Core Viewpoint - The independence of the Federal Reserve is under threat, and the worsening U.S. budget deficit is creating structural pressures on the dollar [1] Group 1: Federal Reserve Independence - The independence of the Federal Reserve is crucial for maintaining the value of the currency [1] - Concerns have arisen in the market due to President Trump's intention to dismiss Fed Governor Cook [1] Group 2: U.S. Budget Deficit - The U.S. faces challenges regarding the sustainability of its debt [1] - Trump's tax and spending proposals may ultimately be more expensive than currently planned, as historical trends show that tax incentives are difficult to revoke [1] Group 3: Dollar Value and Market Resistance - Structural issues may weaken the long-term value of the dollar and increase structural resistance [1] - Short-term resistance for the dollar index is noted at 98.10-98.15, with significant resistance at 98.40-98.45 [1] - Short-term support for the dollar index is identified at 97.60-97.65, with significant support at 97.45-97.50 [1]

Core Viewpoint - The independence of the Federal Reserve is under threat, and the worsening U.S. budget deficit poses structural pressure on the U.S. dollar [1] Group 1 - Analyst Antje Praefcke from Deutsche Bank highlights concerns regarding the Federal Reserve's independence [1] - The ongoing deterioration of the U.S. budget deficit is identified as a significant factor affecting the dollar's stability [1]

Group 1 - The total amount of gold futures at the Shanghai Futures Exchange remains unchanged at 36,045 kilograms as of August 7 [1][2] - The main gold futures contract opened at 782.28 yuan per gram, with a high of 785.00 yuan and a low of 781.08 yuan, closing at 785.02 yuan, reflecting a slight increase of 0.10% [1] - Trading volume for the day reached 187,081 contracts, with an increase in open interest by 2,418 contracts, totaling 217,630 contracts [1] Group 2 - Goldman Sachs' interest rate strategists noted that the current relative expensiveness of five-year U.S. Treasury bonds is rare, except during periods when the Federal Reserve lowered the overnight loan rate target to 0% [2] - The five-year Treasury bond has been the best-performing segment of the U.S. Treasury market this year, driven by expectations of Federal Reserve rate cuts [2] - Ongoing inflation and the trend of the U.S. budget deficit are exerting upward pressure on long-term Treasury yields, with market expectations suggesting a potentially more accommodative policy path after mid-next year following changes in the Federal Reserve leadership [2]

Market Performance - The S&P 500 and Nasdaq indices reached all-time highs, while the Dow Jones Industrial Average slightly declined by 0.04% to 44,323.07 points [2] - The Nasdaq index increased by 0.38% to 20,974.17 points, and the S&P 500 index rose by 0.14% to 6,305.60 points [2] Technology Stocks - Major tech stocks showed mixed performance, with Google A rising by 2.72%, Amazon by 1.43%, Meta by 1.23%, Apple by 0.62%, while Tesla fell by 0.35% and Nvidia by 0.60% [4] - Jensen Huang, CEO of Nvidia, sold 75,000 shares valued at approximately $12.94 million on July 18, following a total reduction of 1.35 million shares worth $215 million from June 20 to July 17 [4] Chinese Concept Stocks - The China Golden Dragon Index decreased by 0.28% [5] - Notable gainers included Huya, which rose by 16.47%, and Lexin, which increased by 11.71% [6] - NIO saw a rise of 2.73%, while New Oriental dropped by 6.59% [7][9] Commodity Prices - WTI crude oil prices slightly declined, closing around $67 per barrel [10] - Gold prices increased by 1.42%, closing at $3,397.48 per ounce, with intraday prices surpassing $3,400 per ounce [11] Federal Reserve Outlook - The likelihood of a rate cut in July is nearly zero, with traders now estimating over a 50% chance of a cut in September [12][13] - Investors are awaiting comments from Federal Reserve Chairman Jerome Powell for insights on potential rate cuts [13] Trade and Fiscal Policy - The White House indicated that President Trump may issue more tariff notices before August 1, which is the date for the collection of tariffs [15] - The recent tax reform is projected to increase the U.S. deficit by $3.4 trillion over the next decade, according to the Congressional Budget Office [16][18]

Core Viewpoint - The U.S. Treasury Secretary Scott Bessent blames the Democratic Party for the anticipated large budget deficit this fiscal year, projecting a deficit-to-GDP ratio between 6.5% and 6.7% for the current fiscal year, marking the third consecutive year above 6% [1] Summary by Relevant Sections - **Budget Deficit Projections** - The projected deficit-to-GDP ratio for the current fiscal year is between 6.5% and 6.7% [1] - This ratio indicates a continuation of high budget deficits, exceeding 6% for three years in a row [1] - **Historical Context** - The deficit-to-GDP ratio for the fiscal year 2024 is recorded at 6.4% [1] - The ratio for the fiscal year 2023 was 6.2% [1]

Core Viewpoint - Global investors are increasingly wary of long-term U.S. government bonds, turning the upcoming bond auction into a highly anticipated economic event for Wall Street and global investors [1][2] Group 1: Market Sentiment and Demand - Investor sentiment towards long-term U.S. Treasury bonds has weakened due to concerns over rising budget deficits and interest payments, leading to lower demand for these securities [1][3] - The upcoming auction of $22 billion in 30-year bonds is expected to be a critical test of market demand, with potential implications for global equity and bond markets [1][4] - The 10-year Treasury yield's term premium is at its highest level since 2014, reflecting investor concerns about the sustainability of U.S. debt and inflation risks [3][12] Group 2: Yield Trends and Economic Implications - The 30-year Treasury yield recently reached a near 20-year high of 5.15%, indicating a significant increase in borrowing costs [4][8] - Higher term premiums imply higher yields, which could lead to continued downward pressure on both equity and bond markets, exacerbating financing pressures amid rising government spending [8][12] - The term premium for 10-year Treasuries has risen to approximately 75 basis points, up from negative levels a year ago, contributing to a steeper yield curve [13][12] Group 3: Political and Fiscal Factors - The anticipated return of a "Trump 2.0" administration is expected to result in higher debt issuance and budget deficits than currently predicted, driven by tax cuts and protectionist policies [3][8] - Concerns over foreign investment in U.S. debt have been heightened by proposed tax measures that could deter overseas buyers, potentially impacting demand for Treasuries [16][12] - The overall fiscal trend is viewed as troubling, with experts warning of the implications of rising deficits and interest payments on the broader economy [8][12]

Core Viewpoint - Elon Musk publicly criticized the "Big Beautiful" tax and spending bill, calling it "disgusting" and urging voters to oppose it, highlighting a significant shift in his stance after previously supporting the Trump administration [1][3][5]. Group 1: Musk's Criticism and Political Impact - Musk's sudden opposition to the tax reform bill comes after he served as a "special government employee" for 130 days under the Trump administration, marking a stark contrast to his earlier support [5]. - His comments have amplified existing divisions within the Republican Party, particularly among Senate hardliners who oppose the current version of the bill unless substantial spending cuts are made [6][7]. - Musk's influence is noted as significant, with Republican senators acknowledging his voice carries weight in the ongoing political debate [9]. Group 2: Legislative Context and Challenges - The "Big Beautiful" bill is facing critical tests in the Senate, where Republican support is less certain compared to the House, where nearly all but three Republicans back the bill [6]. - The bill's passage is contingent on maintaining Republican unity, as Democrats are expected to oppose it unanimously, allowing for only a few defections among Republicans [9]. - The bill aims to raise the U.S. debt ceiling by $4 trillion, with concerns about potential default looming if the debt ceiling is not raised by August [12].

Group 1 - The tax reform bill passed in the House raises concerns about the U.S. budget deficit and the attractiveness of the dollar, leading to uncertainty among stock and bond investors [1] - Hedgeye Risk Management's CEO Keith McCullough believes that the bond and currency markets are sending clear signals, stating that he does not hold any U.S. Treasury bonds and has reduced his gold holdings to a minimum due to rising U.S. economic growth and inflation [1] - McCullough asserts that the U.S. will not enter a recession, and he anticipates that the Federal Reserve will not lower interest rates in the next three to four quarters, which gives him confidence in not holding U.S. government debt [1] Group 2 - McCullough acknowledges the risks associated with U.S. debt and fiscal deficits but believes that the 10-year U.S. Treasury yield will not fall below 4.43%, contrary to his previous belief that it could easily drop below 4% [1] - The company holds some fixed-income assets, specifically high-yield corporate bonds, and McCullough indicates that the lack of volatility in high-yield bond spreads suggests no imminent widespread recession or decline in corporate profits [1] - McCullough expects the economic outlook to improve from Q4 to Q1 of the following year, which should provide more support for the dollar, while he still recommends going long on the euro, Australian dollar, and European equities, particularly in Germany, Spain, and Belgium [1] Group 3 - McCullough's model suggests that the worst period for the dollar has passed, as he believes the U.S. economy will not enter a recession and inflation will begin to rise [2] - He indicates that all rate cut expectations for the year have been largely eliminated, and any potential rate cut by the Federal Reserve will not be as significant as investors might expect [2]

Group 1 - The Kuwait Investment Authority's Managing Director, Sheikh Saud Salim Abdulaziz Al Sabah, emphasizes a commitment to long-term investments in the U.S. but warns about the diminishing time for capital returns to investors [1] - Donald Trump Jr. defends the tariffs imposed by his father as a means to promote U.S. economic growth and hints at a potential future presidential run [1] - Former U.S. Treasury Secretary Steven Mnuchin expresses greater concern over the U.S. budget deficit than trade issues, urging for "fiscal repair" [1]

Group 1 - The US dollar index has fallen to a two-week low, with traders focusing on the G7 meeting for any signs of the Trump administration's desire for a weaker dollar [1] - Bloomberg's dollar spot index declined by 0.4% for the third consecutive day, indicating a bearish trend in the dollar's performance [1][3] - Japan's Finance Minister, Taro Aso, is seeking opportunities for currency negotiations with US Treasury Secretary Scott Posen, suggesting a potential openness from the Trump administration towards dollar depreciation [1] Group 2 - Citigroup predicts that the dollar may further decline after the G7 meeting, as global leaders discuss exchange rate policies as part of trade negotiations with the US [4] - Concerns over the US budget deficit are putting pressure on the dollar, with discussions among lawmakers about a tax cut plan that could result in a $4.5 trillion revenue loss over the next decade [4] - Moody's recently downgraded the US debt rating due to the inability to curb the trend of large fiscal deficits, which adds to the bearish sentiment towards the dollar [4]