• US President Trump said they will start sending letters regarding tariffs and 10 to 12 countries will get a letter on Friday, with tariffs to range from 10%-20% and 60%-70%, while countries are to start paying the new tariff on August 1st.
• US Treasury Secretary Bessent said to expect a flurry of trade deals before July 9th and expect to see about 100 countries get a minimum 10% reciprocal tariff, while he added they are going to be announcing several deals.
• US House voted 218-214 to pass President Trump’s sweeping tax cut and spending bill, sending it to President Trump to sign into law, while the White House said Trump will sign the bill on Friday at 17:00EDT/20:00BST.
• APAC stocks traded mixed with gains limited; European equity futures indicate a negative cash market open with Euro Stoxx 50 futures lower by 0.5% after the cash market closed with gains of 0.5% on Thursday.
• Looking ahead, highlights include German & French Industrial Orders, EZ, UK Construction PMI, Italian Retail Sales, EZ Producer Prices, Speakers include BoE's Taylor, ECB President Lagarde & Elderson, US Independence Day Holiday.
• Desk Schedule: The desk will shut for the week at 18:00BST/13:00EDT amid the US market holiday.

SNAPSHOT

LOOKING AHEAD

• Highlights include German & French Industrial Orders, EZ, UK Construction PMI, Italian Retail Sales, EZ Producer Prices, Speakers including BoE's Taylor, ECB President Lagarde & Elderson, US Independence Day Holiday.
• Desk Schedule: The desk will shut for the week at 18:00BST/13:00EDT amid the US market holiday.
• Click for the Newsquawk Week Ahead.

US TRADE

EQUITIES

• US stocks gained and the dollar strengthened, while Treasuries and gold sold off in the wake of strong jobs data in which Non-Farm Payrolls topped forecast and the Unemployment Rate unexpectedly declined, while wages metrics cooled and Jobless Claims also declined.
• The data releases continued to push out the narrative of a need for a Fed rate cut, especially in July, with Refinitiv money market pricing now seeing 51bps of cuts by year-end (vs. 66bps pre-data) and a 4% chance of a 25bps cut in July (vs. 25% pre-data).
• SPX +0.83% at 6,279, NDX +0.99% at 22,867, DJI +0.77% at 44,829, RUT +1.02% at 2,249.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said they will start sending letters regarding tariffs and 10 to 12 countries will get a letter on Friday, with tariffs to range from 10%-20% and 60%-70%, while countries are to start paying the new tariff on August 1st.
• US Treasury Secretary Bessent said to expect a flurry of trade deals before July 9th and expect to see about 100 countries get a minimum 10% reciprocal tariff, while he added they are going to be announcing several deals.
• Canada's Finance Minister reportedly sees a path to avoid the baseline US tariff, according to Bloomberg.
• US lifted the licence suspension for GE Aerospace to allow the sales of jet engines to China's COMAC.
• China's Commerce Ministry said China is reviewing applications for export licenses of controlled items in accordance with laws and regulations, while it hopes the US will continue to work with China in the same direction and further correct wrong practices. MOFCOM also noted that the US has informed China of cancelling restrictive measures against China and teams on both sides are stepping up efforts to implement the outcomes of the London framework.
• China's Foreign Minister Wang Yi said China is shortening rare earth export approvals for European companies.
• South Korea's Trade Minister Yeo is to leave for the US on Friday for tariff talks, while he noted that the US is demanding improved market access in the digital sector and he will actively consider requesting an extension to the tariff pause.

NOTABLE HEADLINES

• US House voted 218-214 to pass President Trump’s sweeping tax cut and spending bill, sending it to President Trump to sign into law, while the White House said Trump will sign the bill on Friday at 17:00EDT/20:00BST.
• US Treasury Secretary Bessent said there could be an increase in US financing needs based on yields and it is likely that they will use bills to refill the Treasury General Account, while he added that they will see US banks take up more of the debt issuance and debt-to-GDP is to be well into the 90% range by the end of President Trump’s term.
• US House Speaker Johnson said they will have a second reconciliation package in the fall, according to a Fox News interview.
• Fed's Bostic (2027 voter) noted significant risk that upward pressure on prices will be around for some time, while he also stated that US government debt at some point will have implications in the marketplace and crowd out other investments. Bostic added it will have implications for the efficacy of monetary policy and making interest rates more independent of the central bank.

APAC TRADE

EQUITIES

• APAC stocks traded mixed with gains limited despite the better-than-expected jobs data stateside which unwound some Fed rate cut bets, while the House also passed President Trump's sweeping tax cut and spending bill. Nonetheless, trade uncertainty lingered ahead of the July 9th tariff deadline and with President Trump noting that they will begin sending out letters today, although Treasury Secretary Bessent said to expect a flurry of trade deals ahead of the deadline.
• ASX 200 was rangebound as strength in tech and consumer discretionary was offset by losses across the commodity and resources sectors.
• Nikkei 225 traded indecisively amid recent currency moves and as strong Household Spending data supported the case for the BoJ to resume normalisation.
• Hang Seng and Shanghai Comp were mixed with the Hong Kong benchmark pressured, while the mainland is resilient as China plans subsidies for young children to boost the national birthrate, while the US lifted the license suspension for GE Aerospace on sales of jet engines to China's COMAC.
• US equity futures gradually pared some of their data-inspired advances in quiet trade with US participants on a long weekend due to Independence Day.
• European equity futures indicate a negative cash market open with Euro Stoxx 50 futures lower by 0.5% after the cash market closed with gains of 0.5% on Thursday.

FX

• DXY took a breather and held on to most its recent spoils after gaining on the back of the stronger-than-expected US jobs data which resulted in an unwinding of Fed rate cut bets, while there was also a breakthrough in Congress where the House voted to pass President Trump's sweeping tax cut and spending bill ahead of the Independence Day holiday with President Trump set to sign the bill into law on Friday.
• EUR/USD attempted to nurse some of the prior day's losses after giving way to the dollar strength although the rebound was limited with the single currency not helped by mixed Services PMI data from the bloc and after the ECB Minutes noted that keeping interest rates at their current levels could increase the risk of undershooting the inflation target in 2026 and 2027.
• GBP/USD traded steadily and ultimately held its ground after UK PM Starmer's recent attempts to instil confidence in Chancellor Reeves
• USD/JPY gradually pulled back from post-NFP highs after failing to sustain a brief return above the 145.00 level, with mild headwinds seen amid the flimsy risk appetite in Japan and after stronger-than-expected Japanese Household Spending data.
• Antipodeans were contained within tight parameters amid the somewhat indecisive risk tone and lack of pertinent tier-1 data.
• PBoC set USD/CNY mid-point at 7.1535 vs exp. 7.1688 (Prev. 7.1523)

FIXED INCOME

• 10yr UST futures traded sideways after slumping yesterday in reaction to the strong US jobs data which spurred some unwinding of Fed rate cut bets, while demand is also constrained by the closure of US cash markets for Independence Day.
• Bund futures struggled for direction following recent whipsawing and as German Industrial Orders loom.
• 10yr JGB futures were subdued after recent pressure from the strong US jobs report and after Japanese Household Spending accelerated at the fastest pace since at least 2022.

COMMODITIES

• Crude futures traded uneventfully after the prior day's lacklustre performance as demand was constrained ahead of the OPEC+ meeting with delegates said to discuss a 411k BPD output hike for August, while the US and Iran are also to resume nuclear talks in Oslo next week.
• OPEC+ delegates are discussing a 411k BPD output hike for August, according to Bloomberg.
• Spot gold gradually edged higher and clawed back some of the losses triggered by strong US jobs data.
• Copper futures were pressured amid the flimsy overnight risk sentiment and with US participants away for Independence Day.

CRYPTO

• Bitcoin marginally softened in range-bound trade and remained above the USD 109k level.

NOTABLE ASIA-PAC HEADLINES

• China is planning subsidies for young children to boost the national birth rate.
• Japanese government official said regarding household spending that the May Y/Y spending rose at the fastest pace since August 2022 and M/M spending rose by the most since March 2021.

DATA RECAP

• Japanese All Household Spending MM (May) 4.6% vs. Exp. 0.4% (Prev. -1.8%)
• Japanese All Household Spending YY (May) 4.7% vs. Exp. 1.2% (Prev. -0.1%)

GEOPOLITICS

MIDDLE EAST

• Mediators have moved closer to securing an Israel-Hamas ceasefire in Gaza, according to the FT. It was also reported that Hamas said it is discussing a ceasefire proposal with other Palestinian groups and will hand over its response once it concludes these talks, while US President Trump later commented we are going to know over the next 24 hours, when asked if Hamas agreed to the ceasefire deal.
• US Secretary of State Rubio spoke with Syria's Foreign Minister and affirmed he would consider further steps reviewing domestic and UN terrorist designations related to Syria, according to the State Department.
• Saudi Arabia's Defence Minister met with US President Trump and other officials at the White House to discuss de-escalation efforts with Iran, according to Fox News. It was separately reported that Saudi Arabia's Defence Minister spoke with Iran's chief of staff in a call following the meeting with US President Trump, according to an Axios reporter.
• An explosive drone was intercepted near Erbil airport in northern Iraq, according to a Kurdistan security service statement.

RUSSIA-UKRAINE

• US President Trump said he had a long call with Russian President Putin in which they talked about Iran and the war in Ukraine but added that there was no progress with Putin. Trump later commented that he will be speaking to Ukrainian President Zelensky on Friday and is disappointed with the conversation with Russian President Putin, while he doesn't think Putin is looking to stop.
• Kremin aide Ushakov said Russian President Putin and US President Trump spoke for nearly an hour and Putin told Trump that Russia will not step back from its goals in Ukraine, while they had a detailed discussion on Iran and the Middle East. Furthermore, Putin emphasised the importance of settling the Iran issue exclusively by diplomatic means and Trump again raised the issue of bringing the Ukraine conflict to a swift halt.
• Russian overnight drone attack on Kyiv damaged railways infrastructure in the city, while it was separately reported that Ukraine launched drones on Sergiyev Posad near Moscow with several explosions reported, according to TASS.

OTHER

• North Korea said the US fabricated the 'cyber threat' from North Korea and the Quad should stop unilateral coercive acts to change North Korea's position, according to KCNA.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves is to announce a review of workplace pension contributions, according to the FT.
• ECB's Nagel said no reason to rush on next rate cuts and the ECB must not get anxious if prices temporarily fall below 2%.
• ECB's Elderson said the link between heat and key economic indicators such as inflation and gross domestic product is too important to ignore, according to Bloomberg.
• ECB's Lagarde said they will do whatever must be done to reach the inflation target. Have price stability. The economic system needs to be more efficient and integrated before the EUR can increase its role as a global currency. Need to further cut trade barriers in Europe and simplify regulation, according to Reuters.