Wall Street Awaits Trio of Trump Tariffs, 10-year Auction, Fed Minutes: July 9, 2025

Markets are advancing cautiously after President Trump declared today that he will send tariff letters to at least seven nations. The confrontational posturing comes after the Head of State sent correspondence to 14 countries yesterday, which included the major economies of Japan and South Korea. And on a quiet day from an economic data standpoint, Wall Street is focused on Washington, but outside of the White House, top of mind is the Treasury as well as the Federal Reserve. Participants are awaiting a $39 billion offering of 10-year notes this afternoon, which will be closely followed by Fed minutes from the June meeting. Indeed, fixed-income watchers will analyze attendee participation and enthusiasm following yesterday’s lackluster showing for 3-year government paper. An hour later at 2:00 PM ET, meanwhile, attention will turn to the US central bank for clues on the committee’s thought process as well as viewpoints concerning growth, hiring, inflation and the projected pace of the institution’s journey down the monetary policy stairs. And then tomorrow will feature another auction at the very end of the complex—a $22 billion issuance of 30-year bonds. But for now, as investors await the trio comprised of the Commander in Chief’s cross-border levies, demand for sovereign debt and commentary from Fed officials, they are buying equities in most sectors and Treasuries across maturities with a long-end bias, as the curve descends in bull flattening fashion. The greenback, bitcoins also catching bids. Conversely, there’s not much interest in volatility protection instruments and the commodity space is mixed with lumber, crude oil and gold climbing but natural gas, copper and silver retreating.

Risk of Global Duration Avoidance 

Overseas developments have triggered recent selling pressure in long-end Treasuries. Specifically, speculation that government leaders in London and Tokyo wouldn’t operate with as much fiscal constraint as desired has sparked volatility in those two markets, which have spread to others including the US’s. Global duration demand is significantly weak, as one nation after another sparks concerns among investors and economists alike about unsustainable sovereign budgets. The issue is here to stay folks, as politicians in aggregate are likely to refrain from making the difficult choices that would organically temper yields across the curve and especially those with extended maturities. But this domestic equity market here in the states has proven resilient to rising rates and has defied the odds of tighter financial conditions alongside elevated valuations through robust balance sheets and sturdy business models.

International Roundup

China Gate Prices Decline More than Anticipated

Wholesale prices in China sank at the fastest rate since July 2023 last month, with the Producer Price Index sinking 3.6% year over year (y/y), much worse than the 3.2% projected by a consensus of economists and May’s 3.3% decline. The pricing softness reflects persistent weakness in demand as the world’s second-largest economy struggles will tariffs, excess manufacturing capacity and a glut of housing. Meanwhile, retail prices, as measured by the Consumer Price Index, fell 0.1% month over month (m/m) but were up 0.1% y/y. Economists anticipated 0.0% m/m and -0.1% y/y results following May’s -0.2% m/m and -0.1% y/y prints. The core CPI, which excludes food and energy prices, was up 0.7% from a year ago. China’s fiscal stimulus that includes providing rebates on trade ins of appliances and other goods is believed to have supported the y/y core price pressures. 

Australia Residential Construction Permitting Slows

The growth of Australia’s issuance of building permits for residential projects in Australia during May recovered partially from April. Total dwelling approvals were up 3.2% m/m compared to the 4.1% retreat in the preceding month.  Within the headline result, permits for private homes grew 0.5% m/m, after April’s 5.9% increase. Both metrics matched consensus forecasts from economists. Finalized paperwork for dwellings excluding private homes produced the strongest result with an 11.3% m/m increase. Volumes were still up considerably y/y with approvals for total dwellings, private sector houses and private dwellings excluding houses climbing 6.5%, 3.4% and 11.9%.

Japan Tool Orders Break Nine-Month Winning Streak

After nine consecutive months of growth, orders for machine tools during June dropped 0.5% y/y in Japan, missing the consensus estimate of 3.4% and dropping from the 7.7% gain in May. Domestic demand was particularly weak, contracting 3.3% y/y. Foreign orders provided a modest cushion, climbing 0.3% y/y.