Another TACO moment?
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Will the new 30% tariffs on the EU and Mexico become reality?
30% tariffs on the EU and Mexico with a threat of more if deals aren't reached or if they retaliate. So will these new threats come to fruition or is it just another taco moment? Well, we don't have to wait long because it all starts on the 1st of August, apparently. Plus, serious moves to oust Jerome Powell as Fed chair. We've got all that stuff, plus quite a bit of data, a weak GDP for the UK, strong employment numbers for Canada. And earnings season, it's already started, but it picks up this week. And US CPI this week as well, and Australian labour market data as well. It's a data-heavy week. It's Monday, the 14th of July, 2025. It's the Morning Call from NAB. Good morning. Well, the US dollar was in the ascendancy last week.
Not sure it's going to last, though, but the DXY was up 0.7% over the week, finishing up at 97.85 on the DXY. The Aussie dollar, meanwhile, down a little on Friday, but up 0.3% over the week. The euro, meanwhile, down three quarters of 1% over the week. And bond yields higher, up nine basis points on Friday for 10-year treasuries, up to 4.41%, which is actually where they were in the middle of the week last week. Canadian 10 years rose 9 basis points on Friday. Much smaller moves in Europe. German Bund yields, for example, for 10 years up just 2 basis points on Friday. And Aussie 10 years finished the week up 4 basis points at 4.32%, up 14 basis points over the week. And U.S. stocks, well, they had a bad end to the week, actually not a great week overall.
So the Dow down 0.6% on Friday, 0.3% lower for the S&P and a quarter percent off the NASDAQ. All those indices finished the week down. But the DAX in Germany climbed almost 2% over the week last week and oil well up as well on Friday, up 2.8% for WTI and 2.5% for Brent. Brent finishing at 70.36 a barrel. Actually only up 2.2% over the entire week, though, even with that rise on Friday.
Is the US dollar’s recent strength likely to continue?
And copper prices last week, up 9%. So here's NAB's Taylor Nugent joining us from Melbourne today. And markets not too happy on Friday. They have more to be concerned about now, don't they, with that weekend proclamation from the US president that Mexico and the EU are going to face a 30% tariff on August 1st. I guess the big question is, is it going to happen?
Yeah, good morning, Phil. So on Friday, as you say, a bit of a pullback in equities, you know, reasonably modest in the scheme of the stakes of the tariff headlines that are ongoing. But, you know, we did see a bit of a shift in risk sentiment to end the week from that, you know, after the S&P 500 reset that record high on Thursday. You know, in terms of the news on Friday, you Tariff headlines, again, the main theme. We got that announcement for 35% tariffs on Canada. Then there was some clarification from White House officials that that would continue not to apply to USMCA-compliant goods. But you also had Trump saying on NBC News that he's kind of eyeing blanket tariffs of 15 to 20 percent on most trading partners.
So, you know, again, lots of lots of numbers flying around. And that kind of, you know, again, just, you know, looks to look to have weighed a little bit on equity markets, certainly at the end of the week. And, you know, contributed a little bit to that bear steepening in curves that we saw on Friday as well, I think, with the longer end markets. moving higher.
Well, Ursula von der Leyen is saying for Europe, for their 30%, they are going to try and negotiate. But, you know, just under three weeks. But if it is another take-home moment, if it's just another, you know, we'll delay it. I mean, how many times can this happen before it just becomes the point where no one is paying any attention whatsoever? Yeah.
Exactly. And I think that, you know, that's a big part of why we've seen, you know, what you could call it resilience in markets over the week in the face of all of these headlines. You could, you know, equally call it complacency depending on who you ask. But I think, yeah, as you pointed out, that news over the weekend for markets to be thinking about as we head into Monday is that those letters for 30% on the EU, Mexico-Mexico
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Chapters
8 chapters
1
Will the new 30% tariffs on the EU and Mexico become reality?
0:01–1:51
2
Is the US dollar’s recent strength likely to continue?
1:51–4:04
3
How are rising bond yields affecting equity markets this week?
4:04–6:21
4
Will the ECB consider another rate cut amid current economic data?
6:21–8:26
5
What does the latest UK GDP contraction mean for the pound?
8:26–11:13
6
Why did Canada’s job numbers exceed expectations in June?
11:13–12:44
7
Could the investigation into Fed renovation costs lead to Jerome Powell’s removal?
12:44–15:05
8
What impact will this week’s US CPI and earnings reports have on markets?
15:05–16:41