• APAC stocks were mostly subdued with the region cautious ahead of upcoming key events, including central bank announcements and the July 9th tariff deadline.
• US President Trump said 12 nations will receive tariff letters on Monday (deliveries to start from 17:00BST). Also, threatened 10% additional tariff for those aligned with BRICS.
• US Treasury Secretary Bessent said letters to trading partners will notify them that if no deal is reached, they will revert to April 2nd tariff levels; tariffs to take effect on August 1st.
• European equity futures indicate a quiet open with Euro Stoxx 50 future flat after the cash market closed with losses of 1% on Friday.
• DXY has kicked the week off on the front foot, antipodeans lag alongside the soft risk tone, EUR/USD remains on a 1.17 handle.
• Crude pressured after OPEC+ accelerated its output hike with an increase of 548k bpd for August (prev. 411k bpd increase).
• Looking ahead, highlights include German Industrial Output, Swedish CPIF (Flash), EZ Sentix & Retail Sales, BoE Gilt sale operation.

SNAPSHOT

US TRADE

EQUITIES

• US markets were closed on Friday for Independence Day.

TARIFFS/TRADE

• US President Trump said trade letters are signed and are going out on Monday addressed to 12 countries but declined to say which countries or the different tariff levels involved. Trump later commented that they will have a deal or letter with most nations done by July 9th and could send out 12 or 15 letters on tariffs on Monday.
• US President Trump posted "I am pleased to announce that the UNITED STATES TARIFF Letters, and/or Deals, with various Countries from around the World, will be delivered starting 12:00 P.M. (Eastern), Monday, July 7th"
• US President Trump posted "Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy."
• US Treasury Secretary Bessent said President Trump will send letters to trading partners notifying them if no deal is reached, they will revert to April 2nd tariff levels with the tariffs to take effect on August 1st, while Bessent added that they are close to several deals and expect to see some big announcements in the next days. Furthermore, Bessent said 100 smaller countries will get set a tariff rate and many never even contacted the US.
• White House Economic Adviser Hassett said it is possible that some trade negotiations will push past the deadline, while he added that trade deals with the UK and Vietnam provide guidelines for additional agreements with other countries, according to a CBS interview.
• EU diplomats said on Friday that EU negotiators failed to achieve a breakthrough in US trade talks and negotiations to continue into the weekend, while EU negotiators were looking to secure a US tariff pause extension if no wider trade deal is agreed. It was also separately reported that the US threatened the EU with a 17% tariff on food exports, according to FT.
• Japan’s tariff negotiator Akazawa held in-depth phone talks with US Commerce Secretary Lutnick on Thursday and Saturday, according to Japan’s government.
• China retaliated against the EU ban regarding public tenders for medical devices by imposing import restrictions on medical devices. China’s Finance Ministry said it is to exclude imports of medical devices exceeding CNY 45mln from the European Union from July 6th, while imports of medical devices from non-EU countries should not contain EU-made components worth more than 50% of the contract value.
• India and the US are likely to take the final decision on a mini trade deal in the next 24-48 hours (reported on Sunday), with an average tariff under the mini trade deal likely to be 10%, while talks have currently only been completed on a mini-trade deal and negotiations on a larger bilateral trade agreement will begin after July 9th, according to CNBC-TV18.
• Thailand is to offer the US more trade concessions to avert a 36% tariff with Thailand’s Finance Minister expected to submit the revised orders before July 9th with a proposal to boost bilateral trade volume and reduce Thailand’s USD 46bln trade surplus with the US by 70% within 5 years, according to Bloomberg.

NOTABLE HEADLINES

• US President Trump signed the One Big Beautiful Bill Act into law at the White House.
• Elon Musk launched a new political party and commented regarding why he changed his stance on Trump, as well as noted that increasing the deficit from USD 2tln under Biden to USD 2.5tln is insane and will bankrupt the US.

APAC TRADE

EQUITIES

• APAC stocks were mostly subdued following a lack of bullish catalysts from over the weekend and with the region cautious ahead of upcoming key events, including central bank announcements and the July 9th tariff deadline.
• ASX 200 marginally retreated amid weakness in miners and as gold producers suffered due to a decline in the precious metal, although the downside in the broader market was limited by resilience in defensives and ahead of tomorrow's RBA announcement where the central bank is widely expected to deliver a consecutive 25bps rate cut.
• Nikkei 225 was pressured following softer-than-expected growth in Labour Cash Earnings which resulted in the largest decline in Japan's real wages in almost two years, while automakers were weighed on by the ongoing US tariff threat.
• Hang Seng and Shanghai Comp conformed to the uninspired mood amid trade uncertainty and frictions with China retaliating against the EU ban on public tenders for medical devices by imposing import restrictions on medical devices.
• US equity futures (ES -0.5%, NQ -0.5%) remained subdued following the declines seen late last week during holiday-thinned conditions.
• European equity futures indicate a quiet open with Euro Stoxx 50 future flat after the cash market closed with losses of 1% on Friday.

FX

• DXY eked mild gains in quiet trade owing to the lack of drivers and with participants sidelined ahead of this week's key events including several central bank rate decisions, FOMC Minutes, and the July 9th tariff deadline, while the US is to begin sending tariff letters from today which are to take effect on August 1st. Furthermore, President Trump recently threatened an additional 10% tariff on any country aligning with anti-American BRICS policies.
• EUR/USD traded little changed amid light pertinent newsflow from the bloc, while trade uncertainty lingers after EU negotiators failed to achieve a breakthrough in US trade talks last week and with China retaliating against the EU ban regarding public tenders for medical devices by imposing import restrictions on medical devices from the EU.
• GBP/USD was lacklustre and conformed to the predominantly humdrum mood across the FX space, while a report that UK ministers are to launch a GBP 500mln scheme to help struggling families garnered very little reaction.
• USD/JPY saw two-way price action but ultimately gained with the yen not helped by softer-than-expected wages data.
• Antipodeans retreated amid the subdued risk appetite, softer yuan and ahead of the central bank rate decisions beginning with the RBA tomorrow which is expected to deliver a back-to-back rate cut.
• PBoC set USD/CNY mid-point at 7.1506 vs exp. 7.1626 (Prev. 7.1535).

FIXED INCOME

• 10yr UST futures traded in a narrow range following the lack of major fresh macro catalysts from over the weekend, but remained afloat amid the cautious risk tone.
• Bund futures were little changed amid a lack of drivers and as German Industrial Production and EU Retail Sales loom.
• 10yr JGB futures lacked firm direction despite the softer-than-expected wages data from Japan.

COMMODITIES

• Crude futures were pressured at the reopen after OPEC+ accelerated its output hike with an increase of 548k bpd for August which stoked some supply glut concerns.
• OPEC+ said eight member countries agreed to raise oil output by 548k bpd in August (prev. 411k bpd increases) and will next meet on August 3rd.
• Saudi Arabia set the August Arab light crude to Asia at plus USD 2.20/bbl vs Oman/Dubai average, while it set the OSP to NW Europe at plus USD 4.65 vs ICE Brent and set the OSP to the US at plus USD 3.90 vs ASCI.
• Qatar set the August Marine Crude OSP at Oman/Dubai plus USD 1.40/bbl and Land Crude OSP at Oman/Dubai plus USD 1.30.
• Spot gold retreated amid weakness across the commodities complex but remained above the USD 3,300/oz level.
• Copper futures declined amid the subdued risk appetite and trade uncertainty ahead of the July 9th tariff deadline.

CRYPTO

• Bitcoin heads into the European morning relatively flat after recovering from a brief dip beneath the USD 109k level.

NOTABLE ASIA-PAC HEADLINES

• China released a plan to expand the domestic service industry and help promote rural revitalisation.
• China signed an agreement with Brazil to strengthen cooperation in infrastructure, medicine and new energy.
• US President Trump said they pretty much have a deal on TikTok and the US will start talks with China regarding TikTok on Monday or Tuesday. It was separately reported that TikTok is building a new version of the app planned for the US with the existing app to eventually shut down in the US in March 2026, according to The Information.
• South Korea passed an expanded extra budget worth KRW 31.8tln.

DATA RECAP

• Japanese Labour Cash Earnings (May) 1.0% vs Exp. 2.4% (Prev. 2.3%, Rev. 2.0%)
• Japanese Real Cash Earnings (May) -2.9% vs Exp. -1.7% (Prev. -1.8%, Rev. -2.0%)

GEOPOLITICS

MIDDLE EAST

• Israeli military issued an evacuation order to people at Yemen’s ports of Hodeidah, Ras Isa and Al-Salif, as well as to those inside the Hodeidah power station, while it announced to carry out airstrikes in those areas due to military activities being conducted there. Israel's Defence Minister later confirmed military strikes on Houthi targets in Yemen's ports of Hodeidah, Salif, Ras Isa, as well as the Ras Qatib power plant
• A Liberia-flagged, Greek-owned bulk carrier was attacked 51NM off Yemen’s Hodeidah, while the UKMTO later announced that all crew abandoned a ship that was attacked southwest of Yemen’s Hodeidah.
• Israeli PM’s office said the changes requested by Hamas to the Qatari proposal are not acceptable to Israel, while the negotiating team will depart to Qatar for Gaza talks.
• Israeli PM Netanyahu said he is determined to ensure hostages’ return to Israel and remove the Hamas threat from Gaza, while he said his negotiators in ceasefire talks have clear instructions to achieve an agreement under conditions Israel has accepted. Furthermore, Netanyahu said ahead of his White House meeting that he believes the discussion with US President Trump can certainly help advance these results.
• US President Trump said he will discuss Iran with Israeli PM Netanyahu and noted Iran’s nuclear program was set back permanently but they may restart in a different location, while Trump also said there could be a Gaza deal during the week ahead.
• First session of indirect ceasefire talks between Israel and Hamas in Qatar ended inconclusively and the Israeli delegation does not have sufficient mandate to reach an agreement with Hamas as it has no real power, according to two Palestinian officials cited by Reuters.
• Hamas government office rejected a US State Department accusation that Hamas was involved in an attack on Americans at a Gaza Humanitarian Foundation site on Saturday.
• UK government re-established diplomatic relations with Syria.

RUSSIA-UKRAINE

• US President Trump said they won’t be sending patriot missiles to Ukraine but talked about it and noted they have to be protected, while he said Russian President Putin is worried about sanctions and understands it may be coming.
• Russian military forces gained control of Sobolivka in Ukraine’s Kharkiv region and Piddubne in Donetsk region.

GLOBAL NEWS

• Russian President Putin told BRICS through a video link that it is important to enhance cooperation at BRICS and the usage of national currencies, while he commented that the liberal globalisation model is becoming obsolete.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves has warned ministers that taxes will need to increase after the government U-turned on its welfare bill, despite repeated pledges not to increase the taxes of working people, according to CityAM.
• UK ministers are to launch a GBP 500mln scheme to help struggling families, according to FT.
• EU is to stockpile critical minerals due to war risk, according to FT.