EUROZONE T-BILL ISSUANCE: W/C 14 July

Reuters carrying comments from US Commerce Secretary Howard Lutnick, speaking to CNBC on the US-China trade framework struck after two days of talks in London. 

• Lutnick notes that US President Donald Trump and Chinese President Xi Jinping have to “approve final wording” of the deal. The tone of Trump’s Truth Social post earlier today suggests he is likely to endorse the agreement.
• Lutnick said: “China is going to approve all applications for magnets for US companies,” referring to rare earth components that are critical for a range of high-tech products.
• Lutnick appeared to suggest that the tariff rate agreed in London will be final: “You can say China tariff levels won't change from here.”
• On export controls, which come under the purview of his Commerce Department, Lutnick said the Chinese side “always wants to remove export controls,” but added "We are not going to give China our best chips.”
• Lutnick continued, “They've agreed we are going to examine how China can do more business with us.”
• In his ongoing testimony to the House Ways and Means Committee, Treasury Secretary Scott Bessent noted a short time ago that the Trump administration will continue to take a firm line on China’s industrial overcapacity. 
• Speaking more broadly on trade, Lutnick said, “deal after deal” will start coming next week. Bloomberg reports that EU negotiators see trade talks stretching beyond the July 9 deadline, despite an uptick in talks.

• US TSY 17W AUCTION: NON-COMP BIDS $564 MLN FROM $60.000 BLN TOTAL

European Commissioner for Trade and Economic Security Maros Sefcovic has confirmed the EU, UK and Spain have reached an agreement on the status of the British Overseas Territory of Gibraltar. Reuters reports the UK Foreign Office says that "The UK, alongside the gov't of Gibraltar, reaches a political agreement with the EU to protect British sovereignty, UK military authority, and secure Gibraltar's economic future. The agreement provides a practical solution to avoid the need for 'onerous checks' and long delays at the border." 

• The joint statement confirms that "the Parties agreed to establish dual Gibraltar and Schengen border checks at Gibraltar port and airport – to be carried out in full cooperation between the EU and UK/Gibraltar authorities, removing all checks at the crossing point between Gibraltar and La Linea [...]. For the EU, full Schengen checks will be carried out by Spain. For the UK, full Gibraltar checks will continue to be carried out as they are today. " The Daily Telegraph reported earlier the system will mirror that used for the Eurostar train service, with UK border guards checking passports first, then French (or in Gibraltar's case, Spanish) guards checking on British soil to ensure a frictionless exit.
• For the UK, retaining Gibraltar's ability to act as a strategic military base has been of paramount concern. It remains to be seen how Spain effectively policing entry to the British territory affects the operations of the UK armed forces on the rock.