MNI EUROPEAN OPEN: Trump Threatens Brazil With 50% Tariff

Jul-10 05:21By: Jonathan Cavenagh

Europe

EXECUTIVE SUMMARY

TRUMP HITS BRAZIL WITH 50% TARIFF, ORDERS UNFAIR TRADE PRACTICES PROBE - RTRS
TRUMP ANNOUNCES 50% TARIFF ON COPPER EFFECTIVE AUGUST 1 - RTRS
JAPAN JUNE CGPI RISES 2.9% Y/Y; IMPORT PRICE DROPS - MNI BRIEF
CHINA’S GDP FACES H2 GROWTH CHALLENGES - MNI
BOK KEEPS POLICY RATE UNCHANGED AT 2.50%: PRESS - MNI BRIEF

Fig 1: Japan Import Prices & USD/JPY Y/Y

Source: Bloomberg Finance L.P./MNI

HOUSING (BBG): “A closely watched gauge of demand from potential British homeowners climbed to its highest level in six months, a signal that the real estate market is starting to stabilizing from a tax-increase induced slowdown that’s weighed on house prices.”

RUSSIA (BBG): “Senate Majority Leader John Thune said Wednesday he expects a vote as soon as this month to place severe new sanctions on Russia, the latest sign of a growing fracture between Donald Trump and Vladimir Putin, a man the US president once said he admired.”

US/RUSSIA (RTRS): “U.S. Secretary of State Marco Rubio will meet with Russian Foreign Minister Sergei Lavrov on the sidelines of the ASEAN foreign ministers' meeting in Kuala Lumpur on Thursday, the U.S. State Department and Russia's foreign ministry said.”

US/UKRAINE (RTRS): “The United States is delivering artillery shells and mobile rocket artillery missiles to Ukraine, two U.S. officials told Reuters on Wednesday, days after President Donald Trump's administration halted shipments of some critical weapons to Kyiv.”

TARIFFS (RTRS): “U.S. President Donald Trump turned his trade ire against Brazil on Wednesday, threatening Latin America's largest economy with a punitive 50% tariff on exports to the U.S. and ordering an unfair trade practices investigation that could lead to even higher tariffs.”

TARIFFS (RTRS): “U.S. President Donald Trump announced on Wednesday a 50% tariff on copper, saying on social media that it would be effective August 1 and that the decision was made after a national security assessment.”

FED (MNI): Federal Reserve policymakers worried at last month's policy meeting that tariffs will boost prices pressures, minutes released Wednesday showed, after they decided to keep interest rates on hold for a fourth time and FOMC forecasts showed a median projection of two rate cuts for 2025. A closer look at the Summary of Economic Projections revealed a fairly sharp divergence among policymakers, and this was reflected in the minutes, which also included extensive discussion of the probable effect of tariff and immigration policies.

OTHER

JAPAN (MNI BRIEF): “Japan’s corporate goods price index (CGPI) rose 2.9% y/y in June, easing from May’s revised 3.3%, data released by the Bank of Japan showed Thursday. The index fell 0.2% m/m, following a 0.1% decline in May, marking the second consecutive monthly drop.”

SOUTH KOREA (MNI BRIEF): The Bank of Korea board on Thursday held its base rate unchanged at 2.50%, taking a wait-and-see attitude amid high uncertainties over the economy and prices, Yonhap News Agency reported.

PHILIPPINES (RTRS): “ The Philippines is planning to negotiate with Washington to lower tariffs after the United States moved to impose higher 20% duties on goods imported from Manila, its ambassador to the United States said on Thursday.”

AUSTRALIA (BBG): " Australian Treasurer Jim Chalmers and the Reserve Bank’s interest-rate setting board have agreed that members will conduct at least one speech or public engagement a year, as well as publishing unattributed votes."

CHINA

GROWTH (MNI): MNI discusses China's economic difficulties ahead.

FISCAL STIMULUS (SHANGHAI SECURITIES NEWS): “China’s fiscal policy is expected to both “accelerate” and “expand” in the second half of the year, Shanghai Securities News reports, citing industry insiders.”

MNI: PBOC Net Injects CNY32.8 Bln via OMO Thursday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY90 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY32.8 billion after offsetting the maturity of CNY57.2 reverse repo today, according to Wind Information.

The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4328% at 09:37 am local time from the close of 1.4767% on Wednesday.
The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 49 on Wednesday, compared with the close of 47 on Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Lower At 7.1510 Thurs; +1.17% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1510 on Thursday, compared with 7.1541 set on Wednesday. The fixing was estimated at 7.1794 by Bloomberg survey today.

MARKET DATA

NEW ZEALAND MAY NET MIGRATION 1530; PRIOR 1090

JAPAN JUNE PPI M/M -0.2%; MEDIAN -0.1%; PRIOR -0.1%
JAPAN JUNE PPI Y/Y 2.9%; MEDIAN 2.9%; PRIOR 3.3%

SOUTH KOREA BOK BASE RATE 2.50%; MEDIAN 2.50%; PRIOR 2.50%

MARKETS

US TSYS: Front-End Yields Edge Higher In Quiet Session

The TYU5 range has been 111-09 to 111-13+ during the Asia-Pacific session. It last changed hands at 111-10, up 0-01+ from the previous close.

The US 2-year yield has edged higher trading around 3.85%, up 0.01 from its close.
The US 10-year yield has edged higher trading around 4.335%, up slightly from its close.
The 10-year yield has topped out just above the 4.40% area, giving the bulls some reprieve. No clear long-term direction though has seen the 10-year chop around in a wider 4.10% - 4.60% range for most of the year, with the 4.40% area being the pivot. A sustained close back above the 4.45% area could see more of the longs pared back but while this area holds they should be happy to stick with their position looking for a move back to the lower end of the range.
Nick Timiraos on X: ”The next few months of inflation data will offer a key test of competing theories about whether tariffs will prove inflationary and animate potential Fed divisions over how to manage any costs if forecasts are wrong—in either direction.”
(Bloomberg) -- “Investors will monitor ultra-long bond auctions in Japan and the US later Thursday to gauge concerns of how fiscal discipline may impact demand.”
"JAPAN 20-YEAR BOND BID-COVER RATIO 3.15 VS 12-MONTH AVG 3.29" - BBG
Data/Events: Initial Jobless Claims, US To Sell $22 Bln 30-year Bond.

Fig 1: 10-Year US Yield Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

JGBS: Bull-Flattener After 20Y Auction, BoJ Regional Assessment Out

JGB futures are slightly firmer, +9 compared to settlement levels.

Outside of the previously outlined PPI and International Investment Flows, there hasn't been much by way of domestic drivers to flag.
Today’s 20-year JGB auction delivered mixed results across key metrics. The low price underperformed dealer forecasts, which were set at 100.10 according to a Bloomberg poll. However, the cover ratio increased to 3.1462x from 3.1070x in the previous auction and the auction tail shortened to 0.18 from 0.28.
(RTRS) The BoJ reports in its regional assessment that some firms are delaying or reviewing capital spending due to global trade policy uncertainty. While the impact of US tariffs has been limited so far, firms are concerned about weakening global demand and rising US prices. Many regions saw strong wage hikes, though some firms may cut bonuses if profits fall. Views on future wage increases are mixed. Firms continue raising prices to offset rising costs.
Cash US tsys are flat to slightly cheaper, with a flattening bias, in today's Asia-Pac session.
Cash JGBs are flat to 6bps richer across benchmarks, with a flatter curve. The benchmark 20-year yield is 3.1bps lower at 2.484% versus the cyclical high of 2.596%.
Swap rates are flat to 3bps lower.
Tomorrow, the local calendar will empty.

AUSSIE BONDS: Richer, Treasurer Chalmers & RBA Board Agree On Communication

ACGBs (YM +4.0 & XM +7.0) sit richer, hovering near Sydney session bests, on a data-light day.

(Bloomberg) -- Australian Treasurer Jim Chalmers and the Reserve Bank's interest-rate setting board have agreed that members will conduct at least one speech or public engagement a year, as well as publishing unattributed votes.
Cash US tsys are flat to slightly cheaper, with a flattening bias, in today's Asia-Pac session. Today's US calendar: Initial Jobless Claims and $22 Bln 30-year bond auction.
(Bloomberg) "At the end of the day, however, the US isn't the main game for Australian exports - the bigger threat to the economy from tariffs stems from the impacts on China and Japan, and on consumer and business confidence."
Cash ACGBs are 5-7bps richer with the AU-US 10-year yield differential at -6bps.
The bills strip has bear-flattened, with pricing flat to +4.
RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in August is given a 90% probability, with a cumulative 62bps of easing priced by year-end.
Tomorrow, the local calendar will be empty apart from the AOFM’s planned sale of A$1000mn of the 2.75% 21 November 2029 bond.

BONDS: NZGBS: Closed With A Bull-Flattener

NZGBs closed showing a solid bull-flattener, with benchmark yields 4-9bps lower.

With the NZ-US and NZ-US 10-year yield differentials little changed on the day, today’s move looks to have been driven from abroad.
Cash US tsys are flat to slightly cheaper, with a flattening bias, in today's Asia-Pac session. Today's US calendar: Initial Jobless Claims and $22 Bln 30-year bond auction.
Today’s weekly supply showed cover ratios ranging from 2.64x (Apr-29) to 3.50x (May-35).
Swap rates closed 3-8bps lower, with the 2s10s curve flatter.
MNI RBNZ Review (see link): The central bank considered cutting rates, largely due to concerns around faltering economic momentum. However, with near term inflation pressures expected to be firmer, the case to hold presented a more compelling argument. The central bank maintained an easing bias, subject to medium-term inflation pressures subsiding. Note Q2 CPI data prints on July 21.
RBNZ dated OIS pricing closed little changed across meetings. 18bps of easing is priced for August, with a cumulative 33bps by November 2025.
Tomorrow, the local calendar will see BusinessNZ Manufacturing PMI.

FOREX: Asia FX Wrap - USD Flat In A Quiet Session After Drifting Lower Early

The BBDXY has had a range of 1194.34 - 1196.30 in the Asia-Pac session, it is currently trading around 1195. The USD drifted lower in early trading but has since bounced back in a quiet Asia-Pac session, -0.08%. "China Likely to Ramp Up Fiscal Support for Economy in 2H: Paper. China’s fiscal policy is expected to both “accelerate” and “expand” in the second half of the year, Shanghai Securities News reports, citing industry insiders." BBG

EUR/USD - Asian range 1.1715 - 1.1750, Asia is currently trading 1.1735. The pair has seen solid demand again just below the 1.1700 area allowing it to bounce in our session. The price is still starting to look a little stretched in the short term and is vulnerable to any correction in the USD, first support is back towards 1.1600 then more importantly the 1.1450 area.
GBP/USD - Asian range 1.3584 - 1.3613, Asia is currently dealing around 1.3605. Decent support seen around the 1.3580 area in a quiet session. Price has rejected the move higher but the USD would need to gain momentum higher for GBP/USD to extend lower in the short-term. First support around 1.3500 and then more importantly the 1.3350/1.3400 area.
USD/CNH - Asian range 7.1782 - 7.1834, the USD/CNY fix printed 7.1510, Asia is currently dealing around 7.1820. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
Cross asset : SPX -0.25%, Gold $3317, US 10-Year 4.334%, BBDXY 1195, Crude oil $68.48
Data/Events : Germany CPI, Italy Industrial Production,

Fig 1: GBP/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

JPY: USD/JPY - Sees Sellers Into the Fix But Good Bids Emerge Below 146.00

The Asia-Pac USD/JPY range has been 145.76 - 146.38, Asia is currently trading around 146.25, -0.06%. The pair fell away pretty easily in early trading down 0.40% at one point but found bids again towards 145.75 and has since clawed back most of its early losses . USD/JPY finally topped out above 147.00 overnight after moving almost 400 points in 5 days, getting relief from a move lower in US yields. The USD/JPY relentless march higher has been pretty telling, challenging a market positioned the wrong way. Dips back towards 144.50/145.00 should now find support first up.

(MT Newswires) via BBG: “The Bank of Japan (BOJ) will likely delay another interest rate hike until at least next March to assess potential economic damage from US tariffs, Reuters reported Wednesday, citing former BOJ policymaker Makoto Sakurai.”
JGBS AUCTION Mixed Demand Metrics For 20Y Auction: The 20-year JGB auction delivered mixed results across key metrics. The low price underperformed dealer forecasts, which were set at 100.10 according to a Bloomberg poll. However, the cover ratio increased to 3.1462x from 3.1070x in the previous auction and the auction tail shortened to 0.18 from 0.28.
JAPAN DATA PPI Slightly Below Forecasts, Import Prices Down Sharply Y/Y.
USD/JPY has lost all downside momentum for now and is back in its wider 142.00 - 148.00 range. The Market is long JPY and should the USD manage to continue to correct higher the risk is a move back to the top end of the range to further challenge the conviction of the shorts.
Options : Close significant option expiries for NY cut, based on DTCC data: 147.00($832m).Upcoming Close Strikes : 143.50($960m July 15).

Fig 1 : USD/JPY Spot Hourly Chart

Source: MNI - Market News/Bloomberg Finance L.P

NZD: Asia Wrap - NZD/USD Holding Above 0.6000 Support For Now

The NZD/USD had a range of 0.5997 - 0.6012 in the Asia-Pac session, going into the London open trading around 0.6005, +0.05%. The pair has edged slightly higher in a very quiet session. If there is a deeper correction in risk and the USD can squeeze higher then the risk to the NZD is a move back towards the 0.5850/0.5900 area, but while the support just below 0.6000 continues to hold the bulls will be looking for a base from which to extend higher.

NEW ZEALAND, JAPAN WORKING ON DEFENCE LOGISTICS PACT - BBG
RBNZ MNI RBNZ Review-July 2025: On Hold, Easing Bias Still Intact: As widely expected the RBNZ left rates on hold at the July policy meeting.
The central bank considered cutting rates, largely due to concerns around faltering economic momentum. However, with near term inflation pressures expected to be firmer, the case to hold presented a more compelling argument.
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6000(NZD517m), 0.6025(NZD373m) . Upcoming Close Strikes : none.
AUD/NZD range for the session has been 1.0877 - 1.0903, currently trading 1.0895. The cross has broken out of its recent range and focus will now turn to the more pivotal 1.0900/50 area. The RBNZ yesterday was unable to give it another nudge.

Fig 1: NZD/USD Spot Hourly Chart

Source: MNI - Market News/Bloomberg Finance L.P

AUD/USD - Drifts Higher In A Quiet Session

The AUD/USD has had a range of 0.6530 - 0.6551 in the Asia- Pac session, it is currently trading around 0.6540, +0.10%. The pair has traded a little higher in a quiet session. The AUD needs to hold above its 0.6480/0.6500 support as a sustained move below there would see a deeper correction back to 0.6350/0.6400. While above this support though the focus will be on trying to build a base from which to potentially extend higher.

(Bloomberg) -- Australian Treasurer Jim Chalmers and the Reserve Bank’s interest-rate setting board have agreed that members will conduct at least one speech or public engagement a year, as well as publishing unattributed votes.
“At the end of the day, however, the US isn’t the main game for Australian exports — the bigger threat to the economy from tariffs stems from the impacts on China and Japan, and on consumer and business confidence.” - BBG
The AUD/USD continues to hold above its support around 0.6500, looks like it's back to the 0.6500 - 0.6600 range and it should now take its cues from the USD. Watching to see if the support continues to hold as a move through there signals a deeper correction.
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6500(AUD598m), 0.6600(AUD 634m), 0.6650(AUD 857m). Upcoming Close Strikes : 0.6560(AUD631m July 15), 0.6650(AUD599m July 11).
AUD/JPY - Today's range 95.40 - 95.76, it is trading currently around 95.70, +0.10%. The pair failed to extend on its break above 96.00, even with the market positioned both short AUD and long JPY. First support seen back towards 94.00/94.50 with risk moving higher this pair should have tailwinds to test higher again at some point.

Fig 1: AUD/USD spot Hourly Chart

Source: MNI - Market News/Bloomberg Finance L.P

ASIA STOCKS: Mixed Trends, Japan Weaker, South Korea & Taiwan Firmer

Asia equity markets are mixed, with aggregate moves less than 1% across the region at this stage. Japan weakness is a standout, while South Korean markets continue to rally strongly. US equity futures are down a touch, Eminis last off around 0.25%. This follows solid cash gains in Wednesday trade (led by the Nasdaq). Trump's 50% tariff threat against Brazil, along with confirmation that a 50% tariff on copper will come into effect from August 1 has likely weighed on sentiment.

Japan's Topix was last off around 0.70%. Negative factors cited were tariff concerns, along with upcoming upper house elections (to be held July 20). Both the Topix and Nikkei 225 have struggled for upside momentum since the start of the month. Offshore investors have remained buyers of local stocks, per weekly flow data. On the data front, we had slightly weaker than forecast PPI figures.
The Kospi has continued to rally, last up close to 1% and putting the index at fresh cycle highs. We aren't too far from the 3200 levels. The BOK held rates steady earlier, but maintained an easing bias. Financial stability concerns, particularly in the property market is the main factor inhibiting easing in the near term.
The Taiex is up around 0.50%, amid a positive tech mood. Bellwether Nvidia continues to rally in the US, suggesting a firm AI-related backdrop.
Hong Kong markets are little changed, while the CSI 300 in China is trying to establish a move above 4000.
In SEA, trends are mixed. Indonesian stocks are up around 0.80% at this stage, while other markets are mixed.
In Australia, the ASX 200 is up +0.70%.

OIL: Quiet Session Sees Consolidation

The Asia-Pac range for the CLQ5 contract was $68.04 - $68.41, it is trading around $68.37 as we head into the London session. Oil does not appear to have a firm trend in place with the weakness experienced seemingly done for now.

(Bloomberg) -- “Oil steadied as traders weighed a large increase in US crude stockpiles and a wave of new tariff rates from President Donald Trump.”
“US inventories rose by about 7.1 million barrels last week, the biggest build since January, according to official data.”
Brent front-month futures trade around $70.22 a barrel on the ICE Futures Europe exchange heading into the London session.

GOLD: Steady After FOMC Minutes Offered Up Little New

Gold is 0.1% higher in today’s Asia-Pac session, after edging 0.3% higher yesterday.

Little new from the June FOMC minutes, with members signalling a July hold while keeping futures policy options open. The June meeting minutes reflected a committee that was leaning slightly more hawkish than it had earlier in the year, although probably no more than should have been expected.
The Dot Plot released at the meeting already captured most of the story: a divided Committee retains its overall easing bias but needs varying degrees of certainty before supporting a resumption of the easing cycle.
Lower rates are typically positive for gold, which doesn’t pay interest.
MNI’s technicals team noted that recent weakness in gold resulted in a breach of the 50-day EMA, and a trendline drawn from the Dec 30 ‘24 low and connected to the Feb 28 low. A clear break of both trend tools would signal scope for a deeper correction, and open $3,245.5, the May 29 low.
However, the recovery from the Jun 30 low also highlights a possible false trendline break. A resumption of gains would refocus attention on $3,451.3, the Jun 16 high.

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Country	Event
10/07/2025	0600/0800	***	NO	CPI Norway
10/07/2025	0600/0800	**	SE	Private Sector Production m/m
10/07/2025	0600/0800	***	DE	HICP (f)
10/07/2025	0700/0900		EU	ECB Cipollone Digital Euro Lecture
10/07/2025	0800/1000	*	IT	Industrial Production
10/07/2025	-	***	CN	Money Supply
10/07/2025	-	***	CN	New Loans
10/07/2025	-	***	CN	Social Financing
10/07/2025	1230/0830	***	US	Jobless Claims
10/07/2025	1230/0830	**	US	WASDE Weekly Import/Export
10/07/2025	1400/1000		US	St. Louis Fed's Alberto Musalem
10/07/2025	1430/1030	**	US	Natural Gas Stocks
10/07/2025	1500/1600		GB	BOE Breeden On Climate Change
10/07/2025	1530/1130	**	US	US Bill 04 Week Treasury Auction Result
10/07/2025	1530/1130	*	US	US Bill 08 Week Treasury Auction Result
10/07/2025	1700/1300	***	US	US Treasury Auction Result for 30 Year Bond
10/07/2025	1715/1315		US	Fed Governor Christopher Waller
10/07/2025	1830/1430		US	Fed's Mary Daly at MNI
11/07/2025	0600/0700	***	GB	UK Monthly GDP
11/07/2025	0600/0700	**	GB	Trade Balance
11/07/2025	0600/0700	**	GB	Index of Services
11/07/2025	0600/0700	**	GB	Index of Production
11/07/2025	0600/0700	**	GB	Output in the Construction Industry
11/07/2025	0645/0845	***	FR	HICP (f)
11/07/2025	1130/1330		EU	ECB Cipollone At Ukraine Recovery Conference
11/07/2025	1230/0830	***	CA	Labour Force Survey
11/07/2025	1230/0830	*	CA	Building Permits