Augur Digest #35

1. Headlines
2. Global Economics
   1. United States
   2. Canada
   3. Europe
   4. Asia-Pacific
   5. Emerging Markets ex China
3. Global Markets
   1. Equities
   2. Fixed Income
   3. FX

Headlines

• President Trump announced a 35 percent tariff on Canadian imports not covered by the US-Mexico-Canada Agreement, to take effect August 1, and indicated that most trading partners will face new tariffs of 15 to 20 percent. Reports also state that the European Union will receive a tariff notification.
• US secretary of state Marco Rubio met with his Chinese counterpart, a development that sources suggest could precede a presidential summit. Separately, a South Korean official reported that the United States has requested South Korea join efforts to economically isolate China.
• The administration is reportedly planning weapons sales to NATO allies for subsequent transfer to Ukraine, and the president is expected to make a major statement on Russia on Monday.

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Global Economics

United States

• The Federal Reserve’s balance sheet was unchanged at $6.66 trillion in the week ending July 10.

• The U.S. federal budget recorded a surplus of $27 billion in June, a stark reversal from the previous month’s $316 billion deficit and significantly better than the expected $11 billion deficit.

• The Baker Hughes total rig count fell by two to 537 week-over-week, its lowest level since October 2021. The oil rig count declined by one to 424.

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Canada

• Canada’s labor market showed surprising strength in June as the unemployment rate unexpectedly fell to 6.9% from 7.0%, below the 7.1% consensus. The economy added 83,100 jobs, a massive beat against the 0K consensus, driven by a 69,500 surge in part-time positions—the largest gain since February 2022. The participation rate ticked up to 65.4%.

• Average hourly wages in Canada grew 3.2% Y/Y in June, decelerating from 3.5% in May and marking the slowest pace of wage growth since February 2022.

• Building permits in May surged 12.0% M/M, rebounding sharply from a revised 6.8% fall in April and dramatically exceeding the consensus forecast for a 0.8% decline. The increase represents the strongest monthly growth since July 2024.

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Europe

• The UK economy unexpectedly contracted in May, with GDP falling 0.1% M/M, missing the consensus forecast for a 0.1% expansion. This follows a 0.3% decline in April. On a year-over-year basis, GDP growth slowed to 0.7%, in line with estimates but down from 1.1% previously. The three-month average GDP reading provided a silver lining, rising 0.5% and beating expectations of 0.4%.

• The UK's total trade deficit narrowed to £5.7 billion in May from £6.5 billion in April. The goods trade deficit narrowed to £21.7 billion, slightly wider than the £21.5 billion consensus, while the non-EU goods trade deficit also narrowed to £9.3 billion.

• UK industrial production fell 0.9% M/M in May, a significant miss compared to the 0.0% consensus and a deterioration from the 0.6% decline in April. The year-over-year figure also turned negative, contracting 0.3% against expectations of a 0.1% gain.

• UK manufacturing production dropped 1.0% M/M in May, well below the consensus estimate of a 0.1% decline. Year-over-year growth slowed to 0.3% from 1.3% in April.

• UK construction output grew 1.2% Y/Y in May, a notable slowdown from 3.6% in April and below the 1.7% consensus.

• Germany’s wholesale prices rose 0.2% M/M in June, matching consensus and reversing a 0.3% decline in May. The year-over-year rate accelerated to 0.9% from 0.4%.

• Germany's current account surplus narrowed sharply to €9.6 billion in May from €18.9 billion in April, marking the lowest reading since May 2023.

• Final June inflation data for France confirmed an acceleration in price pressures. The headline CPI rose 0.4% M/M and 1.0% Y/Y, both slightly above consensus. The harmonized HICP figures showed similar trends, with the year-over-year rate rising to 0.9%.

• The Netherlands' trade surplus expanded to €10.54 billion in May from €9.29 billion in April.

• Norway’s trade surplus increased to NOK 47.4 billion in June from NOK 46.1 billion in May.

• Swiss consumer confidence improved in June, with the index rising to -32 from -37, beating the consensus estimate of -35.

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Asia-Pacific

• New Zealand's Business NZ PMI rose to 48.8 in June from 47.4 in May, indicating a slower pace of contraction in the manufacturing sector.

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Emerging Markets ex China

• The Philippines attracted $600 million in foreign direct investment in April, an increase from $500 million in the prior month.

• Malaysia's industrial production growth slowed sharply to 0.3% Y/Y in May, a significant disappointment versus the 1.8% consensus and down from 2.7% in April. This was the weakest reading since December 2023.

• Turkey’s current account deficit narrowed significantly to $0.68 billion in May from $7.86 billion in April, well below the consensus estimate for a $0.8 billion deficit. This marks the smallest deficit since October 2024.

• Turkish retail sales remained strong in May, rising 1.6% M/M. The year-over-year growth accelerated to 17.7% from 11.7%, the fastest pace since March 2024.

• Thailand's official reserve assets increased to $262.4 billion in June from $257.6 billion, reaching an all-time high.

• Mexican industrial production showed a notable improvement in May, rising 0.6% M/M against expectations for a 0.1% decline. The annual contraction narrowed to 0.8%, much better than the -1.9% consensus.

• Russia's trade surplus declined slightly to $8.72 billion in May from $9.04 billion in April.

• Russian inflation cooled in June, with the headline rate slowing to 9.4% Y/Y from 9.9% in May. The monthly price increase was 0.2%, half the rate of the previous month.

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Global Markets

Equities

• Global equity markets retreated as new US tariff announcements stoked fears of a wider trade conflict. In the U.S., major indices pulled back, with the S&P 500 falling 0.3% and the Nasdaq down 0.2%. European markets saw steeper declines, with Germany and France down 1.0% and 1.1%, respectively. In Brazil, stocks fell for the third consecutive day, losing 0.7%.

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Fixed Income

• US Treasury yields rose across the curve as investors priced in higher inflation risk following the tariff news. The 10-year Treasury yield climbed 7.4 basis points to 4.39%, while the 30-year yield rose 9.3 basis points, pushing above 5% for the first time since 2023. Shorter-term yields also increased, with the 2-year yield up 2.6 bps.

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FX

• The US dollar strengthened against most G10 peers amid safe-haven demand spurred by trade tensions. The Canadian dollar weakened 0.1% against the dollar following the announcement of new US tariffs targeting Canadian imports. The British pound fell 0.4% on the back of weak domestic economic data and broader risk aversion. The Japanese yen also weakened, falling 0.6%. The Australian dollar was a notable outlier, gaining 0.2% for its fourth consecutive daily advance.

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Disclaimer

Augur Digest is an automated newsletter written by an AI. It may contain inaccuracies and is not investment advice. Augur Labs LLC will not accept liability for any loss or damage as a result of your reliance on the information contained in the newsletter.