July 23 Financial Breakfast: US-Japan trade agreement reached! USD/JPY falls below 147, Bitcoin rises over 2%, gold hits a one-month high

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The progress of U.S. trade dominates market sentiment, with the 10-year U.S. Treasury yield, the dollar, and oil prices falling, reflecting investors' concerns about the global macroeconomic outlook. Goldman Sachs predicts that the U.S. economy is likely to enter a prolonged period of low growth. Trump announced that the U.S. has reached a trade agreement with Japan, with a tariff rate of 15% on Japan and $550 billion in Japanese investment in the U.S. Additionally, trade agreements have been reached between the U.S. and the Philippines and Indonesia, with a goods tariff of 19%. Trump also mentioned that he might visit China in the near future.

The three major U.S. stock indices showed mixed results, with the Dow Jones rising 0.4%; the S&P 500 slightly up 0.06%; and the Nasdaq down 0.39%, closing at 20,892 points; the China Golden Dragon Index climbed 1.7%. In terms of popular stocks, among the heavyweight stocks, NVIDIA fell 2.6%, the largest decline among Dow components; Tesla rose 1.1%; Alphabet rebounded 0.7%, marking its 10th consecutive day of gains; Meta retreated 1.1%, and Netflix slid 3.5%. General Motors (GM) saw its earnings impacted by tariff costs, with its stock price dropping 8.1%; defense contractor Lockheed Martin wrote off $1.6 billion for aerospace projects and helicopter divisions, causing its stock price to plunge 10.8%.

The 10-year U.S. Treasury yield fell to 4.34%, marking a five-day decline. The dollar index dropped 0.46%, approaching the critical support level of 97.0; the euro/dollar rose 0.5%, marking three consecutive days of increases. The dollar/yen fell 0.48%, slipping below 147.0; gold rose 1.03% to 3,431, reaching a new high in over a month; WTI crude oil fell 0.5%, stabilizing at $65.0; Bitcoin rose 2.2%, rebounding to touch the $120,000 mark; Ethereum fell 0.49%, ending a nine-day streak of gains.

Macro News

Trump: U.S. and Japan reach a trade agreement, with a tariff rate of 15% on Japan

Trump announced via social media that the U.S. has reached a trade agreement with Japan, with a tariff rate of 15% on Japan and $550 billion in Japanese investment in the U.S. Trump stated on his social platform that the U.S. has just reached a huge agreement with Japan, possibly the largest in history. He indicated that under his directive, Japan will invest $550 billion in the U.S., with the U.S. receiving 90% of the profits. This agreement will create hundreds of thousands of jobs. Trump also mentioned that perhaps most importantly, Japan will open its market for trade, including automobiles, trucks, rice, and other agricultural products and goods. Japan will pay the U.S. a 15% equivalent tariff. So far, there has been no response from Japan.

Additionally, Trump announced on Tuesday that the tariff on goods imported from the Philippines will be reduced from 20% to 19%, stating that a trade agreement has been reached with the Philippines, allowing the U.S. to impose a 19% tariff on goods from the Philippines, while goods shipped from the U.S. to the Philippines will be exempt from tariffs.

Trump stated that a trade agreement has been signed with Indonesia, where nearly all goods exported to Indonesia from the U.S. will be exempt from tariffs, effectively eliminating 99% of tariffs, while goods imported from Indonesia to the U.S. will be subject to a 19% tariff US-China Trade Progress: Trump May Visit China in the Near Future

U.S. Treasury Secretary Steven Mnuchin stated that he may discuss extending the deadline for the tariff increase set for August 12 during his meeting with Chinese Finance Minister Liu Kun next week.

Mnuchin told Fox Business that trade with China is in a very good state, and he believes that the relationship between the U.S. and China has actually reached a new level, with both sides having a very constructive relationship and being able to accomplish many things, as trade has stabilized at a good level.

On Tuesday, Trump mentioned again during a press conference at the White House that Xi Jinping had invited him to visit China, and he may undertake a milestone visit to China in the near future to address the increasingly tense trade and security situation between the two countries, predicting that a decision will be made soon. Reports indicate that both sides are discussing arrangements for Trump to visit Beijing around the end of October, before or after attending the Asia-Pacific Economic Cooperation (APEC) leaders' summit in South Korea, or that the two may meet during the summit. Another possibility is that Trump could visit China around the September 3 commemoration of the victory in the War of Resistance, although neither side has confirmed this information.

Goldman Sachs: U.S. Economy Expected to Enter a Long Period of Low Growth

Goldman Sachs Chief Economist Jan Hatzius believes that U.S. tariffs will impact inflation and that the U.S. economy will enter a long period of low growth. Tariffs will lead to rising prices, slow real wage growth, and weak consumer spending, which will offset the positive effects of a loose financial environment, resulting in moderate economic growth.

Hatzius mentioned that Wall Street generally expects the U.S. economic growth forecast for this year to be only 1.1%. He adjusted the average forecast for U.S. reciprocal tariffs from 10% to 15%, with an average tariff expected to be 14% this year, rising by another 3 percentage points next year.

Goldman Sachs also adjusted its forecast for the Personal Consumption Expenditures (PCE) price index, which the Federal Reserve views as an inflation indicator, now estimating it to be 3.3% this year and expected to fall to 2.7% next year. According to the latest assessment, Goldman Sachs estimates the probability of an economic recession to be 30%, which is double the market estimate.

Bowman: Independence in Monetary Policy Formulation is Very Important for the Federal Reserve

Federal Reserve Governor Michelle Bowman stated that the ability of the Federal Reserve to formulate monetary policy without political interference is "very important." In an interview with CNBC, she said, "It is very important that we maintain our independence in monetary policy"; she will later preside over a one-day bank regulatory meeting at the Federal Reserve.

Bowman was appointed to the Federal Reserve Board during President Trump's first term and was recently promoted by him to Vice Chair for Supervision. Trump has intensified his criticism of the Federal Reserve and Chairman Jerome Powell, accusing them of failing to lower interest rates according to his wishes. The U.S. Treasury Secretary stated that there is no need for Chairman Powell to step down immediately, and Powell should consider adjusting the scale of the Federal Reserve's non-monetary policy functions as part of his legacy International Monetary Fund: U.S. Tariff Policy Impacts Global Macroeconomy

The International Monetary Fund released a report on the 22nd local time, stating that the Trump administration's imposition of import tariffs on nearly all trading partners may further have a significant impact on the global macroeconomy. The report pointed out that the U.S. tariff increases will reduce global demand in the short term, leading to rising import prices and further exacerbating inflationary pressures. In addition, the uncertainty surrounding tariffs may weaken consumer and business confidence, intensifying volatility in financial markets. The report indicated that the U.S. tariff increases could lead countries to respond by further raising trade barriers to address the worsening trade imbalance, resulting in increased geopolitical economic fragmentation, which would have lasting damage to the global economy.

Brazilian President: If the U.S. insists on imposing a 50% tariff, a tariff war may break out

The U.S. plans to impose tariffs of up to 50% on Brazil starting August 1. Brazilian President Lula stated that Vice President Geraldo Alckmin is negotiating with the U.S. side along with the Brazilian Ministry of Foreign Affairs, and if the U.S. does not change its mind, when Brazil responds, a "tariff war" may break out between the two sides. Previously, Lula announced the establishment of an interdepartmental committee responsible for economic and trade negotiations and countermeasures to study how to implement specific measures based on the Economic Equivalence Act in response to U.S. tariffs and protect the Brazilian economy.

Market Trends

U.S. Stocks: The three major U.S. stock indices were mixed, with the Dow Jones rising 0.4%, the S&P 500 rising 0.06%, and the Nasdaq falling 0.39%.

European Stocks: European stock markets generally fell, with the German DAX 30 index down 1.09%. The French CAC 40 index fell 0.69%. The UK FTSE 100 index rose 0.12%.

Bond Market: The yield on the U.S. ten-year benchmark treasury bond is about 4.34%, down 4 basis points from the previous trading day.

Commodities: Gold rose 1.03%, reported at $3,431 per ounce. WTI crude oil fell 0.5%, reported at $65.45 per barrel.

Foreign Exchange: The U.S. dollar index fell 0.46%, reported at 97.39. The USD/JPY fell 0.48%, and the EUR/USD rose 0.5%.

Cryptocurrency: Bitcoin rose 2.19% in 24 hours, currently reported at $119,843. Ethereum fell 0.4% in 24 hours, currently reported at $3,739.

Hong Kong Stocks: The Hang Seng Index night market futures closed at 25,321 points, up 187 points, 191 points higher than yesterday's Hang Seng Index closing of 25,130 points, with a turnover of 13,329 contracts. The night market futures for the National Index closed at 9,146 points, 70 points higher than yesterday's National Index closing.

Global Company News

Texas Instruments Plummets Over 11% After-Hours, Earnings Outlook Falls Short of Optimistic Expectations

Texas Instruments plummeted over 11% after-hours. Texas Instruments reported second-quarter revenue of $4.45 billion, while analysts expected $4.36 billion. Second-quarter analog revenue was $3.45 billion, while analysts expected $3.41 billion. Second-quarter operating profit was $1.56 billion, while analysts expected $1.47 billion. Second-quarter EPS was $1.41, while analysts expected $1.35 Expected third-quarter revenue of $4.45 billion to $4.8 billion, analysts expect $4.57 billion. The third-quarter performance guidance does not include changes to the U.S. tax legislation.

Amazon to acquire wearable device startup Bee AI

Amazon has confirmed plans to acquire the wearable device startup Bee AI, but has not disclosed transaction details. Data shows that Bee produces a wristband priced at $49.99, resembling a Fitbit smartwatch. The device is equipped with artificial intelligence and a microphone, capable of listening to and analyzing conversations, providing summaries, to-do lists, and daily task reminders.

General Motors' second-quarter net profit fell 35.4% year-on-year

General Motors Company released its second-quarter earnings report on the 22nd, showing a loss of $1.1 billion for the quarter due to tariffs, resulting in a 35.4% year-on-year plunge in net profit to $1.9 billion. The report indicated that compared to $47.97 billion in the same period last year, the company's second-quarter revenue decreased by 1.8% to $47.12 billion. General Motors expects to lose $4 billion to $5 billion this year due to multiple tariffs. CEO Mary Barra stated in a letter to shareholders that the company will increase its investment in U.S. assembly plants by $4 billion to mitigate tariff risks and will reduce the expected cost increase due to tariffs by at least 30% through production adjustments, targeted cost control, and consistent pricing.

Today's news preview

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