Global News Summary: 14-19 July 2025

Global markets braced for escalating trade tensions as President Trump confirmed sweeping tariffs—35% on Canada, 30% on Mexico and the EU—while customs revenues hit a record $64B in Q2. Despite initial volatility, inflation expectations in the U.S. eased to 4.4%, and Fed Governor Waller hinted at a July rate cut, though markets remained skeptical. UK inflation rose to 3.6% while GDP contracted, signaling stagflation risk, and Japan’s bond yields surged to post-2008 highs amid political uncertainty. AI investment soared, with xAI eyeing a $200B valuation and Perplexity jumping to $18B. However, mass layoffs at Scale AI and rising emissions at Amazon raised ESG and sustainability concerns. Across markets, falling volatility masked fragilities as investors bet on political reversals—but risks from tariffs, inflation, and slowing jobs remain real.

United States

• Tariffs: Trump confirmed 35% tariff on Canada, 30% on Mexico and EU from August 1, intensifying global trade tensions.

• Customs revenue hit an all-time high of $64 billion in Q2, suggesting little foreign retaliation so far.

• Fed independence concerns emerged after reports Trump considered firing Fed Chair Powell, shaking market confidence.

• Retail sales (June): Better than expected, boosting the dollar midweek.

• University of Michigan 1-year inflation expectations dropped to 4.4% (from 5%), and consumer sentiment rose to 61.8, a 5-month high.

• Fed Governor Waller still supports a July rate cut, citing a labor market “on the edge,” though markets assign near-zero probability of an imminent cut.

United Kingdom

• GDP (May): Unexpectedly contracted by –0.1%, indicating that earlier growth momentum is fading.

• Inflation (June): Rose to 3.6% YoY, up from 3.4% in May, driven by petrol, airfare, and rail tickets.

• Jobs: Payroll employment fell 25,000 in May; wage growth slowed, pressured by tax increases and trade uncertainty.

• Market expectation: Rate cut likely delayed as the BoE grapples with inflation vs. stagnation.

Euro Area

• EU response to Trump tariffs: Plans for €21B in retaliatory tariffs paused in hopes of negotiation; later reverted to tit-for-tat car tariff offers.

• France: President Macron pledged €6.5B in defense spending over 2 years to counter Russian threats.

• Germany: Chancellor Friedrich Merz warned the 30% U.S. tariff threat could hit German exporters "to the core."

• ECB pressure: Italian Deputy PM Tajani urged lower rates to weaken the euro and stimulate growth.

China

• Exports (June): +5.8% YoY to $325B, beating expectations.

• Imports: Rose +1.1%, the first increase since February.

• Q2 GDP: Estimated at +5.1% YoY, slightly above target; stimulus pressure eases.

• Trade surplus: $115B, underscoring resilience amid U.S. tariffs.

• Diplomacy: Trump toned down anti-China rhetoric, aiming to secure a summit with Xi Jinping.

Japan

• 10Y JGB yield rose to highest since 2008, reflecting election-related fiscal concerns.

• Exports (June): Fell –0.5% YoY, led by car and steel; U.S. tariffs weigh on trade outlook.

• Inflation (June): Core CPI +3.3% YoY, down from 3.7% in May, but still well above the BoJ’s 2% target.

• Political risk: Market bracing for volatility ahead of Sunday’s national election.

Australia

• Unemployment (June): Rose to 4.3%, the highest since 2021.

• Hiring: Nearly stalled, bolstering expectations for a rate cut at the next RBA meeting.

New Zealand

• Retail card spending (Q2): Dropped –0.7%, reflecting fading consumer strength after early-year momentum.

Economic Growth

• US: Retail data firm but potential drag from tariffs on sentiment and future growth.

• UK & NZ: Signs of stagnation with GDP contraction and weak consumption respectively.

• China: Stable at 5.1% YoY growth, above target.

• Eurozone: Risks from trade tensions; growth remains fragile.

Jobs

• UK: Net job loss of 25,000; wage growth slowing.

• Australia: Jobless rate spiked to 4.3%, 4-year high.

• US: Weekly initial jobless claims fell, showing labor resilience.

• Japan: Political risks and falling exports raise employment concerns.

Debt Securities

• US Treasury yields (19 July):

  • 2Y: ↓ to 3.87%

  • 10Y: ↓ to 4.43%

  • 30Y: ↓ to 5.00%

• Bond rally driven by dovish Fed commentary and easing inflation expectations.

• Japan: 10Y yield jumped on political/fiscal risks.

• EU: Push for weaker euro and lower rates from Italy.

Artificial Intelligence

• Musk's xAI: Seeking new capital, possibly valuing firm at $200B.

• Perplexity: Valuation jumped to $18B, just 2 months after a $14B round.

• Meta: Hired top AI researchers from Apple; declined EU’s AI code of conduct, citing overreach.

• OpenAI: Exploring monetization via product sales inside ChatGPT.

• Trump administration: Drafting AI deregulation plan, promoting federal preemption over state laws.

• Scale AI: Laid off hundreds post-Meta investment, showing shifts in data-labeling economics.

ESG

• Amazon: Reported its first carbon emissions increase in 3 years (2024), driven by data center and delivery logistics expansion.

Inflation

• UK CPI (June): +3.6%, up from 3.4%.

• Japan Core CPI (June): +3.3%, down from 3.7%.

• U.S. inflation expectations (1Y ahead): Fell from 5.0% to 4.4%, calming markets.

• Eurozone: ECB still under pressure to cut rates despite structural inflation risks.

Recession Watch

• UK: GDP contraction, labor softness, and sticky inflation raise stagflation risk.

• Japan: Exports falling, inflation still elevated, and political instability — recession risk elevated.

• Australia & NZ: Signs of consumption and labor slowdown; policy easing expected.

• US: No recession signals yet, but tariff escalation could drag on earnings, hiring, and rate policy.