/07/2025	0830/0930	***	GB	S&P Global Services PMI flash
24/07/2025	0830/0930	***	GB	S&P Global Composite PMI flash
24/07/2025	1000/1100	**	GB	CBI Industrial Trends
24/07/2025	1100/0700	***	TR	Turkey Benchmark Rate
24/07/2025	1215/1415	***	EU	ECB Deposit Rate
24/07/2025	1215/1415	***	EU	ECB Main Refi Rate
24/07/2025	1215/1415	***	EU	ECB Marginal Lending Rate
24/07/2025	1230/0830	***	US	Jobless Claims
24/07/2025	1230/0830	**	US	WASDE Weekly Import/Export
24/07/2025	1230/0830	**	CA	Retail Trade
24/07/2025	1230/0830	**	CA	Retail Trade
24/07/2025	1245/1445		EU	ECB Press Conference
24/07/2025	1345/0945	***	US	S&P Global Manufacturing Index (Flash)
24/07/2025	1345/0945	***	US	S&P Global Services Index (flash)
24/07/2025	1400/1000	***	US	New Home Sales
24/07/2025	1430/1030	**	US	Natural Gas Stocks
24/07/2025	1500/1100	**	US	Kansas City Fed Manufacturing Index
24/07/2025	1530/1130	**	US	US Bill 04 Week Treasury Auction Result
24/07/2025	1530/1130	*	US	US Bill 08 Week Treasury Auction Result
24/07/2025	1700/1300	**	US	US Treasury Auction Result for TIPS 10 Year Note
25/07/2025	2301/0001	**	GB	Gfk Monthly Consumer Confidence
25/07/2025	2330/0830	**	JP	Tokyo CPI