The ECB left interest rates unchanged yesterday, as widely expected, with Christine Lagarde saying the central bank is now “on hold” and in “wait and see” mode as it awaits further developments in relation to the current EU-US trade talks in particular. The market has pared back expectations for any further policy easing though and is no longer pricing in a full 25bps cut in the deposit rate from the current 2%. Despite this, the euro is slightly softer against the dollar from yesterday morning, trading at around $1.1750, though it is firmer against sterling, hovering above £0.87 (and closing in on its 2025 to date high of circa £0.8740 in mid-April). The latter largely reflects the weakness of the pound – which has also fallen against the dollar, to around $1.3480 – following the release of some softer than expected UK economic data over the past 24 hours, including retail sales a short while ago, copper-fastening the case for another Bank of England rate cut at next month’s meeting.
Yesterday’s Events
The paring back of ECB rate cut expectations has contributed to a jump in German government bond yields, with 2- and 10-year yields both up around 10bps from Wednesday’s close. UK yields are largely unchanged over the same period, reflecting the soft economic data, while US yields are marginally higher. Equity markets took a breather yesterday, following a solid performance the previous day, chalking up very modest gains, though the S&P 500 still closed at a new all-time high.
This morning’s retail sales data in the UK show spending volumes rose by 0.9% in June, shy of the 1.2% increase expected and only partially reversing May’s fall of almost 3%, while for Q2 as a whole sales rose by just 0.2% from Q1. Meanwhile, yesterday’s PMI data showed a decline in the composite index to 51.0 in July from 52.0 in June, “indicative of the economy struggling to expand” according to the release accompanying the data.
The Day Ahead
Looking to the day ahead, economic data due include money supply/credit growth in the Euro area, the IFO business confidence index in Germany, and durable goods orders in the US, while the ECB publishes its latest Survey of Professional Forecasters.
Author: Brian Cuddy
Tel: 1800 30 30 03 / +353 (0)1 790 0000
24 Jul 2025
Today's Talking Points 24.07.2025
Market Commentary
The euro bounced off lows of not far off $1.17 against the dollar late yesterday after the FT reported that the EU is closing in on a trade deal with the US which would see it ‘accept’ a 15% tariff. It is trading at around $1.1770 this morning, and at about £0.8675 against sterling (largely unchanged from yesterday morning), ahead of the ECB’s latest interest rate announcement this afternoon. The pound has also gained ground against the US currency, trading at about $1.3565. The ECB is widely expected to keep the deposit rate unchanged at 2%, having cut at each of its previous meetings this year, and is likely to keep its options open regarding any further reduction as it awaits some clarity on the EU’s trade negotiations with the US. Regarding the euro’s exchange rate, while it is off its early July highs, it is running ahead of the levels assumed by the ECB in its June growth and inflation projections, so Christine Lagarde is likely to face some questions on the currency at today’s post-meeting press conference.
Yesterday’s Events
US equites rallied into the New York close on the back of the report of a possible US-EU trade deal, building on earlier gains following the announcement of a deal between the US and Japan, with the S&P ending about 0.8% higher on the day. European stocks, which had underperformed over the past few sessions, added more than 1% yesterday and they are up another 1% or so at the open this morning. In government bond markets, US, German and UK yields all ended higher yesterday (by around 4-bps in the 10-year area), partly in response to the news on the trade front, and they are nudging higher again this morning.
The FT reported that the US and EU are ‘closing in on a trade deal’ that would include a 15% tariff imposed by the US on European imports, citing three people familiar with the situation, with exemptions for “some products such as aircraft, spirits and medical devices”. According to the report, the 15% would include the 10% universal rate set by Trump and “preexisting tariffs” in place before Trump took office, and would apply to cars, a decrease from the current 27.5%.
The Day Ahead
For the day ahead, as well as the ECB meeting, economic data due include flash PMIs for July in the main economies (Euro area, UK and US), and new homes sales and weekly jobless claims in the US.
Author: Brian Cuddy
Tel: 1800 30 30 03 / +353 (0)1 790 0000
23 Jul 2025
Today's Talking Points 23.07.2025
Market Commentary
Japanese equity markets have advanced strongly overnight, up almost 4%, after Donald Trump announced that a trade ‘deal’ had been reached with Japan – “perhaps the largest deal ever made” – including a 15% tariff on exports to the US, lower than the 25% that was due to come into effect on August 1st. Japanese bond yields have spiked higher, by around 8bps in the case of 10-year yields, while the yen, though bouncing around against the dollar, is not much changed overall. Elsewhere in FX, the euro and sterling have both gained some more ground against the US currency, trading at about $1.1745 and $1.3545 respectively this morning, while EURGBP is at around £0.8670 having reached almost £0.87 during yesterday’s session.
Yesterdays Events
The jump in Japanese bond yields is spilling over to other markets with US 10-year yields 3-4bps higher overnight, reversing a fall the occurred yesterday, and German and UK yields also nudging up at the start of play this morning. European equity markets have opened in positive territory (+1%) following the gains in Asia overnight, while the futures market points to a positive open for US stocks later today as well.
In addition to the deal with Japan, Trump has also announced trade agreements with the Philippines and Indonesia with both facing tariffs of 19% on their exports to the US. As in the case of Japan, this is ahead of the 10% tariff that was applied to most countries during the 90-day pause period following the announcement of ‘reciprocal’ tariffs on April 2nd (Liberation Day).
In relatively conciliatory remarks yesterday, US Treasury Secretary Bessent said “there’s nothing that tells me that (Fed Chair Powell) should step down right now,” adding that If he wants to see his term through to next May, then “I think he should.” More witheringly, Trump said Powell is doing a bad job but “he’s going to be gone pretty soon anyway,” as he again said interest rates should be 300bps lower than they are currently.
The Day Ahead
It’s another quiet day ahead in terms of economic data with just consumer confidence in the Euro area and existing home sales in the US.
Author: Brian Cuddy
Tel: 1800 30 30 03 / +353 (0)1 790 0000
22 Jul 2025
Today's Talking Points 22.07.2025
Market Commentary
The dollar was on the back foot yesterday falling against a broad range of currencies, though there didn’t appear to be any particular catalyst for the move lower. It shed more than 1% against the yen, as the latter regained some of the ground it had lost late last week ahead of elections in Japan over the weekend, and fell to lows north of $1.17 and $1.35 against the euro and sterling, though it has since recovered a little to around $1.1690 and $1.3475 respectively. EURGBP is a touch firmer this morning at about £0.8675, the upper end of the very tight range of £0.86 to £0.87 that has prevailed during the month of July to date.
Yesterdays Events
US bond yields fell further yesterday, though they finished off their lows, with the long end of the curve outperforming as 10-and 30-year yields dropped by 4-5bps. German and UK yields caught up with the move lower in US yields than began late last week, with 10-year yields falling by 8-9bps on the day. In equity markets, European stocks ended lower for a second consecutive session, albeit only marginally so, while the S&P 500 retreated from it best levels of the day but still closed at a new all-time high.
In a television interview yesterday, US Treasury Secretary Bessent said there needs to be a review of “the entire Federal Reserve institution and whether they have been successful”, which certainly sounded ominous given concerns about the Fed’s independence in the face of ongoing criticism from the Trump administration for not cutting interest rates. He later clarified his remarks, saying the Fed should conduct an internal review of its non-monetary policy operations, adding that its independence in monetary policy-making “is a cornerstone of continued US economic growth and stability”.
Public finances data published in the UK a short while ago shows public sector net borrowing was £20.7 billion in June, almost £6.6 billion more than in June 2024 driven by an increase in debt interest repayments. For the financial year to date i.e. April-June borrowing was £57.8 billion, which was £7.5 billion more than in the same period of 2024 and the third-highest April to June borrowing since monthly records began (after those of 2020 and 2021). UK bonds are underperforming a touch this morning on the back of the data, with yields up 3bps or so at the start of play.
The Day Ahead
It is extremely quiet economic data-wise for the rest of the day with just a couple or regional surveys of economic activity due in the US. Here at home, the government publishes a revised National Development Plan (NDP) and the Summer Economic Statement.
Author: Brian Cuddy
Tel: 1800 30 30 03 / +353 (0)1 790 0000
21 Jul 2025
Today's Talking Points 21.07.2025
Market Commentary
The euro retreated from Friday’s highs of around $1.1670 against the dollar after the FT reported that Trump is seeking to impose a tariff of 15-20% on the EU, greater than the 10% currently in place (albeit but less than the 30% contained in the infamous letter), with the single currency ending lower for a second week running. Sterling also came off its best levels against the dollar, finishing lower for a third week in a row. They kick off this week trading at around $1.1630 and $1.3440 respectively, while EURGBP is hovering just above £0.8650 having traded in a relatively narrow range last week. The ECB meets on Thursday, with the euro’s exchange rate less problematic for the central bank now that it has fallen back from its 2025 highs in early July. Having cut the deposit rate by 200bps (to 2%) to date, and with monetary policy in a “good place” (in the vicinity of neutral) according to Christine Lagarde, the ECB is widely expected to stay on hold this week. The market expects one further 25bps reduction by the end of the year, but much may depend on what happens post August 1st, the ‘deadline’ for the EU and US to agree some sort of trade deal.
Yesterday’s Events
US government bond yields ended slightly lower on Friday after Fed member Waller said the central should cut interest rates at its meeting later this month, though they were largely unchanged on the week overall. German yields were a touch lower on the week, while UK bonds underperformed with yields edging up on the back of the latest UK inflation data. In equity markets, the S&P nudged down from Thursday’s all-time high to finish with gains for the week of around 0.5%, while European stocks were marginally lower on the week.
According to Friday’s FT report, Trump has escalated his demands on the EU following weeks of negotiations on a possible framework trade deal, seeking a minimum 15-20% tariff on US goods imports from the EU with increasingly limited exemptions and carve-outs. At the same time, Bloomberg reports that the EU continues to “formulate a plan for measures to respond to a possible no-deal scenario.”
The Day Ahead
Looking to the week ahead, Thursday’s ECB meeting will be the main focus for markets, while on the economic data front the key releases will be the flash PMIs for July in the main economies, also on Thursday. Other data of note include retail sales and consumer confidence in the UK on Friday.
Dealer Comments
Today's Talking Points 25.07.2025
Market Commentary
The ECB left interest rates unchanged yesterday, as widely expected, with Christine Lagarde saying the central bank is now “on hold” and in “wait and see” mode as it awaits further developments in relation to the current EU-US trade talks in particular. The market has pared back expectations for any further policy easing though and is no longer pricing in a full 25bps cut in the deposit rate from the current 2%. Despite this, the euro is slightly softer against the dollar from yesterday morning, trading at around $1.1750, though it is firmer against sterling, hovering above £0.87 (and closing in on its 2025 to date high of circa £0.8740 in mid-April). The latter largely reflects the weakness of the pound – which has also fallen against the dollar, to around $1.3480 – following the release of some softer than expected UK economic data over the past 24 hours, including retail sales a short while ago, copper-fastening the case for another Bank of England rate cut at next month’s meeting.
Yesterday’s Events
The paring back of ECB rate cut expectations has contributed to a jump in German government bond yields, with 2- and 10-year yields both up around 10bps from Wednesday’s close. UK yields are largely unchanged over the same period, reflecting the soft economic data, while US yields are marginally higher. Equity markets took a breather yesterday, following a solid performance the previous day, chalking up very modest gains, though the S&P 500 still closed at a new all-time high.
This morning’s retail sales data in the UK show spending volumes rose by 0.9% in June, shy of the 1.2% increase expected and only partially reversing May’s fall of almost 3%, while for Q2 as a whole sales rose by just 0.2% from Q1. Meanwhile, yesterday’s PMI data showed a decline in the composite index to 51.0 in July from 52.0 in June, “indicative of the economy struggling to expand” according to the release accompanying the data.
The Day Ahead
Looking to the day ahead, economic data due include money supply/credit growth in the Euro area, the IFO business confidence index in Germany, and durable goods orders in the US, while the ECB publishes its latest Survey of Professional Forecasters.
24 Jul 2025
Today's Talking Points 24.07.2025
Market Commentary
The euro bounced off lows of not far off $1.17 against the dollar late yesterday after the FT reported that the EU is closing in on a trade deal with the US which would see it ‘accept’ a 15% tariff. It is trading at around $1.1770 this morning, and at about £0.8675 against sterling (largely unchanged from yesterday morning), ahead of the ECB’s latest interest rate announcement this afternoon. The pound has also gained ground against the US currency, trading at about $1.3565. The ECB is widely expected to keep the deposit rate unchanged at 2%, having cut at each of its previous meetings this year, and is likely to keep its options open regarding any further reduction as it awaits some clarity on the EU’s trade negotiations with the US. Regarding the euro’s exchange rate, while it is off its early July highs, it is running ahead of the levels assumed by the ECB in its June growth and inflation projections, so Christine Lagarde is likely to face some questions on the currency at today’s post-meeting press conference.
Yesterday’s Events
US equites rallied into the New York close on the back of the report of a possible US-EU trade deal, building on earlier gains following the announcement of a deal between the US and Japan, with the S&P ending about 0.8% higher on the day. European stocks, which had underperformed over the past few sessions, added more than 1% yesterday and they are up another 1% or so at the open this morning. In government bond markets, US, German and UK yields all ended higher yesterday (by around 4-bps in the 10-year area), partly in response to the news on the trade front, and they are nudging higher again this morning.
The FT reported that the US and EU are ‘closing in on a trade deal’ that would include a 15% tariff imposed by the US on European imports, citing three people familiar with the situation, with exemptions for “some products such as aircraft, spirits and medical devices”. According to the report, the 15% would include the 10% universal rate set by Trump and “preexisting tariffs” in place before Trump took office, and would apply to cars, a decrease from the current 27.5%.
The Day Ahead
For the day ahead, as well as the ECB meeting, economic data due include flash PMIs for July in the main economies (Euro area, UK and US), and new homes sales and weekly jobless claims in the US.
23 Jul 2025
Today's Talking Points 23.07.2025
Market Commentary
Japanese equity markets have advanced strongly overnight, up almost 4%, after Donald Trump announced that a trade ‘deal’ had been reached with Japan – “perhaps the largest deal ever made” – including a 15% tariff on exports to the US, lower than the 25% that was due to come into effect on August 1st. Japanese bond yields have spiked higher, by around 8bps in the case of 10-year yields, while the yen, though bouncing around against the dollar, is not much changed overall. Elsewhere in FX, the euro and sterling have both gained some more ground against the US currency, trading at about $1.1745 and $1.3545 respectively this morning, while EURGBP is at around £0.8670 having reached almost £0.87 during yesterday’s session.
Yesterdays Events
The jump in Japanese bond yields is spilling over to other markets with US 10-year yields 3-4bps higher overnight, reversing a fall the occurred yesterday, and German and UK yields also nudging up at the start of play this morning. European equity markets have opened in positive territory (+1%) following the gains in Asia overnight, while the futures market points to a positive open for US stocks later today as well.
In addition to the deal with Japan, Trump has also announced trade agreements with the Philippines and Indonesia with both facing tariffs of 19% on their exports to the US. As in the case of Japan, this is ahead of the 10% tariff that was applied to most countries during the 90-day pause period following the announcement of ‘reciprocal’ tariffs on April 2nd (Liberation Day).
In relatively conciliatory remarks yesterday, US Treasury Secretary Bessent said “there’s nothing that tells me that (Fed Chair Powell) should step down right now,” adding that If he wants to see his term through to next May, then “I think he should.” More witheringly, Trump said Powell is doing a bad job but “he’s going to be gone pretty soon anyway,” as he again said interest rates should be 300bps lower than they are currently.
The Day Ahead
It’s another quiet day ahead in terms of economic data with just consumer confidence in the Euro area and existing home sales in the US.
22 Jul 2025
Today's Talking Points 22.07.2025
Market Commentary
The dollar was on the back foot yesterday falling against a broad range of currencies, though there didn’t appear to be any particular catalyst for the move lower. It shed more than 1% against the yen, as the latter regained some of the ground it had lost late last week ahead of elections in Japan over the weekend, and fell to lows north of $1.17 and $1.35 against the euro and sterling, though it has since recovered a little to around $1.1690 and $1.3475 respectively. EURGBP is a touch firmer this morning at about £0.8675, the upper end of the very tight range of £0.86 to £0.87 that has prevailed during the month of July to date.
Yesterdays Events
US bond yields fell further yesterday, though they finished off their lows, with the long end of the curve outperforming as 10-and 30-year yields dropped by 4-5bps. German and UK yields caught up with the move lower in US yields than began late last week, with 10-year yields falling by 8-9bps on the day. In equity markets, European stocks ended lower for a second consecutive session, albeit only marginally so, while the S&P 500 retreated from it best levels of the day but still closed at a new all-time high.
In a television interview yesterday, US Treasury Secretary Bessent said there needs to be a review of “the entire Federal Reserve institution and whether they have been successful”, which certainly sounded ominous given concerns about the Fed’s independence in the face of ongoing criticism from the Trump administration for not cutting interest rates. He later clarified his remarks, saying the Fed should conduct an internal review of its non-monetary policy operations, adding that its independence in monetary policy-making “is a cornerstone of continued US economic growth and stability”.
Public finances data published in the UK a short while ago shows public sector net borrowing was £20.7 billion in June, almost £6.6 billion more than in June 2024 driven by an increase in debt interest repayments. For the financial year to date i.e. April-June borrowing was £57.8 billion, which was £7.5 billion more than in the same period of 2024 and the third-highest April to June borrowing since monthly records began (after those of 2020 and 2021). UK bonds are underperforming a touch this morning on the back of the data, with yields up 3bps or so at the start of play.
The Day Ahead
It is extremely quiet economic data-wise for the rest of the day with just a couple or regional surveys of economic activity due in the US. Here at home, the government publishes a revised National Development Plan (NDP) and the Summer Economic Statement.
21 Jul 2025
Today's Talking Points 21.07.2025
Market Commentary
The euro retreated from Friday’s highs of around $1.1670 against the dollar after the FT reported that Trump is seeking to impose a tariff of 15-20% on the EU, greater than the 10% currently in place (albeit but less than the 30% contained in the infamous letter), with the single currency ending lower for a second week running. Sterling also came off its best levels against the dollar, finishing lower for a third week in a row. They kick off this week trading at around $1.1630 and $1.3440 respectively, while EURGBP is hovering just above £0.8650 having traded in a relatively narrow range last week. The ECB meets on Thursday, with the euro’s exchange rate less problematic for the central bank now that it has fallen back from its 2025 highs in early July. Having cut the deposit rate by 200bps (to 2%) to date, and with monetary policy in a “good place” (in the vicinity of neutral) according to Christine Lagarde, the ECB is widely expected to stay on hold this week. The market expects one further 25bps reduction by the end of the year, but much may depend on what happens post August 1st, the ‘deadline’ for the EU and US to agree some sort of trade deal.
Yesterday’s Events
US government bond yields ended slightly lower on Friday after Fed member Waller said the central should cut interest rates at its meeting later this month, though they were largely unchanged on the week overall. German yields were a touch lower on the week, while UK bonds underperformed with yields edging up on the back of the latest UK inflation data. In equity markets, the S&P nudged down from Thursday’s all-time high to finish with gains for the week of around 0.5%, while European stocks were marginally lower on the week.
According to Friday’s FT report, Trump has escalated his demands on the EU following weeks of negotiations on a possible framework trade deal, seeking a minimum 15-20% tariff on US goods imports from the EU with increasingly limited exemptions and carve-outs. At the same time, Bloomberg reports that the EU continues to “formulate a plan for measures to respond to a possible no-deal scenario.”
The Day Ahead
Looking to the week ahead, Thursday’s ECB meeting will be the main focus for markets, while on the economic data front the key releases will be the flash PMIs for July in the main economies, also on Thursday. Other data of note include retail sales and consumer confidence in the UK on Friday.