MNI US OPEN - EU Imposes Raft of New Russian Oil Sanctions
EXECUTIVE SUMMARY:
- EU IMPOSES NEW RAFT OF SANCTIONS ON RUSSIAN OIL TRADE
- DOVISH WALLER DOUBLES DOWN ON JULY CUT
- MERZ VOWS TO FOCUS ON BOOSTING ECONOMY
- TSMC CALLS FX A "BIG UNCERTAINTY"
Figure 1: Japanese core CPI picks up pace in June
Source: MNI / Bloomberg Finance L.P.
NEWS
FED (MNI): Dovish Waller Doubles Down On July Cut, More Cuts This Year
In case missed late yesterday, Governor Waller (permanent voter, dove) clearly doubled down on his dovish stance, starting his speech with "My purpose this evening is to explain why I believe that the FOMC should reduce our policy rate by 25 basis points at our next meeting." It's not a new approach from Waller but continues to stand out along with Bowman amidst the Fed's independence being threatened by President Trump's call for 1% rates.
EU-RUSSIA (BBG): EU Imposes New Raft of Sanctions on Russia and Its Oil Trade
European Union states have approved a fresh sanctions package on Russia over its war against Ukraine including a revised oil price cap, new banking restrictions, and curbs on fuels made from Russian petroleum. The package, the bloc’s 18th since Moscow’s full scale invasion, will see about 20 more Russian banks cut off the international payments system SWIFT and face a full transaction ban, as well as restrictions imposed on Russian petroleum refined in third countries.
US-AUSTRALIA (BBG): Australia’s Treasurer Weighs Impact of Possible US Drug Tariff
Australia is evaluating the impact of potential US tariffs of 200% on pharmaceutical imports, Treasurer Jim Chalmers said, while reiterating that his nation’s subsidies for certain drugs are not up for negotiation. “We’re working through” how the potential tariff might work with the industry and “the potential consequences of pharmaceuticals being caught up in these escalating trade tensions”.
US (WaPo): White House Shares Diagnosis in Rare Acknowledgment of Trump’s Age
The White House on Thursday said that President Donald Trump has been diagnosed with a mild but chronic illness related to his age — a rare admission from one of the nation's oldest presidents who has long sought to project vigor. Trump has chronic venous insufficiency, the White House physician said in a memorandum, a condition in which the legs have trouble delivering blood back to the heart.
GERMANY (BBG): Merz Vows to Focus on Boosting Economy After Bumpy Start in Job
German Chancellor Friedrich Merz vowed to put a choppy start to his tenure behind him and focus on returning Europe’s biggest economy to meaningful growth. The conservative leader has had a turbulent couple of months since taking charge in early May, with a number of disputes already rumbling in his ruling coalition with the Social Democrats on issues ranging from welfare reforms to judicial appointments.
CHINA (BBG): Xi Questions Local Officials on EV, AI Plans in Rare Rebuke
President Xi Jinping questioned the need for local governments across China to crowd into the same emerging industries, a rare rebuke that reflects growing concerns about deflation at home and trade tensions abroad. “When it comes to launching new projects, it’s always the same few things: artificial intelligence, computing power, new-energy vehicles,” Xi said in a meeting in Beijing this week on urban development, according to a Thursday article on the front page of the People’s Daily.
CORPORATE (BBG): TSMC Calls FX ‘Big Uncertainty’, Vows Constant Review on Hedging
Taiwan Semiconductor Manufacturing Co. sees currency volatility as a “big uncertainty” to its margins and will constantly review hedging strategies to manage the impact, said Chief Financial Officer Wendell Huang. “Foreign-exchange rate is something that we cannot control, but there were instances before where it was not in our favor, but we managed to lean on other factors so that we are able to keep our profitability, and that’s what we are planning to do,” Huang said in an interview on Friday.
Japan's annual core consumer inflation rate decelerated to 3.3% y/y in June, from May’s 3.7%, marking 39 consecutive months above the Bank of Japan’s 2% inflation target, data released by the Ministry of Internal Affairs and Communications showed on Friday. Government subsidies contributed to a slowdown in energy prices, which rose 2.9% y/y compared to 8.1% in May and household durable goods, which increased 2.5% versus 3.8% previously.
BONDS: EGB & Gilt Yields A Little Higher, Support In Futures Intact
Slightly firmer oil prices and equities weigh on EGBs & gilts, with little in the way of market moving headline/data flow to note
- Bund futures -28 at 129.55. Volume below recent averages.
- A bear cycle in Bunds remains intact, with initial support still Monday’s low at 129.08. Clearance of this level would quickly expose the bear trigger at 128.97 (May 14 low).
- German yields 2-3bps higher on the session. Bund yields remain in the 2.40-2.75% range in place since late March.
- 10-year EGB spreads to Bunds biased slightly tighter but within 0.5bp of closing levels.
- Yesterday’s low in gilt futures (91.14) held at the open. A break would expose Fibonacci support (90.97)
- UK yields flat to 1-3bp higher, multi-week ranges intact through 30s, 50s to fresh cycle highs.
- 2s10s steadies around 75bp after failure to meaningfully break above 80bp earlier in the week, while 5s30s continues to consolidate around 140bp.
- Fundamental factors point to the potential for ongoing steepening, although seemingly crowded positioning and a more activist policymaker approach to limiting spikes in long end yields poses risks to that idea.
- BoE pricing steady around ~46bp of cuts through year-end (21.5bp for Aug, 25bp through Sep). We have seen the removal of some calls for a September BoE rate cut from sell-side forecasts following this week’s data.
- Little of note on the European & UK calendars ahead of the weekend, with macro focus on Fedspeak and U.S. UoM data.
FOREX: USD Index Tilts Lower Post Waller, But Consolidating Weekly Advance
- Both treasury yields and the dollar track modestly lower on Friday as Fed Governor Waller reiterated his relatively dovish stance and advocated for a 25bp cut at the next FOMC meeting. This dynamic has allowed the likes of AUD (+0.46%) and NZD (+0.56) to outperform on the session, while the Scandies top the G10 FX leaderboard.
- In similar vein, EURUSD (+0.35%) has been steadily edging higher after regaining the 1.16 handle to currently trade at session highs of 1.1644. Despite an ongoing bearish corrective cycle playing out, the ongoing resilience for the single currency has been notable with EURUSD remaining comfortably above its firm support of the 50-day EMA which is located around 1.1510.
- Despite the softer greenback today, the USD index is broadly consolidating a solid weekly advance of around 0.5% and fresh recovery highs this week underpin the more constructive short-term outlook. Both the Australian dollar and the Japanese yen have been particular laggards across the week, as domestic developments weigh.
- In Australia, a much weaker-than-expected jobs report has bolstered RBA easing bets, while the increased volatility surrounding the Trump-Powell spat has likely provided an additional headwind to higher beta currencies. AUDUSD support at the 50-day EMA, at 0.6490, was temporarily breached. A clear break of this EMA would highlight a stronger reversal and signal scope for an extension lower.
- In Japan, the focus remains centred on the upper house elections, which will be held over the weekend. The ruling party is still projected to lose its majority there and associated fiscal concerns have allowed USDJPY to reach fresh 3-month highs this week above 149.00. Above here, attention will be on 149.38, the 50.0% retracement of the Jan 10 - Apr 22 bear leg, and 150.49, the Apr 2 high.
- Preliminary US UMich data, housing starts/building permits and further comments from Fed Governor Waller headline the macro calendar today.
EQUITIES: Stock Futures Strike New Record Highs
S&P E-Minis are trading higher today and this has resulted in a fresh cycle high. The climb confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. A bull cycle in Eurostoxx 50 futures remains in play and recent weakness appears to have been a correction. Support to watch is 5281.00, the low on Jul 1 and 4. A clear break of this price point would strengthen a bearish threat.
- Japan's NIKKEI closed lower by 82.08 pts or -0.21% at 39819.11 and the TOPIX ended 5.33 pts lower or -0.19% at 2834.48.
Elsewhere, in China the SHANGHAI closed higher by 17.658 pts or +0.5% at 3534.483 and the HANG SENG ended 326.71 pts higher or +1.33% at 24825.66. - Across Europe, Germany's DAX trades higher by 115.22 pts or +0.47% at 24485.57, FTSE 100 higher by 15.83 pts or +0.18% at 8988.51, CAC 40 up 47.72 pts or +0.61% at 7869.7 and Euro Stoxx 50 up 26.07 pts or +0.48% at 5403.37.
- Dow Jones mini up 61 pts or +0.14% at 44779, S&P 500 mini up 7.5 pts or +0.12% at 6348, NASDAQ mini up 27.5 pts or +0.12% at 23278.25.
COMMODITIES: Bearish WTI Theme Persists
Gold is unchanged. A bull cycle that started Jun 30, remains intact and the yellow metal is holding on to the bulk of its recent gains - for now. Note that medium-term trend conditions are bullish. A bearish tone in WTI futures remains intact and gains are considered corrective. The sharp reversal from the Jun 23 high continues to highlight scope for an extension lower.
- WTI Crude up $0.41 or +0.61% at $67.75
- Natural Gas up $0.04 or +1.02% at $3.578
- Gold spot up $8.6 or +0.26% at $3348.93
- Copper up $6.45 or +1.17% at $557.55
- Silver up $0.16 or +0.43% at $38.3223
- Platinum down $2.16 or -0.15% at $1463.26
| Date | GMT/Local | Impact | Country | Event |
| 18/07/2025 | - |  EU | ECB Cipollone At G20 Meeting | |
| 18/07/2025 | 1230/0830 | *** |  US | Housing Starts |
| 18/07/2025 | 1230/0830 | *** | US | Housing Starts |
| 18/07/2025 | 1400/1000 | *** | US | U. Mich. Survey of Consumers |
| 18/07/2025 | 1400/1000 | ** | US | University of Michigan Surveys of Consumers Inflation Expectation |
| 18/07/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 18/07/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
