TL;DR

Fed holds rates; Q2 GDP beats on import drop; Trump tariff deadline looms August 1.

Highlights

• Fed held rates steady at 4.25–4.50% (9-2 vote); two Trump appointees dissented for a cut 1.
• Powell signaled no urgency to cut, citing tariff-driven inflation risks and softer growth 2.
• Q2 US GDP rose 3.0% annualized, beating forecasts, but gains were driven by a sharp 30% import drop; core domestic demand remained weak 3.
• Trump reaffirmed August 1 as the trade deal deadline, threatening new tariffs: 25% on India, 35% on Canada, 50% on Brazil; China remains under 145% duties 5.
• Copper futures fell 16% after the White House excluded copper scrap and refined metal from tariffs, triggering position unwinds 6.
• US crude inventories rose 7.7 million barrels vs. expected 2.6 million draw; WTI near $69.56 as gasoline stocks fell 7.
• US Dollar Index up 2.3% over five days, heading for second-best month in a decade amid strong data and position shifts 8.
• July ADP private payrolls rose 104,000, beating expectations; prior month revised to a smaller loss 9.
• JPMorgan and Coinbase announced a partnership for direct crypto access to 80 million Chase customers; Coinbase shares up 3% 10.
• Meta and Microsoft report earnings after the bell, with AI and cloud spending in focus; options markets price in volatility 14.
• Retail trading activity is surging, rivaling dot-com era levels, driving speculative rallies in stocks and crypto 16.
• Senate panel advanced a stock-trading ban for top US officials; prospects for passage remain uncertain 12.

Commentary

US markets are processing a dense set of macro and policy updates. The Fed held rates unchanged as expected, but the 9-2 split—both dissenters Trump appointees—signals growing internal debate as economic data softens 1. Powell emphasized a wait-and-see approach, citing elevated uncertainty, tariff-driven inflation, and weaker domestic demand 2. Rate cut expectations are now focused on September, pending further labor and inflation data 1.

The Q2 GDP beat masks underlying softness: while headline growth hit 3.0%, this was largely due to a collapse in imports as firms front-ran tariffs. Core measures of domestic demand and business investment were subdued, aligning with Powell’s cautious tone 32. Meanwhile, the labor market showed some resilience with ADP payrolls rebounding, but recent volatility suggests traders should remain cautious ahead of the official jobs report 9.

Trade policy remains a key risk. Trump’s August 1 deadline and tariff threats against India, Canada, and Brazil add to global uncertainty 5. The copper market’s sharp reversal after tariff exemptions highlights how quickly commodity positioning can shift on policy headlines 6. Oil markets absorbed a surprise crude build, with gasoline draws and low inventories keeping WTI stable 7.

The US dollar continues to strengthen, driven by resilient US data and a reversal of short positioning, pressuring G10 FX and supporting the dollar’s outperformance 8. Crypto is in focus with JPMorgan’s Coinbase partnership and new regulatory clarity efforts, but Bitcoin remains rangebound 1011. Equity markets are bracing for volatility as Meta and Microsoft report after the close, with AI and cloud spending under scrutiny 14. Retail trading activity is again elevated, fueling moves in speculative equities and crypto 16.