July 16 Financial Breakfast: Major news from the US and China! The US dollar surged, gold plummeted by $46, and the Nasdaq and NVIDIA reached new historical highs

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The market is optimistic about the progress of U.S.-China trade, with U.S. Treasury Secretary Janet Yellen stating that the originally scheduled deadline for the U.S.-China tariff ceasefire next month is flexible, and both sides will hold talks in the coming weeks. Advanced Micro Devices and NVIDIA received approval from the U.S. government to ease restrictions on chip exports to China, driving the Nasdaq index to a new historical high. The U.S. Consumer Price Index (CPI) for June accelerated to an annual increase of 2.7%, but core CPI has been below expectations for the fifth consecutive month. The impact of tariffs on inflation may accelerate in the second half of the year, making a rate cut by the Federal Reserve in July unlikely. U.S. Treasury yields and the dollar surged, while gold plummeted by $46.

The three major U.S. stock indices showed mixed results, with the Dow Jones down 0.98%; the S&P 500 down 0.4%; and the Nasdaq up 0.18%, closing at 20,677 points, setting a new historical high. The China Golden Dragon Index rose 2.76%. Among popular stocks, NVIDIA closed up 4% at $170.7; Advanced Micro Devices rose 6.4%; while Tesla fell 1.9%. Major Wall Street banks have begun to report earnings, with JP Morgan down 0.7%; Wells Fargo down 5.5%; in contrast, Citigroup rose 3.7%, reaching a closing high since 2008.

The 10-year U.S. Treasury yield rose 6 basis points to 4.49%, the dollar index increased by 0.55%, marking a four-day rise to 98.69; the euro/dollar fell 0.54%, dropping below 1.1600. The dollar/yen rose 0.76%, rebounding to 149.0; gold fell 0.56%, facing resistance at $3,360 for two consecutive declines; WTI crude oil fell 0.12%; Bitcoin dropped 1.82%, marking the largest single-day decline in a month; Ethereum rose 3.92% to $3,140.

Macro News

U.S. Treasury Secretary hints: No need to worry about the deadline for the suspension of additional tariffs on U.S.-China trade

According to reports cited by Global Times, U.S. Treasury Secretary Janet Yellen stated in an interview with Bloomberg Television that the upcoming deadline for the U.S.-China tariff ceasefire next month is flexible, and market participants need not worry about the deadline. The current negotiation situation between China and the U.S. is positive, and both sides are expected to hold talks in the coming weeks.

It is noteworthy that NVIDIA and another chip giant, AMD, announced that they have received approval from the U.S. Department of Commerce to export designated chips to China. U.S. Secretary of Commerce Howard Lutnick stated that the policy allows Chinese companies to obtain a certain quantity of next-generation U.S. AI chips, maintaining China's reliance on U.S. technology. The new measures are part of an earlier agreement reached between the U.S. and China, allowing the U.S. to exchange for Chinese rare earth and magnet products.

Trump: Tariff rate on Indonesian goods exported to the U.S. is 19%

Trump stated that the U.S. government has reached a trade agreement with Indonesia, whereby U.S. goods imported into Indonesia will not be subject to tariffs, while goods imported from Indonesia into the U.S. will incur a 19% tariff. Additionally, the U.S. will gain full access to the Indonesian market. Reuters quoted a senior official from Indonesia's Coordinating Ministry for Economic Affairs as saying that authorities are preparing a joint statement to be issued by the U.S. and Indonesia, explaining the scale of reciprocal tariffs on Indonesia, including tariff agreements, non-tariff, and commercial arrangements Last week, Trump sent a letter to the President of Indonesia, threatening to impose a 32% tariff on the country starting August 1.

U.S. core CPI has been below expectations for five consecutive months, and the impact of tariffs may accelerate in the second half of the year.

The U.S. Consumer Price Index (CPI) for June rose 0.3% month-on-month, in line with expectations; it increased 2.7% year-on-year, with an expectation of a 2.6% rise, and a previous value of a 2.4% increase. The core CPI rose 0.2% month-on-month, with an expectation of a 0.3% increase; it rose 2.9% year-on-year, with an expectation of a 3% increase, and a previous value of a 2.8% rise.

Notably, categories significantly affected by tariffs (such as toys, furniture, appliances, and clothing) have seen price increases, indicating that companies are beginning to pass higher import costs onto consumers. However, the core CPI being below expectations has raised questions about the extent to which tariff policies will impact consumer prices. Goldman Sachs predicts that tariffs will exert greater upward pressure on monthly inflation in the coming months, with the core CPI monthly increase expected to fall between 0.3% and 0.4%, and forecasts a year-on-year core CPI increase of 3.1% by December 2025, with a 2.3% increase excluding tariff impacts. Chief Economist Joseph Briggs stated that if the June data does not raise alarms, it will support the forecast of a rate cut starting in September, with a total reduction of 75 basis points for the year.

From the market pricing perspective, the likelihood of the Federal Reserve cutting rates in September remains around 60%. Traders still believe that the chance of a rate cut this month is only 5%.

Collins: U.S. economy is robust, Fed can make decisions patiently.

Collins, who has voting rights on monetary policy at the Federal Open Market Committee (FOMC) this year, stated in a pre-released speech that the U.S. economic situation is robust, allowing the Fed to remain patient and carefully assess the latest data before making interest rate policy decisions. She believes that maintaining a proactive and patient stance is appropriate for the current environment.

Collins pointed out that the data reflects limited impact of U.S. tariff measures on current inflation, possibly because companies have absorbed some costs, resulting in price increases being lower than expected. She estimates that the core Personal Consumption Expenditures (PCE) price index, which the Fed considers an inflation indicator, will remain close to 3% this year before gradually declining. The current core PCE index stands at 2.7%.

OPEC maintains its forecast for oil demand growth unchanged.

The Organization of the Petroleum Exporting Countries (OPEC) stated that despite trade conflicts, global economic performance in the second half of the year may be better than expected, and refinery crude oil absorption will remain high to meet the increased travel demand during the summer, which helps support the demand outlook. OPEC noted that the performance of India, China, and Brazil has been stronger than expected so far, while the U.S. and Eurozone continue to rebound from last year. Therefore, economic growth in the second half of 2025 may be better than currently expected.

The report indicated that as refineries complete maintenance, global refinery crude oil absorption in June significantly increased by 2.1 million barrels per day compared to May, which is a sign of strengthening in the oil market, and stated that refinery processing volumes may remain high. The organization expects global refinery absorption, particularly in the U.S., to keep processing volumes high to meet seasonal increases in transportation fuel demand, especially for gasoline, jet fuel, and residual fuel U.S. Cryptocurrency Bill Fails to Pass House Procedural Vote

The House of Representatives voted 233 to 196 to reject a procedural vote for fast-tracking bills including the Stablecoin Act (GENIUS Act), the Asset Regulation Act (CLARITY Act), and another bill to prevent the Federal Reserve from establishing a central bank digital currency. This marks a rare failure for a Trump-backed bill in the Republican-controlled House. The latest situation has dashed the hopes of the cryptocurrency sector for swift legislative progress. U.S. listed companies related to cryptocurrencies saw their stock prices pressured on Tuesday.

The outcome surprised House Republican leaders, who immediately canceled the remaining voting process. Thirteen Republican representatives joined Democrats in voting against the bills, which contributed to their failure.

Market Overview

U.S. Stocks: The three major U.S. stock indices were mixed, with the Dow Jones down 0.98%, the S&P 500 down 0.4%, and the Nasdaq up 0.18%.

European Stocks: European stock markets generally fell, with the German DAX 30 index down 0.42%. The French CAC 40 index fell 0.54%. The UK FTSE 100 index dropped 0.66%.

Bond Market: The yield on the U.S. 10-year benchmark Treasury bond was about 4.49%, up 6 basis points from the previous trading day.

Commodities: Gold fell 0.56% to $3,324 per ounce. WTI crude oil dropped 0.12% to $66.75 per barrel.

Foreign Exchange: The U.S. dollar index rose 0.55% to 98.58. The USD/JPY rose 0.76%, while the EUR/USD fell 0.54%.

Cryptocurrency: Bitcoin fell 1.76% in the last 24 hours, currently priced at $117,571. Ethereum rose 4.1% in the last 24 hours, currently priced at $3,133.

Hong Kong Stocks: The Hang Seng Index night market futures closed at 24,622 points, up 94 points, with a premium of 32 points compared to yesterday's closing of 24,590 points, with a turnover of 15,766 contracts. The National Index night market futures closed at 8,902 points, with a premium of 25 points compared to yesterday's closing.

Global Company News

JP Morgan's Adjusted Earnings Per Share Exceed Expectations in Q2

The U.S. earnings season has kicked off. JPMorgan Chase reported a profit of $14.99 billion for the second quarter ending June 30, down 17% year-on-year but up 2% quarter-on-quarter. Earnings per share were reported at $5.24, with adjusted earnings per share at $4.96, exceeding expectations.

JP Morgan's net income for the last quarter was reported at $45.68 billion, better than analysts' estimates of $44.06 billion, down 10.4% year-on-year and 1% quarter-on-quarter. Net interest income was reported at $23.3 billion, up 2% year-on-year, slightly below analysts' expectations; non-interest income was $22.4 billion, down 20%.

CEO Jamie Dimon stated that the U.S. economy remained resilient in Q2, and tax reforms and potential regulatory easing would benefit the economic outlook. However, he warned that significant risks remain, including tariffs and trade uncertainties, worsening geopolitical situations, the federal government's massive fiscal deficit, and rising asset prices, emphasizing that the group is prepared to respond to various scenarios Trump announces $92 billion technology and energy project in Pennsylvania

Trump announced that 20 leading technology and energy companies have committed a total investment of $92 billion in Pennsylvania to develop artificial intelligence and energy infrastructure across the state.

The investments from several companies include the construction of new data centers, upgrades to power generation and grid infrastructure, as well as artificial intelligence training and apprenticeship programs, highlighting the U.S. government's commitment to ensuring America's dominance.

Reports suggest SpaceX is considering internal stock sale, company valuation rises to $400 billion

Foreign media cited sources revealing that Elon Musk's SpaceX is considering an internal stock sale, which would bring the company's valuation to approximately $400 billion. The report indicated that the placement price of $212 per share is significantly higher than the $185 per share valuation of SpaceX in December last year, which was $350 billion. It is reported that SpaceX will repurchase up to $1.25 billion worth of stock from employees and other shareholders.

Today's key news preview

UK June CPI month-on-month

UK June Retail Price Index month-on-month

Eurozone May seasonally adjusted trade balance

U.S. June PPI year-on-year

U.S. June PPI month-on-month

U.S. June industrial production month-on-month

Federal Reserve's Harker delivers a speech

Federal Reserve Governor Barr delivers a speech

U.S. EIA crude oil inventory for the week ending July 11

Federal Reserve releases Beige Book on economic conditions

Federal Reserve's Williams delivers a speech