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Closing changes:

• Stoxx 600 -1.0%
• German DAX -0.8%
• UK FTSE 100 -0.9%
• French CAC -1.2%
• Italy MIB -0.4%
• Spain IBEX -0.8%

The Stoxx 600 isn’t quite ready to break out yet.

This article was written by Adam Button at www.forexlive.com.

Gold is at the best levels of the day, up $23 to $2433 with about half those gains in the past few minutes.

You can always craft a narrative for gold because it’s such a chameleon. I’d imagine the bulls today are looking at bonds and a Republican sweep and seeing higher fiscal spending and deficits. The turmoil around tariffs and trade wars also doesn’t argue for a few governments expanding holdings of gold.

That said, if Trump really does end the war in Ukraine, you would imagine that’s negative for gold.

At the end of the day, we’ve seen Trump before and only learned that he’s very, very hard to predict…. so maybe that’s the message from gold.

The all-time high was set in May at $2450.

This article was written by Adam Button at www.forexlive.com.

If you go by PredictIt, it looks like Peter Thiel might get his guy in the #2 position in the White House. Hurting Vance might be his previous comments about Trump, where he called him “cultural heroin” and “noxious”. He also liked a tweet saying Trump committed “serial sexual assault.”

“I’m a Never Trump guy,” Vance said in an interview with Charlie Rose in
2016. “I never liked him.”

He later made amends and said “I just think the results [of Trump’s presidency] were so good…. I was critical of Trump in 2016, but he proved me wrong.” Trump endorsed him in his 2021 nomination for Ohio’s senate seat and he won that election in the 2022 midterms.

Vance appears to be the favourite but traditional betting sites paint a different picture with North Dakota Governor Doug Burgum in the lead.

Marco Rubio remains a decent probability at both and it appears as though the decision hasn’t leaked.

I strongly doubt that whoever he chooses won’t be a market mover, though Bergum’s relationship to the energy industry may help that industry.

This article was written by Adam Button at www.forexlive.com.

• Business sentiment 21% vs 17% prior
• Firms’ sales outlooks are mostly unchanged from last quarter and remain more pessimistic than average
• Businesses tied to discretionary spending reported particularly weak
  sales expectations, while those tied to essential spending see
  population growth continuing to benefit their sales.
• Investment spending plans also remain below average
• The share of firms reporting labour shortages is near survey lows

This article was written by Adam Button at www.forexlive.com.

Politics is truly a game of inches.

We were an inch away from a very different Monday morning but the bullet missed and now a Florida judge has dismissed Trump’s classified documents case citing violation of the appointments clause. I’m not exactly sure what that clause is but I’m told it will be appealed.

However given the timelines, it’s now highly unlikely to be litigated during the campaign.

This article was written by Adam Button at www.forexlive.com.

Next week’s Bank of Canada rate decision is a big one.

The market is pricing in a 76% chance of a rate cut, which is a contract high and has been steadily creeping up. Recent data has been slipping and the housing market is suffering.

Critically, this could be the second-consecutive cut and could signal a cadence of cutting every meeting, though with 4 meetings left this year the market is pricing in 63 bps in easing.

Consumers will have a big say in where rates are headed and the latest credit card data from RBC shows real retail sales falling in June.

“On a per capita basis, real spending on consumer goods declined for the first time since Q3 last year, and we don’t expect a turnaround in the near term,” the report released Thursday said.

Softness came from autos as well as essentials. Spending on home goods and building materials fell for the second month as well. Perhaps most-worrying were drops in spending on restaurants and hotels.

“Tourism demand is still sitting below pre-pandemic levels,” RBC notes.

• Discretionary services 114.5 vs 115.7 prior
• Discretionary goods 98.5 vs 101.4 prior
• Essentials 107.6 vs 112.9 prior

This article was written by Adam Button at www.forexlive.com.

The US stocks are opening with gains. Markets shrug off the assassination attempt. With the former president Trump being elected president increased. That implies a softer Fed (new Fed Chair?), less regulation, lower taxes. The bad is less immigration and deportation of illegal immigrants, and higher tariffs. That has the yield curve steepening.

The snapshot of the market five minutes into the open and showing:

• Dow industrial average +241 points or 0.61% at 40245. The record high close is 40003.60.
• S&P index +25.59 points or 0.45% at 5641.01
• NASDAQ +94 points or 0.51% at 18493.

The small-cap Russell 2000 is up 13.83 points or 0.64% at 2162.20.

In the US debt market, yields are higher/the yield curve is steepening (although 2-10 years spread is still negative):

• 2-year yield 4.447%, -1.3 basis points.
• 5-year yield 4.116%, +0.5 basis points.
• 10 year yield 4.213%, +2.7 basis points.
• 30-year yield 4.445%, +4.4 basis points

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

Betting markets have boosted Trump’s Presidential odds after the failed assassination attempt on the weekend. In equities, shares of the meme-stock social network $DJT are up 70% premarket and I would expect some others to follow along.

For the broader market, S&P 500 futures are up 22 points and I wonder if that’s underpriced given the political shifts that appear to be coming.

One I’m trying to pin down is the House. Many Democratic districts were running well-ahead of Biden so there had been a good chance that Democrats would control the House. A Trump Presidency with a Democratic House is very different than a Republican sweep (I’m assuming Republicans take the Senate).

Polymarket makes a market on House control and you can see a shift to 45% for Dems but that seems high and the market is thin.

A clearer signal may be in bonds where there is a bear steepener unfolding today, similar to after Biden’s debate performance. The short end is flat today while the long end is up 6 bps. That has 2s30s uninverted for the first time since January.

If you translate that to FX, the message here is a Republican sweep running larger deficits and cutting taxes. That would be good for equities and the US dollar as interest rates are kept higher. At some point, you run into supply worries in Treasuries and that’s tough to gauge but in FX, I could see a scenario unfolding where material USD outperformance continues.

Then again, politics are tough to predict and it’s still a long way to November.

This article was written by Adam Button at www.forexlive.com.

• Prior report -6.00
• new orders -0.6 versus -1.0 last month
• prices paid +26.5 versus +24.5 in June
• employment index -7.9 versus -8.7 in June
• 6-month business conditions Index +25.8 versus +30.1 in June (in June it was a two-year high)

Other details:

• shipments 3.9 versus 3.3 last month.
• Unfilled orders -11.2 versus 1.0 last month.
• Delivery time -9.2 versus -4.1 last month.
• Inventories -6.1 versus 1.0 last month.
• Prices received 6.1 versus 7.1 last month.
• Average employee work wake -0.1 versus -9.9 last month
• Supply availability is 0.0 versus -1.0 last month

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

• Prior was +2.4%
• Manufacturing sales +0.4% vs +0.2% expected
• Prior manufacturing sales +1.1%
• Wholesale inventories +0.9%
• Inventory-to-sales ratio increased from 1.53 in April to 1.55 in May

Sales declined in five of the seven subsectors in wholesale sales, with the largest decline
coming from the motor vehicle and motor vehicle parts and accessories
subsector, which fell 3.8%. Wholesale sales were 0.9% lower in May compared with the same
month one year earlier.

Manufacturing sales were mainly driven by higher production in the aerospace product and parts
industry group (+11.2%), followed by higher sales in the food (+1.4%)
and paper (+5.5%) product subsectors. Meanwhile, sales of motor vehicles
(-4.2%) and petroleum and coal products (-2.2%) decreased the most.

This article was written by Adam Button at www.forexlive.com.

Happy Monday and certainly a happier one than it could have been.

The Fed chair spoke twice last week so it’s difficult to imagine he will change his tune but he did get the CPI since his second day of testimony so there is a chance he tilts more dovishly. He speaks at 12:30 pm ET in a conversation at the Economic Club of Washington. Given the format, I wouldn’t expect pre-released text but I also wouldn’t rule out some kind of opening statement.

In terms of data, we get the Empire Fed at the bottom of the hour to kick off the monthly manufacturing cycle. With it comes the Canadian wholesale trade report.

Canada will also be in focus at 10:30 am ET with the Q2 business outlook survey from the Bank of Canada. The market is pricing in a 72% chance of a BOC cut on July 24 but that might shift based on the survey, which is a key BOC input.

This article was written by Adam Button at www.forexlive.com.