Oil rises again while Tech outperforms ahead of GOOGL earnings - Newsquawk US Market Wrap

• SNAPSHOT: Equities up, Treasuries down, Crude up, Dollar up, Gold up
• REAR VIEW: Trump said no interest in meeting Iran, will hit Pickaxe Mountain soon and very heavily; Houthis have reportedly warned shipping firms to avoid loading or discharging at Saudi ports; 6 Saudi ships reportedly forced to return from Bab al-Mandab; TSMC to raise chipmaking prices by up to 10%; US to impose additional 50% tariff on certain products of Canada including some USMCA products; NZ Q2 inflation comes in slightly hot; UK employment growth beats, u/e rate unchanged; NVDA said new Vera processor is faster than AMD's Turin.
• COMING UP: Data: Japanese Trade Balance (Jun), UK Inflation (Jun). Supply: Australia, Japan, Germany, US. Earnings: Tesla, Alphabet, IBM, Dassault Aviation, Santander, Equinor, UniCredit, Moncler, Akzo Nobel.

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MARKET WRAP

US indices saw strength on Tuesday, as the tech-heavy Nasdaq 100 outperformed, seeing the Tech sector sit atop of the breakdown, buoyed by numerous bullish stories, ahead of GOOGL and TSLA earnings on Wednesday; 1) Taiwan export orders in June +59.4% Y/Y (exp. 49.5%); 2) TSMC set to raise prices for both advanced and mature chip production services by up to 10% in 2027; 3) NVDA disclosed a 9.3% passive stake in NBIS; 4) HUT and IREN on gains after recent order news; 5) NVDA said chips are on schedule for use in AI data centers. Once again, US/Iran headlines dominated the tape, as US/Iran tensions continue to escalate with no signs of abating, which saw energy benchmarks see strength of c. USD 2/bbl; some of the more notable reports were that Trump said they will hit Pickaxe Mountain very soon, and hard, while the Yemeni Houthis have warned shipping firms to avoid loading or discharging at Saudi ports. Sectors close predominantly in the green, with only Consumer Staples and Communications in the red, with Energy the next best performing sector and supported by the aforementioned stories. The Dollar is broadly gaining vs. G10 FX peers, with safe-havens lagging and USD/JPY hitting a fresh YTD high: the Aussie the only one eking out marginal gains. The pound was pressured as PM Burnham announced his first measures, essentially an unfunded removal of VAT on electricity bills. Treasuries bear flattened as rising oil prices reinforced expectations for further Fed tightening, in a week that lacks key US data or speakers, aside from earnings. Precious metals sit in the green.

FIXED INCOME

T-NOTE FUTURES (U6) SETTLED 7 TICKS LOWER 108-20+

T-notes bear flattened as rising oil prices reinforced expectations for further Fed tightening. At settlement, 2-year +5.0bps at 4.261%, 3-year +4.9bps at 4.300%, 5-year +4.5bps at 4.368%, 7-year +3.7bps at 4.489%, 10-year +3.0bps at 4.624%, 20-year +2.1bps at 5.141%, 30-year +1.3bps at 5.129%.

THE DAY: Treasuries sold off across the curve as crude prices extended their recent gains amid continued US-Iran hostilities and further threats from President Trump. Early in the session, there was some optimism after reports Pakistan was attempting to broker a resumption of talks between the US and Iran, while other reports suggested Iran had proposed a 10-day ceasefire and that the US was seeking additional concessions. However, those hopes faded after renewed tensions involving Saudi Arabia and the Houthis. The Houthis warned shipping firms to avoid loading or unloading at Saudi ports, adding that any vessel bound for or departing Saudi ports could become a legitimate target.

On the data front, the only notable US release was the ADP Employment Change, which showed 16.5k jobs were added in July, easing from the prior 19.3k and pointing to a fourth consecutive slowdown in hiring. Elsewhere, the Philadelphia Fed Non-Manufacturing Business Outlook Survey improved on the month, although neither release had a meaningful impact on Treasury trading.

Instead, markets continued to look through the second-tier data, with price action driven primarily by developments in the Middle East and their implications for energy prices and inflation expectations. Attention now turns to next week's July FOMC decision and the June PCE inflation report, while this week's USD 13bln 20-year bond auction will provide an important test of investor demand as geopolitical uncertainty remains elevated.

Higher oil prices continued to lift Fed rate expectations, with money markets now pricing around 30bps of tightening by year-end. A 25bp hike is now fully priced by October, while September carries an implied probability of around 78%. Those repricing dynamics kept the front end under the greatest pressure, resulting in a bear flattening of the Treasury curve.

SUPPLY

Notes

• US to sell USD 13bln of 20yr bonds on July 22nd, to settle on July 24th; to sell USD 21bln of 10-year tips on July 23rd; to settle on July 31st

Bills

• US sold 6-week bills at a high rate of 3.650%, B/C 2.79x
• US to sell USD 110bln in 4-week bills and USD 100bln of 8-week bills on July 23rd; to sell USD 72bln of 17-week bills on July 22nd; all to settle July 28th

STIRS / OPERATIONS

• Fed Pricing: Dec 31.9bps (prev. 27.7bps)
• EFFR at 3.63% (prev. 3.63%), volumes at USD 106bln (prev. USD 111bln) on July 20th
• SOFR at 3.57% (prev. 3.59%), volumes at USD 3.012tln (prev. USD 3.03tln) on July 20th
• NY Fed RRP op demand at 0.275bln (prev. 0.03bln) across 1 counterparties (prev. 6) on July 21st

CRUDE

WTI (U6) SETTLED USD 1.68 HIGHER AT 84.91/BBL; BRENT (U6) SETTLED USD 1.79 HIGHER AT 91.01/BBL

The crude complex saw strength, again, on Tuesday as US/Iran tensions continue to escalate with no signs of abating. While benchmarks edged higher for the duration of the US session, they did see a bout of pressure in the EU morning as reports suggested that Pakistan is trying to push for a resumption of negotiations between Iran and the US. However, that was short lived with the crude complex once again reversing as Yemeni Houthis warned shipping firms to avoid loading or discharging at Saudi ports.Meanwhile, i24news reported that it was Iran that proposed the 10-day ceasefire, while the US is said to be demanding a longer ceasefire and demanding even partial navigation of the Strait of Hormuz; Some members of the Trump administration call the Iranian proposal "absurd, illogical.". Later, Trump said that they are not finished at all with Iran, and will hit the Pickaxe Mountain area very soon, and very heavily. As such, overall sentiment remains negative as attacks continue between the nations, and in the region, with focus on any further escalatory acts. Also, weekly private inventory data is due after-hours.

EQUITIES

CLOSES: SPX +0.89% at 7,509, NDX +1.93% at 29,155, DJI +0.74% at 52,230, RUT +1.53% at 2,987

SECTORS: Consumer Staples -1.01%, Communication Services -0.85%, Utilities +0.01%, Real Estate +0.03%, Consumer Discretionary +0.04%, Financials +0.13%, Materials +0.30%, Industrials +0.33%, Health +0.64%, Energy +1.15%, Technology +2.35%.

EUROPEAN CLOSES: Euro Stoxx 50 +0.90% at 6,283, Dax 40 +0.59% at 24,992, FTSE 100 +0.58% at 10,586, CAC 40 +0.28% at 8,363, FTSE MIB +0.81% at 52,285, IBEX 35 +0.89% at 19,379, PSI +1.11% at 9,172, SMI +0.31% at 14,298, AEX +0.57% at 1,097

STOCKS SPECIFICS:

• TSMC (TSM) set to raise prices for both advanced & mature chip prod. services by up to 10% in '27
• Nvidia (NVDA) disclosed a 9.3% passive stake in Nebius (NBIS) & incl. Nvidia's earlier $2B investment.
• Crown Holdings (CCK): EPS, rev. beat & lifted FY26 outlook.
• Danaher (DHR): Cut FY adj. rev. growth outlook.
• Hasbro (HAS): Top & bottom line surpassed exp. alongside raising FY guidance.
• General Motors (GM): Earnings beat; FY26 adj. EBIT outlook missed.
• 3M (MMM): EPS & rev. beat alongside raising FY profit outlook.
• Charles Schwab (SCHW): Earnings impress.
• Software: Intuit (INTU), Salesforce (CRM), Adobe (ADBE) all downgraded at Morgan Stanley.
• Intel (INTC) is reportedly planning layoffs for data center groups, Business Insider reports; cuts are part of efforts to become "more focused and efficient".
• Nvidia (NVDA) said chips are on schedule for use in AI data centers, new Vera processor is faster than AMD's (AMD) Turin; major customers are already testing Vera Rubin gear.
• Apple (AAPL) plans to launch device leasing programme on July 28th in US; 'Apple upgrade' to include iPhones, iPads, Macs, and Apple Watch.
• Disney (DIS) to cut several hundred jobs across its TV unit and film production studios; majority of layoffs are within Pixar, reports Variety.

FX

USD was firmer on geopolitical risk increasing yet again. Recent moves in yields show markets are returning to the view that oil prices will remain higher for some time with the US 2yr approaching its YTD high, and money markets back to pricing over 30bps of tightening by year-end from the Fed. Taken together, geopolitical developments today were net negative. Reports showed Yemeni Houthis have warned shipping firms to avoid loading or discharging at Saudi ports, which was later accompanied by reports that six Saudi ships were reportedly forced to return from Bab al-Mandab. Meanwhile, talks between Iran and Pakistan have seemingly yielded little progress. Data and Fedspeak were absent today with focus this week to be split on geopolitical and US earnings (GOOGL, TSLA, INTC).

AUD outperformed vs USD, helped by higher gold prices, meanwhile, NZD failed to hold onto strength despite a slightly hotter-than-expected Q2 inflation figure, 1.5% Q/Q (exp. 1.4%).

CHF and JPY were the less preferred havens, with even gold climbing despite the suspected higher rate environment. USD/JPY made new YTD highs of 163.235 while USD/CHF hit highs of 0.81326.

Sterling weakness continued in the aftermath of UK PM Burnham announcing John Healey as the new Chancellor. Additionally, funding concerns have already arisen. The new government announced they would remove VAT on electricity bills, an unfunded measure given the government is yet to find the savings to fund the now-cancelled Digital ID rollout which is now being planned as the source of funds for the VAT removal on electricity bills.