TL;DR

US-China trade talks resume; global equities hit records; rare metals, FX, and tariffs drive volatility.

Highlights

• Trump and Xi held a 90-minute call, agreeing to resume US-China trade talks and reciprocal state visits; rare earths remain a sticking point1.
• China’s rare metals export restrictions continue to disrupt global auto and EV supply chains, with European suppliers reporting shutdowns3.
• US Treasury added Ireland and Switzerland to its FX monitoring list, kept China, Japan, and South Korea after interventions, and warned China over currency transparency9.
• India and US are negotiating to avoid a 16% reciprocal tariff by July 9, focusing on agriculture, autos, and market access10.
• Australia rejected US beef access over biosecurity concerns amid ongoing tariff talks; considering carbon border tariffs on high-emission imports11.
• European Commission launched a tool to monitor import surges and trade diversion resulting from US tariffs12.
• Russia cut its key interest rate to 20% (from 21%) for the first time since 2022, citing easing inflation and economic strain7.
• BOJ is considering slower bond tapering through smaller quarterly cuts, possibly extending to March 2027; Japan may adjust bond issuance8.
• Global equities, including the S&P 500 and MSCI ACWI, hit new all-time highs, driven by tech and strong US/EU earnings14.
• Gold (+2.3% for the week), silver (+24% YTD), and oil rose on safe-haven demand, OPEC+ output moves, and US-China trade optimism13.
• NATO ministers endorsed new defense capability targets and signaled support for raising spending to 5% of GDP6.
• Metaplanet (Japan) to raise $5.4B to buy up to 210,000 BTC by 2027; UK FCA proposes lifting ban on crypto ETNs for retail investors1516.

Commentary

Traders are navigating a landscape shaped by renewed US-China engagement, persistent supply chain vulnerabilities, and shifting monetary policy. The Trump-Xi call signals a potential easing of trade tensions, but the lack of detail—particularly on rare earths—means industrial supply chains, especially in autos and EVs, remain exposed1. European and Asian manufacturers face ongoing risks from China's export controls, while new EU monitoring tools reflect heightened vigilance against trade diversion as US tariffs ripple through global flows312.

Currency markets are in focus after the US Treasury expanded its FX monitoring list, with scrutiny on China, Japan, and South Korea following recent interventions9. This, combined with the BOJ’s cautious approach to bond tapering and Russia’s rate cut amid economic strain, highlights diverging policy paths among major central banks78. Watch for increased volatility in JPY, KRW, and CNY, as well as possible shifts in global bond yields.

Equities remain buoyant, with global indices reaching record highs on strong tech and earnings momentum, even as trade and tariff risks persist14. Commodities are also active: gold and silver are benefiting from safe-haven flows and soft US data, while oil prices are supported by OPEC+ output signals and supply disruptions13. Meanwhile, institutional crypto adoption is accelerating, with Metaplanet’s large-scale Bitcoin purchase plan and the UK’s potential regulatory shift likely to drive further flows and volatility in digital assets1516.

Geopolitical and defense themes are intensifying. NATO’s push for higher defense spending and ongoing Russia-Ukraine hostilities may sustain elevated risk premiums in select sectors and sovereign bonds6. Trade negotiations between the US and India, as well as Australia’s stance on beef and carbon tariffs, underscore the complexity of global trade realignment1011. Traders should stay alert to headline risk from ongoing negotiations, central bank policy updates, and geopolitical developments.