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I posted last week on Macquarie pointing to populist economic policies as “inflationary by design“, and that the Fed’s easing cycle may be shallower than presumed:

• while US inflation may continue to stay low in the next few months and allow the Fed to start easing in September, once ‘popunomics’ is invoked, inflation will be a feature of the system

In a note on Monday (more here) analysts at the investment bank reiterated:

• Trump’s expected policies are likely to be more inflationary

• “Trump 2.0 will be a more inflationary policy regime, given restricted immigration, higher tariffs, and the extension of the Tax Cut and Jobs Act of 2025”

• forecast US Treasury yields and the dollar to be higher
• Trump regime may restrict immigration … the removal of low-cost labor supply may put upward pressure on wages
• federal deficit … also likely to expand under Trump

Agree / disagree? If comments could be non-partisan that’d be great. Like this dude says:

This article was written by Eamonn Sheridan at www.forexlive.com.

The US presidential election, so far, has had significant implications for trade, prompting swings across markets. PIMCO with the timely warning:

• In what has been a series of stranger than fiction events – from the disaster of the debate to the assassination attempt of former President Trump to the first time an incumbent president is dropping out of a race at this point (yes, Johnson decided not to run in 1968, but that was in March, not July), this has been a bananas election cycle – and we still have 3.5 months to go”

This article was written by Eamonn Sheridan at www.forexlive.com.

Scanning here comments there isn’t much of relevance for markets yet:

• gun laws – universal background checks, assault weapons ban
• will support Congress passing reproductive freedom laws

Yeah, nothing on economic policy in this speech, but a heads up if you are interested.

Harris vs. Trump

This article was written by Eamonn Sheridan at www.forexlive.com.

• Analyst says the “forces underway for inflation to fall like a rock are in place”
• The closing bell rings and the tech sector/small cap stocks lead the way in tandem
• Crude oil futures settle at $79.78
• Israel PM Netanyahu and US Pres. Biden meeting postponed until Wednesday/Thursday
• More on Schumer and Jeffries: Are due to meet with Harris shortly
• CNN: Schumer and Jeffries to endorse Harris as soon as today
• Former House Speaker Pelosi endorses VP Harris
• Michigan Governor Whitmer says she is not looking to be VP running mate for Harris
• Who might be the VP nominee if Kamala Harris is the Dem nominee
• European stocks rally at session close to kick off trading week
• Kickstart the FX trading for July 22 w/a technical look at the EURUSD , USDJPY & GBPUSD
• The JPY is the strongest and the AUD is the weakest as the NA session begins
• ForexLive European FX news wrap: Dollar steady but mixed, stocks look to bounce back
• Bitcoin Technical Analysis – The bullish bias remains intact
• ECB’s Kažimír: Market pricing of two rate cuts by year-end is not entirely misplaced

The markets was void of any economic data in the US session today. The key event was the weekend resignation of Pres. Biden as the Democratic Presidential candidate and the endorsement of VP Kamala Harris.

Other party leaders fell in line with their endorsement paving the way for the nomination. To get the official nomination, Harris would need 1986 delegates. She is well on her way in achieving that goal with some estimating that she would have enough delegates by the end of the week.

US stocks moved higher on the news. There was some chatter that Harris might be more friendly to big tech vs Biden, with Harris favoring a balanced/less regulated industry. Harris is also from California, home to many tech firms and startups. That helped the Nasdaq index, and also the small-cap Russell-2000. Both those indices rose by close to 1.60% on the day.

This week will also be a slew of earnings led by 2 of the Magnificent 7 led by Tesla and Alphabet after the close on Tuesday. Markets took both those companies shares up 2.26% and 5.15% in anticipation of good news. Nvidia also announced that have a chip that would be compliant for China and that helped it’s share rise 4.76% .

The final numbers are showing:

• Dow Industrial average, +0.32%
• S&P, +1.08%
• Nasdaq, 1.58%

The small cap Russell 2000, +1.66%

In the US debt market, the reaction initially led to a more negative curve, but as the day concludes, the yields are higher by 1.2 to 2.3 basis points across the curve:

• 2 year yield 4.521%, +1.4 basis points
• 5 year yield 4.175%, +1.2 basis points
• 10 year yield 4.254%, +1.6 basis points
• 30 year yield 4.473%, +2.3 basis points.

In the forex, the JPY is ending the day as the strongest of the major currencies despite reports that BOJ officials see weak consumption complicating long awaited tightening of policy. The AUD and the NZD are the weakest as they were impacted by concerns about China growth. The PBOC cut rates unexpectedly in reaction to the slowing economy. Moreover concerns about more tariffs ahead from Trump or Harris as the political winds of change favor America first.

The USD was higehr with most of the gains coming versus the AUD and the NZD.

The USD was also higher vs the CAD ahead of their rate decision on Wednesday which is expected to favor a cut of 25 basis points.

This article was written by Greg Michalowski at www.forexlive.com.

Amongst concerns TD ennumerate on gold are:

• discretionary trader positioning “remains bloated” (to the long side), which means positioning risks are now asymmetrically skewed to the downside
• froth above and beyond what is consistent with expectations of Fed cuts
• Asia on a buyer’s strike
• notable long liquidations on Shanghai Futures Exchange

TD says a “a liquidity vacuum could ensue with fewer buyers to offset potential liquidations”.

As for levels TD says gold is vulnerable to a break south of US$2380/oz.

—

As for that ‘buyers strike’ I noted in June the PBOC bought no gold in May. And that this continued for a second consecutive month.

• People’s Bank of China bought zero gold for a second month in a row in June

The absence of an underlying bid like this is a concern for gold bugs.

This article was written by Eamonn Sheridan at www.forexlive.com.

The closing bell rings, and the tech sector/small cap stocks lead the way higher in tandem with each other today. Last week, the Russell outperformed vs the NASDAQ on a rotation out to high cap tech into the small cap stock sector. .

Both the NASDAQ and the small-cap Russell 2000 rose by around 1.6% today. The Dow lagged today after leading the way higher last week.

The final numbers are showing:

• Dow industrial average rose 127.91 points or 0.32% at 40415.45
• S&P index rose 59.41 points or 1.08% at 5564.40
• NASDAQ index rose 280.63 points or 1.58% at 18007.57

The small-cap Russell 2000 gained 36.30 points or 1.66% at 2220.64.

Some gainers today include:

• Nvidia rose by 4.76%
• Meta Platforms rose by 2.23%
• Alphabet rose by 2.26% ahead of its earnings on Tuesday after the close
• Microsoft and 1.33%
• Tesla rose 5.15% ahead of its earnings after the close tomorrow
• AMD +2.83%

This article was written by Greg Michalowski at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

The PPI data from South Korea is due at 2100 GMT / 1700 GMT and that’s about for the data agenda in the Asian timezone today.

Europe time will bring a speech from European Central Bank’s Lane.

Nothin’. Nothin’ at all!

This article was written by Eamonn Sheridan at www.forexlive.com.

Crude oil futures settled at $79.78. That’s down $0.35 or -0.44%

The low today reached $77.55. The high price was at $79.13.

The drop was the third consecutive down day. Political uncertainty following President Joe Biden’s decision to withdraw from the 2024 election contibuted. The settlement was the lowest since June 14.

The declines also come despite high summer demand. ​

This article was written by Greg Michalowski at www.forexlive.com.

The meeting between Israeli PM Netanyahu and US Pres. Biden is to be postponed until Wednesday and perhaps Thursday, depending on the president’s health. Biden has Covid and is doing well, but has been absent from the public.

This article was written by Greg Michalowski at www.forexlive.com.

The orchestra arrangement is continuing: Schumer and Jeffries are to meet with Harris shortly.

So rather than be the first to endorse, they will do their due diligence with a one-on-one and then come out together and unified. Does Harris come out with them for a photo-op, for the “hand in hand raised” opportunity?

I would not be surprised.

What does Biden do when he speaks about this transition? Does Harris and the party want to tweak policy? Does Biden support changes that Dem nominee wants? Give her reign to divorce from the absolute policy in place, or will she be tied to Biden presidency?

This article was written by Greg Michalowski at www.forexlive.com.

CNN is now reporting that Sen. Majority leader Chuck Schumer and House Minority Leader Jeffries will endorse VP Harris as soon as today.

This article was written by Greg Michalowski at www.forexlive.com.