MNI US OPEN - Passthrough Pressure Seen Mounting in US CPI

EXECUTIVE SUMMARY:

• PASSTHROUGH PRESSURE SEEN MOUNTING IN US CPI
• NVIDIA TO RESUME H20 CHIP SALES TO CHINA
• TRUMP ASKED ZELENSKYY IF UKRAINE COULD HIT MOSCOW - FT
• FRENCH GOVERNMENT RISKS BACKLASH ON BUDGET PLANS
• UK'S REEVES, BAILEY TO MAKE MAJOR SPEECHES AT MANSION HOUSE

Figure 1: Recent inflation developments

NEWS

US (MNI): US CPI Preview: Passthrough Pressure Mounting: Download Full Report Here

US-CHINA (BBG): Nvidia to Resume H20 AI Chip Sales to China in US Reversal
US government officials told Nvidia they would green-light export licenses for the H20 artificial intelligence accelerator, the company said in a blog post on Monday — a move that may add billions to Nvidia’s revenue this year, restoring its ability to fulfill orders it had written off as lost due to government restrictions. Nvidia designed the less-advanced H20 chip to comply with earlier China trade curbs from Washington, which Trump’s team tightened in April to block H20 sales to the Asian country without a US permit.

US/UKRAINE/RUSSIA (FT): Trump asked Zelenskyy if Ukraine could hit Moscow
Donald Trump has privately encouraged Ukraine to step up deep strikes on Russian territory, even asking Volodymyr Zelenskyy whether he could strike Moscow if the US provided long-range weapons, according to people briefed on the discussions.

FRANCE (BBG): France’s Government Risks Backlash With Stringent Budget Plan
Prime Minister Francois Bayrou will outline a plan on Tuesday to sharply narrow France’s deficit, setting the stage for a parliamentary battle that risks triggering another government collapse. The premier is set to present details of around €40 billion ($47 billion) of spending cuts and tax increases for 2026 that are needed to shrink the euro area’s largest budget gap.

UK (BBG): Reeves to Give First Major Speech Since UK Welfare Climbdown
Chancellor of the Exchequer Rachel Reeves will highlight plans to spur homeownership by easing access to mortgages in her flagship annual address to the City of London, a key moment for Britain’s finance minister as she seeks to bounce back from a rocky period that included a market-moving tearful appearance in the House of Commons. 

UK (BBG): BOE Set to Delay Basel Trading Rules in Regulatory Giveaway
The Bank of England will give investment banks extra time to implement the most contentious part of new global capital reforms as part of a sweeping regulatory giveaway ahead of the Chancellor of the Exchequer’s Mansion House speech later on Tuesday.  

CHINA (MNI): China To Quicken New Model For Real Estate
China will accelerate the development of a new model for real estate, promoting the renovation of urban villages and dilapidated houses, according to the Central Urban Work Conference held in Beijing during the past two days, the state-run CCTV News reported.

CHINA (MNI): China CPI To Rise Moderately In H2 - NBS
China’s CPI is expected to moderately rise in H2, following June's 0.1% change, according to Sheng Laiyun, spokesperson of the National Bureau of Statistics, citing positive economic trends and the increasing effectiveness of demand boosting policies.

THAILAND (BBG): Thailand Unexpectedly Delays Naming New Central Bank Chief
Thailand’s expected appointment of veteran banker Vitai Ratanakorn as the next central bank governor was delayed by at least a week, a sudden twist in the selection process for the closely-watched position. Before entering Tuesday’s cabinet meeting, Pichai told reporters he planned to propose the Bank of Thailand appointment, but later said more time was needed and that the cabinet will consider the matter next week.

DATA

MNI: GERMANY ZEW JUL ECONOMIC EXPECTATIONS 52.7
MNI: GERMANY ZEW JUL CURRENT CONDITIONS -59.5

MNI: EUROZONE MAY IP +1.7% M/M, +3.7% Y/Y

MNI: SPAIN JUN HICP +0.7% M/M, +2.3% Y/Y

MNI: UK BRC JUN BY VALUE SHOP SALES LFL +2.7% YY, TOTAL +3.1% YY

EGBS: German Curve Bull Flattens; French Budget Eyed This Afternoon

Bund futures are up 45 ticks today at 129.63, but remain below initial resistance at 130.06 (20-day EMA). That keeps a bearish theme intact, with support to monitor at 129.08 (July 14 low). Market moving headline flow has been relatively light, with no obvious trigger for today’s strength in major EGB futures.

• The German curve has bear flattened, with 30-year yields down 4.5bps at 3.197%. A reminder that 30-year yields met resistance at the April 2023 high of 3.263% yesterday.
• Germany will sell E5bln of the new 1.90% Sep-27 Schatz at 1030BST today.
• At 1500BST/1600CET, French PM Bayrou is set to unveil the main proposals of the 2026 state budget, including spending cuts and tax hikes that risk collapsing his minority government. French political risks gradually been priced back into OATs in recent weeks, particularly when assessing French debt against semi-core/periphery peers.
• 10-year EGB spreads to Bunds are within 0.5bps of yesterday’s closing levels.
• Eurozone industrial production was much stronger-than-expected in May, with volatile Irish data once again a likely culprit. On a monthly SA basis, production rose 1.7% M/M, above the 1.0% consensus and April’s -2.2% (revised up from -2.4% initial).
• Meanwhile, the German July ZEW survey was also stronger-than-expected.
• Global macro focus remains on today’s US CPI report.

GILTS: Firmer & Flatter, Mansion House Eyed After U.S. CPI

Core global FI markets have rallied this morning, curves flattening, pointing to lightening up of existing shorts & curve steepeners ahead of U.S. CPI data.

• Gilt futures +30 at 92.13 last, nearing initial resistance at 92.19, which protects the 20-day EMA (92.29). Bears remain in technical control.
• Yields 1-4bp lower, curve flatter.
• There hasn’t been much in the way of fresh headline cues, even alongside a burst of demand for bonds around the middle of the London morning.
• FT reports suggesting that U.S. President Trump privately encouraged Ukrainian President Zelenskyy to strike Moscow if possible (on July 4) provided some background support in more recent trade, although the bulk of the move happened before those headlines crossed.
• Elsewhere, the OBR reaffirmed that shifts in the bond buyer base and unexpected shocks present ongoing risks to the UK government bond market.
• This morning’s GBP1bln PGT of the 4.25% Jun-32 gilt was well received, with infrequency of primary supply and limited size helping generate solid demand and firm pricing metrics.
• BoE-dated OIS little changed on the day, showing ~57bp of cuts through year-end. A reminder that a particularly soft REC labour market report and dovish comments from BoE Governor Bailey resulted in dovish repricing on Monday.
• Note that Chancellor Reeves will appear twice today, more prominently this evening, at the Mansion House event. BoE Governor Bailey will also speak at that event (21:00).
• Meanwhile, CPI (Wednesday) and labour market (Thursday) data headline this week’s domestic calendar.

FOREX: Greenback Reversing Monday Gains Ahead of US CPI

• The USD index sits in moderate negative territory on Tuesday, taking the DXY back to unchanged levels on the week. Cautious sentiment precedes the June inflation report from the US, which will be the final input for the Fed and no doubt prompt some further commentary from President Trump.
• This dynamic has allowed AUD and NZD to outperform on the session, eroding the majority of the prior day’s declines. Bolstered sentiment in the equity tech space has been supportive, buoyed by early headlines that chip/AI bellwether Nvidia would resume sale of its H20 chip to China (with US government approval). Additionally, China’s Q2 GDP print was slightly better than forecast (y/y growth holding above 5%).
• The impressive USDJPY rally stalled overnight at 147.89, just 14 pips shy of the June highs of 148.03. The pair has since slipped back to unchanged on the day around 147.65. The key technical point for the pair remains at 148.65 as we approach the significant US data, the May 12 high and a reversal trigger.
• Markets remain cautious surrounding the upcoming upper house election on Sunday in Japan, with latest polls underlining the prospect that the governing bloc may struggle this weekend, with the focus remaining on the relentless rise in longer-dated JGB yields.
• GBP has been consolidating its relatively weak position this week, just below 1.3450. A UK jobs report from KPMG REC showed a particularly pessimistic/stagflationary set of figures on Monday, keeping markets on a pessimistic footing ahead of UK inflation and labour market data later this week. EURGBP reached a recovery high this morning at 0.8697, further narrowing the gap with the key bull trigger at 0.8738, the 2025 high and near-term upside target.
• Swiss Franc strength continues to be notable as CHFJPY rose to a fresh record high of 185.73 overnight. It is also worth highlighting that EURCHF dipped to a near 3-month low on Monday, slipping back below the 0.9300 mark. 

EQUITIES: Stocks Boosted by NVIDIA Resuming H20 Chips Shipments

The trend condition in S&P E-Minis remains bullish and the contract is trading at its recent highs. Recent activity has resulted in a break of resistance at 6128.75, the Jun 11 high. A bull cycle in Eurostoxx 50 futures remains in play and the latest pullback appears corrective. Recent gains have exposed key resistance and the bull trigger at 5486.00, the May 20 high.

• Japan's NIKKEI closed higher by 218.4 pts or +0.55% at 39678.02 and the TOPIX ended 2.5 pts higher or +0.09% at 2825.31.
  Elsewhere, in China the SHANGHAI closed lower by 14.651 pts or -0.42% at 3504.999 and the HANG SENG ended 386.8 pts higher or +1.6% at 24590.12.
• Across Europe, Germany's DAX trades higher by 56.13 pts or +0.23% at 24215.81, FTSE 100 lower by 2.49 pts or -0.03% at 8995.35, CAC 40 up 6.7 pts or +0.09% at 7816.23 and Euro Stoxx 50 up 15.42 pts or +0.29% at 5387.93.
• Dow Jones mini down 56 pts or -0.13% at 44636, S&P 500 mini up 19.75 pts or +0.31% at 6331, NASDAQ mini up 128.75 pts or +0.56% at 23164.75.

COMMODITIES: Gold Holds Well Above 50-dma

A bull cycle in Gold that started Jun 30, remains intact and the yellow metal is holding on to its recent gains. Note that medium-term trend conditions are bullish - moving average studies are in a bull-mode position highlighting a dominant uptrend. WTI futures maintain a bearish tone following the reversal from the Jun 23 high, and recent gains still appear corrective. Support to watch is the 50-day EMA, at $65.46. The average has been pierced, a clear break of it would signal scope for a deeper retracement.

• WTI Crude down $0.21 or -0.31% at $66.73
• Natural Gas down $0.04 or -1.04% at $3.431
• Gold spot up $17.43 or +0.52% at $3361.14
• Copper up $0.05 or +0.01% at $555.2
• Silver up $0.12 or +0.32% at $38.2789
• Platinum up $7.89 or +0.58% at $1378.02

Date	GMT/Local	Impact	Country	Event
15/07/2025	1230/0830	***	CA	CPI
15/07/2025	1230/0830	**	CA	Monthly Survey of Manufacturing
15/07/2025	1230/0830	**	US	Empire State Manufacturing Survey
15/07/2025	1230/0830	***	US	CPI
15/07/2025	1230/0830	***	US	CPI
15/07/2025	1230/0830	***	US	CPI
15/07/2025	1255/0855	**	US	Redbook Retail Sales Index
15/07/2025	1300/0900	*	CA	CREA Existing Home Sales
15/07/2025	1315/0915		US	Fed Vice Chair Michelle Bowman
15/07/2025	1645/1245		US	Fed Governor Michael Barr
15/07/2025	1845/1445		US	Boston Fed's Susan Collins
15/07/2025	2000/2100		GB	Mansion House: Chancellor Reeves and BOE Bailey
15/07/2025	2345/1945		US	Dallas Fed's Lorie Logan
16/07/2025	0600/0700	***	GB	Consumer inflation report
16/07/2025	0800/1000	***	IT	HICP (f)
16/07/2025	0900/1100	*	EU	Trade Balance
16/07/2025	1100/0700	**	US	MBA Weekly Applications Index
16/07/2025	1215/0815	**	CA	CMHC Housing Starts
16/07/2025	1230/0830	***	US	PPI
16/07/2025	1315/0915	***	US	Industrial Production
16/07/2025	1315/0915		US	Cleveland Fed's Beth Hammack
16/07/2025	1400/1000		US	Fed Governor Michael Barr
16/07/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
16/07/2025	1800/1400		US	Fed Beige Book
16/07/2025	2230/1830		US	New York Fed's John Williams