Investors are waking up to a mild risk‑off tone. Asia‑Pac equities slipped and US equity futures are fractionally red as traders digest Tuesday’s CPI print—confirmation that tariff pass‑through has begun—and brace for today’s US PPI. Treasury yields held the prior session’s jump (10‑yr near 4.49 %), the $USD hovered at a three‑week high, and gold caught a small bid as a hedge.
In Europe, STOXX 50 futures point slightly lower while the FTSE reopens on the back foot after Tuesday’s 0.7 % tariff‑related swoon. UK CPI is expected to print 3.4 % y/y; any upside surprise would pressure the BoE to stay hawkish.
In short: rate‑cut hopes are cooling, but AI optimism is still offering a thin safety net for tech.
| Asset / Index | Latest | Δ % | Note |
|---|---|---|---|
| MSCI Asia‑Pac | –0.1 % | ▼ | Region‑wide dip after CPI‑driven rate worries |
| Hang Seng Tech | +0.5 % | ▲ | Boosted by $NVDA China‑chip optimism |
| Nikkei 225 | Flat | — | Weaker ¥ offsets global growth jitters |
| CSI 300 | –0.5 % | ▼ | Mainland China equities under pressure |
| KOSPI | –1.0 % | ▼ | Rate‑sensitive growth names hit |
| S&P 500 fut ($ES) | –0.2 % | ▼ | Traders waiting on PPI & bank earnings |
| Nasdaq 100 fut ($NQ) | –0.2 % | ▼ | Tech takes a breather after Tuesday’s $NVDA pop |
| Stoxx 50 fut | –0.3 % | ▼ | Europe opens soft ahead of UK CPI |
| US 10‑yr yield | 4.49 % | ▲ | Highest since Jun 11 on fading cut hopes |
| Dollar Index (DXY) | 98.52 | ▲ | Three‑week high versus majors |
| USD/JPY | ¥148.84 | ▲ | Touched ¥149—weakest yen since Apr 3 |
| Brent crude | $68.84 | +0.2 % | Modest rebound on summer‑demand hopes |
| Gold | $3,338 / oz | +0.5 % | Haven bid as yields climb |
Why Wall Street closed in the red
Tuesday’s CPI matched forecasts yet showed furniture, coffee and other tariff‑exposed goods getting dearer, reinforcing Fed Chair Powell’s warning that a “summer bump” was coming. Rising yields battered interest‑rate‑sensitive groups—banks, industrials, small caps—dragging the S&P and Dow lower. Only the $NVDA‑led AI complex kept the Nasdaq in the green. The shift in rate expectations was swift: the market now prices just two 2025 cuts versus three a week ago.
More about: June inflation breakdown: Consumers feel the pinch with tariffs looming
Tariff watch: Indonesia deal, pharma on deck, one‑rate letters looming
Tariff news is piling up:
Indonesia’s asymmetric pact. President Trump struck a headline deal giving US exporters zero tariffs and slapping a 19 % blanket duty on Indonesian goods. Jakarta will purchase $15 B in US energy, $4.5 B in ag commodities, and 50 wide‑body $BA jets—bolstering American manufacturing but raising import costs for US retailers who rely on Indonesian textiles.
“One letter, one rate” for smaller nations. Trump said notices will go out “soon,” likely imposing a flat tariff “a little over 10 %” on dozens of countries yet to sign bespoke deals. That sets a floor under US import costs for 2026 contract cycles and keeps global supply chains guessing.
Pharma and chips next. A low starter tariff on drug imports will kick in by month‑end, rising sharply after a year to coerce on‑shore manufacturing; semiconductor levies are being drafted. Markets see this as a slow‑burn inflation risk that may broaden beyond consumer staples.
EU negotiations inch forward. France’s finance minister signalled a US‑EU framework “not far off,” which could avert retaliatory duties before the Aug 1 deadline, but Brussels has drafted counter‑measures if talks stall.
Net result: tariff uncertainty remains the single biggest macro wild card and the main reason fixed‑income desks are pushing out Fed‑cut timelines.
Fed watch: Powell under fire, succession chatter heats up
Trump again blasted Chair Powell over the Fed’s HQ renovation and said Treasury Secretary $Bessent could replace him, though “I like the job he’s doing now.” Bessent told Bloomberg a formal vetting process has begun, fanning speculation that continuity on trade finance could trump monetary credentials. Traders don’t expect a July rate move and see only a 56 % chance of a quarter‑point cut in September. Any acceleration in PPI today would further diminish those odds.
Earnings focus: banks roll on, AI cash burn in view
Yesterday’s beats from $JPM, $C and $WFC came with caveats—higher funding costs and cautious NII outlooks—explaining the muted share‑price response. Today brings $GS, $MS and $BAC before the bell and $JNJ for a read on consumer health spending. On the tech side, analysts will grill management teams about how new tariff structures could reshape supply‑chain capex (watch $AAPL, $MSFT, $AMD on Thursday’s docket).
Macro diary for Wednesday (Jul 16 2025, ET)
| Time | Release / Event |
|---|---|
| 08:30 | US Producer Price Index (Jun) |
| 09:15 | US Industrial Production (Jun) |
| 10:30 | Fed Gov. Barr speaks |
| Pre‑mkt | $GS, $MS, $BAC, $JNJ earnings |
| All day | UK CPI, BoE’s Mann speech |
Takeaway for the open
A CPI‑triggered pop in yields has tempered rate‑cut hopes and put defensives back in vogue, but the tape still revolves around two themes: AI growth ($NVDA’s China reprieve) and tariff chess. Expect choppy tape until the PPI prints—if factory‑gate prices echo CPI’s tariff creep, bond bears may press further, keeping equity rallies narrow and tech‑led.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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