• EU and US agreed on a trade deal with 15% tariffs; EU to buy USD 750bln in US energy, and make USD 600bln in investments.
• EC President von der Leyen later confirmed the 15% rate is for a vast majority of EU exports including cars, semiconductors and pharmaceuticals; 50% tariff on steel and aluminium remains.
• US and China are expected to extend the trade truce by 90 days, according to SCMP. Reuters suggested that talks are to begin in the “afternoon” in Sweden.
• European bourses cheer EU-US trade deal, but are off best levels; US futures are modestly higher.
• DXY picks up and EUR pulls back as participants digest the EU-US trade deal, whilst Antipodeans lag.
• Bonds were initially hit on the EU-US trade deal, but have since reversed to trade firmer on the session.
• Crude picks up on trade optimism and into OPEC+ JMMC, gold remains steady.
• Looking ahead, Dallas Fed Manufacturing Business Index, Treasury Financing Estimates, OPEC+ JMMC, US and China talks in Stockholm, Supply from the US.

TARIFFS/TRADE

EU-US TRADE DEAL

• US President Trump announced a deal with the EU involving a 15% tariff and stated the EU will buy USD 750bln in US energy and is opening up all countries, while he added the EU will purchase US military equipment and will make USD 600bln in US investments. Trump added that the deal is the biggest ever made and will be great for cars, as well as noted that agriculture is also to have a big impact. Furthermore, Trump said they are looking at deals with three to four other countries and countries will probably receive a letter of clarification or confirmation this week.
• European Commission President von der Leyen confirmed there will be 15% tariffs across the board and said the trade deal creates certainty and stability for businesses on both sides of the Atlantic. Von der Leyen said the deal reaffirms the transatlantic partnership and the 15% tariff rate is for a vast majority of EU exports including cars, semiconductors and pharmaceuticals, while she added that they agreed on zero-for-zero tariffs on certain agricultural products and on strategic products such as aircraft component parts and certain chemicals. Furthermore, she commented that tariffs will be cut and a quota system in place for steel, while there will be major purchases of US LNG and details on the trade deal framework will happen over the next few weeks.
• US senior administration official said the EU agreed to open markets to all but a few products, while President Trump suggested the EU buy USD 1tln of US energy during his term, but the EU settled at USD 750bln and agreed to 15% tariffs on autos, semiconductors and pharmaceuticals. The admin official stated that EU leaders accepted that US would stick to 50% tariffs on steel and aluminium and the EU wants to continue discussing steel and aluminium tariffs. The official stated that President Trump has the ability to change tariffs back if countries don't live up to their commitments and the EU lowered tariffs on many products in the agriculture sector, but not all. Furthermore, the aircraft investigation is still in progress in which the tariff will be zero for now and it is likely that aircraft won't face tariffs, but must wait for the probe to end, while the spirits issue is still to be decided and the US did not include it due to large EU agricultural surpluses.
• USTR Greer and Commerce Secretary Lutnick travelled to Scotland for the EU trade talks, while Lutnick stated the US will release the results of the Section 232 regarding chip imports in two weeks and separately commented that there are no more extensions to the August 1st deadline for tariffs.
• German Chancellor Merz said it is good that the EU and US reached a deal on tariffs and the deal avoids a conflict that would have hit the German economy, particularly in the autos sector, while Merz added that they protected their core interests even if he would have liked to see further facilitation of transatlantic trade.
• French European affairs minister said the trade deal between the EU Commission and the US will bring temporary stability, but it's still an unbalanced deal, while the minister added that the deal has merits of exempting certain key French sectors such as aeronautics, spirits and medicines.
• Dutch PM Schoof said the EU-US agreement is vital for an open economy like theirs, while he added that it is important to work out the details of the framework trade deal as quickly as possible.
• French trade minister on the EU-US framework trade deal, says more talks are needed concerning digital services; spirits should be exempted.
• "EU officials expect there to be a joint statement with the US on yesterday's deal - not-legally binding, working to have it ASAP. ", according to SCMP's Bermingham "This is expected to be along the lines of the US-Indonesia statement from roughly a week ago."
• EU Official says the EU has agreed to cut its car import duty to 2.50% as part of EU-US trade deal. EU official, on US/EU trade deal, says discussions ongoing regarding wines and spirits.
• Germany's engineering federation VDMA says US and EU must not make trade agreement a new normal; trade deal will cost German auto firms billions every year.
• German Chemicals Association VCI, on EU-US trade deal, says, has taken note of "certain chemicals" but do not know which are meant by this.
• German Economy Minister says there will be a requirement for some sectoral adaptation after the EU-US deal Need for further negotiations on aluminium and steel.

US-CHINA

• US President Trump is said to freeze export controls in order to secure a trade deal with China, according to FT. It was separately reported that US and China are expected to extend the trade truce by 90 days, according to SCMP.
• South Korea’s Finance Minister and Foreign Minister will meet with US counterparts this week, while South Korea is preparing a trade package and is drawing a mutually agreeable plan including a shipbuilding partnership. It was separately reported that South Korea suggested tens of billions of dollars worth of shipbuilding projects to the US in trade talks, according to Yonhap.
• UK government said PM Starmer is to meet US President Trump for wide-ranging talks in Scotland and they are expected to discuss progress on implementing the UK-US trade deal, hopes for a ceasefire in the Middle East, and applying pressure on Russia's Putin to end the war in Ukraine.
• Chinese Foreign Minister held a phone call with South Korean counterpart, says the two sides should jointly oppose "decoupling".
• A high-level delegation of US executives will travel to China this week to meet Chinese officials, in a visit organised by the US-China Business Council, according to Reuters sources; US government was not involved in organisation of visit.
• US-China trade talks to start Monday "afternoon" local time in Sweden, according to Reuters sources.

OTHER

• South Korean Finance Minister Koo Yun-cheol will hold high-level trade talks with his US counterpart in Washington later this week on Thursday local time, according to Yonhap

EUROPEAN TRADE

EQUITIES

• European bourses (STOXX 600 +0.7%) opened entirely in the green, benefiting from the EU-US trade agreement. As the morning progressed, indices waned off best levels, but still remain in the green. Nothing behind the slight pressure, but likely some profit-taking ahead of this week's key risk events, which include US PCE, NFP and a slew of earnings.
• European sectors hold a strong positive bias. Healthcare has been buoyed by the EU-US trade deal, where the EU secured a 15% rate for a vast majority of EU exports including cars, semiconductors and pharmaceuticals. Autos were initially strengthened by the announcement, but now trade mixed as traders digest the financial implications of the tariff - Germany's VDMA said that the "trade deal will cost German auto firms billions every year". Media is found at the foot of the pile, joined by Basic Resources.
• US equity futures (ES +0.3% NQ +0.5% RTY +0.6%) are entirely in the green, with some marginal outperformance in the RTY after the EU and US secured a trade deal - though as with European indices, US futures have been moving lower ahead of the week's risk events, while today's docket is headlined by supply-related events.
• Samsung (005930 SK) will produce Tesla’s (TSLA) next-gen AI6 chips under a USD 16.5bln deal running through 2033. The chips will be made at Samsung’s new Taylor, Texas plant. The agreement marks a major win for Samsung’s foundry division, which has lagged rivals in recent years.
• The average selling price of AMD's (AMD) new MI350 AI chip has reportedly increased to USD 25k (prev. estimated at USD 15k), via Newsis citing sources.
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FX

• The USD picked up strength in early European trade after a steady APAC session. There was no headline coinciding with the move at the time but appeared to be more a case of Europe reacting to the EU-US trade agreement. The EU-US agreement removes another area of uncertainty for the market and could also be followed by some positive mood music between the US and China with both sides set to meet in Stockholm this afternoon. Reporting ahead of the meeting suggests a potential 90-day extension of the current 90-day truce. DXY has made its way back onto a 98 handle with a current session high at 98.06. Next upside target comes via the 50DMA at 98.30.
• The obvious focus for the Eurozone at the start of the week has been on the trade front following the EU-US trade agreement. The deal will see EU goods subject to a 15% tariff (including autos, semiconductors, pharma), 0% tariff on aircraft parts (for now), make USD 750bln in energy purchases from the US and USD 600bln in US investments. The deal is broadly as expected given the reporting last week and is not "as bad as feared" given the 30% tariff rate, which was looming over negotiations. However, EUR has been unable to capitalise on the removal of uncertainty and is softer vs. the USD and EUR. Part of this may be a "buy the rumour, sell the fact" trade and also the view that, whilst the worst case has been avoided, it is still a sub-optimal trade arrangement for the EU. It is also worth noting that at this stage, it is just an agreement and still subject to formal ratification by both sides.
• JPY is also suffering at the hands of the firmer USD with USD/JPY back above the 148 mark. Sentiment in Japan remains suppressed by political headwinds with Japan's ruling LDP said to have collected enough signatures on Friday to call a general meeting that will hold PM Ishiba accountable for the party's recent crushing election loss. Participants are also bracing for this week's BoJ policy announcement, which is expected to see policy settings left unchanged. As it stands, markets price around 19bps of tightening by year-end. USD/JPY has ventured as high as 148.34 with the next upside target coming via the 21st July high at 148.66.
• GBP is softer vs. the USD but to a lesser extent than peers with the pound benefiting from cross-related selling in EUR/GBP. Macro drivers for the UK are light aside from UK PM Starmer being set to meet US President Trump for wide-ranging talks in Scotland; expected to discuss progress on implementing the UK-US trade deal. The data slate is a light one for the UK this week. Cable is just about holding above the 1.34 mark with a session low at 1.3407. EUR/GBP is eyeing a test of 0.87 to the downside with a current session low at 0.8705.
• Antipodeans are the G10 underperformers, after initially being buoyed by the risk tone. Though as sentiment slowly waned across markets, the Aussie and Kiwi also lost their allure, to currently trade just off session lows.
• PBoC set USD/CNY mid-point at 7.1467 vs exp. 7.1653 (Prev. 7.1419).
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FIXED INCOME

• USTs/Bunds began lower, in-fitting with the positive risk tone, held in the red but off lows in contained overnight trade. JGB's on the other hand were bid alongside a deterioration in risk sentiment in Japan amid political headwinds and ahead of the BoJ announcement later in the week.
• As for the European morning, the fixed income complex caught a bid around the European cash open. No clear fresh catalyst for the upside, but potentially in tandem with a slight deterioration in the risk tone and a paring of the hawkishness seen late last week, with the EU-US deal welcome but still a growth headwind vs the revised April baseline of 10%. USTs are currently trading flat/incrementally firmer, and towards the upper end of a 110-26 to 111-03 range. No Tier 1 data releases today, so more focus on the US-China meeting in Sweden, US supply (2yr & 5yr note due) and then Treasury Financing Estimates thereafter before Wednesday's refunding. Morgan Stanley does not expect the Treasury to increase coupon sizes at all this year, and have pushed out their call for the next coupon increase to February 2027 (prev. May 2026).
• For Bunds, they caught a bid around the European cash open and have continued to climb, currently at session highs in a 129.12-74 range. Further upside could see a potential test of its 50% fib retracement of last week's move at 129.80, and then the round 130.00 mark. On the firmer fixed environment and associated lower yield action, Rabobank makes the point that diminished trade uncertainty is potentially causing a moderation in term premia.
• Gilts are also higher to a similar degree as Bunds, and ultimately following peers. UK paper currently trades towards the upper end of a 91.57-85 range. More focus has been on the EU, but reports recently have suggested that UK PM Starmer is to convene with US President Trump at his Turnberry golf resort in Scotland. Starmer is reportedly to bring up steel tariffs with Trump, but the US President said on Sunday that the trade deal with Britian is "concluded".
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COMMODITIES

• WTI and Brent are modestly higher in what has been a choppy session so far, currently higher by around USD 0.50/bbl. Earlier upside was driven by the broader risk tone, but as that deteriorated a touch (in equities), the complex also waned off best levels. Nothing energy-specific of note for the complex today, so attention now turns to developments in Sweden, where US-China are to discuss trade. For energy specifically, the OPEC+ JMMC are set to convene, but are unlikely to make any alterations to the group's output plans. Brent Oct'25 currently trades in a USD 68.35-69.11/bbl range.
• Spot gold initially gapped lower at the open, as the yellow-metal digested the latest EU-US trade deal, which boosted sentiment. However, overnight trade saw the prices entirely pare that downside, to currently trade around the unchanged mark.
• Base metals are mixed/marginally firmer, failing to benefit from the on the early trade-related euphoria heading to a slew of risk events this week. 3M LME copper currently incrementally higher and trades in a USD 9,779.05-9,820.4/t range.
• Iran's Foreign Ministry spokesman says IAEA visit is to take place within two weeks.
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NOTABLE EUROPEAN HEADLINES

• ECB’s Cipollone said the economy is sending conflicting signals and needs to see how trade will affect prices.
• Germany is reportedly to avoid EU punishment for breaching budget rules, according to FT,
• Several were killed in a train crash in Germany near the town of Biberach, close to the border with France.
• S&P affirmed Luxembourg at AAA; Outlook Stable, while Fitch lowered Finland’s sovereign rating from AA+ to AA; Outlook Revised to Negative from Stable.
• ECB's Kazimir says "I do not see any significant change that would force my hand to act in September; it would take something like clear signs of unravelling the labour market for me to act" "Sees no looming spectre of inflation undershoot and risks are not tilted to the downside". US-EU trade deal reduces uncertainty but unclear how it impact inflation.

NOTABLE US HEADLINES

• NASA spokesperson said about 20% of the workforce is set to depart the agency as part of an overall effort to become streamlined and more efficient amid concerns about mission safety.
• IAM District 837 members in St. Louis voted to reject the Boeing (BA) defence contract, while the Co. said it was disappointed that employees voted down the richest contract offer it's ever presented to IAM 837 and stated that no talks are scheduled with the union.
• US Lawmakers said to be quickly souring on the OBBB's tax hike on gamblers, according to Punchbowl.

GEOPOLITICS

MIDDLE EAST

• Israel’s military announced a pause of military activity in designated areas in Gaza where it is not operating until further notice, with the pause in fighting to be daily in three areas of Gaza.
• Two Jordanian air force planes and one Emirati plane dropped a total of 25 tonnes of aid in Gaza in the first air drop in months, according to a Jordanian official source. Furthermore, the World Food Programme said it hopes Israeli humanitarian pauses will allow for a surge in urgently needed food for Gaza and it has enough food in or on its way to the region to feed the entire Gaza population for almost three months.
• US President Trump said he doesn’t know what is going to happen regarding Gaza and Israel is going to have to make a decision, while he added we will see what happens and the US is going to do more aid.
• Hamas’s exiled chief Khalil al-Hayya said ceasefire negotiations with Israel are meaningless under a continued blockade and starvation, while he added the immediate and dignified delivery of food and medicine to our people is the only serious and genuine indication of whether continuing the negotiations is worthwhile.
• Yemen’s Houthis said they will target ships that belong to companies which deal with Israeli ports, regardless of their nationality and ships will be attacked regardless of their destination if shipping companies don’t heed their call.
• Houthis say that, as part of the "4th phase" of action, they will be targeting "any ship coming from Israeli ports, regardless of nationality.", via journalist Berman.

RUSSIA-UKRAINE

• Kremlin spokesperson said Russia prefers political and diplomatic means to resolve the conflict in Ukraine, although Kyiv and the West rejected that path.
• Poland scrambled aircraft to ensure airspace security after Russia launched a missile attack on Ukraine, according to the Polish armed forces.
• European Commission President von der Leyen said following a conversation with Ukrainian President Zelensky that the EU will continue to support Ukraine on its European path.
• An Emergency Alert has been declared this morning throughout the Lithuanian capital of Vilnius, after an unknown drone, believed to likely be Russian, crossed into the country from Belarus, according to OSINTdefender.

OTHER

• Thailand's military noted clashes continue in several areas on the border with Cambodia, while it was separately reported that Thailand’s acting PM agreed in principle to have a ceasefire but wants to see a sincere intention from Cambodia and wants bilateral dialogue as soon as possible.
• Malaysia’s Foreign Minister said that Cambodia’s PM and Thailand’s acting PM will visit Malaysia on Monday to discuss the conflict, while a Thai Foreign Ministry spokesperson confirmed there will be a meeting on Monday.
• US President Trump spoke with the leaders of Cambodia and Thailand, while he stated that both are looking for an immediate ceasefire and peace, as well as stated that they are looking to get back to the trading table with the US.
• US Secretary of State Rubio spoke with the leaders of Cambodia and Thailand and urged both sides to deescalate tensions immediately and agree to a ceasefire, while he said the US is prepared to facilitate talks.
• North Korea said it has no interest in any new policy of South Korea and will not sit down for dialogue, while it rejects conciliatory overtures by South Korea and said North Korea and South Korea have moved irreversibly past the concept of one nation.
• South Korea Presidential Office said it is to continue to take actions needed for peace after North Korea's rejection of peace overtures, while the South Korea Unification Ministry said North Korea's reaction is an indication of the challenge in inter-Korea ties.

CRYPTO

• Bitcoin is a little firmer today and trades just shy of USD 119k, whilst Ethereum outperforms a touch and sits just beneath USD 3.9k.

APAC TRADE

• APAC stocks were ultimately mixed despite early tailwinds following the announcement of the US-EU trade deal, while gains were capped ahead of a slew of risk events this week and with Japan pressured amid political uncertainty.
• ASX 200 traded higher but with upside limited amid light catalysts and ongoing global trade uncertainty, while participants digested quarterly activity updates.
• Nikkei 225 wiped out its opening gains and dipped into negative territory amid political headwinds with Japan's ruling LDP said to have collected enough signatures on Friday to call a general meeting that will hold PM Ishiba accountable for the party's recent crushing election loss, while participants also brace for the BoJ policy meeting this week where analysts reportedly see the BoJ providing a less gloomy view and signalling the potential for resuming rate hikes later in the year.
• Hang Seng and Shanghai Comp were mixed ahead of US-China trade talks in Sweden and with the trade truce expected to be extended for 90 days.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted CNY 400bln 1-year Medium Term Lending Facility with the rate at 2.00% for a CNY 100bln net injection.
• Chinese Premier Li said at the World AI Conference that China will help establish an international AI collaboration group and that AI should be an international public good that benefits humanity, while he stated global AI development is accelerating and AI is moving from perceiving the world to changing the world.
• China’s Agriculture Ministry announced a plan to promote the consumption of agricultural products.
• Beijing issued a warning of geological disasters such as landslides for 10 of its 16 districts.
• US Commerce Secretary Lutnick said President Trump really likes TikTok, but it has to move to US ownership.
• Many called for Japanese PM Ishiba's resignation at Japan LDP meeting, according to Kyodo.

DATA RECAP

• Chinese Industrial Profits YY (Jun) -4.3% (Prev. -9.1%); YTD YY (Jun) -1.8% (Prev. -1.1%)