Core Viewpoint - Fitch Ratings indicates that the recent increase in tariffs imposed by the U.S. on EU goods, while significant, is not expected to directly trigger downgrades of sovereign ratings for EU member states [1][3]. Group 1: Tariff Impact - The U.S. has agreed to impose a 15% tariff on EU goods, which has led to strong dissatisfaction from Germany and France, with leaders warning of significant economic damage to the EU [1][2]. - Fitch analyst Ed Parker states that the 15% tariff aligns with the agency's assumptions since March, suggesting no substantial change in economic forecasts [1][3]. - Despite the tariff increase, Fitch believes that the impact has largely been accounted for in their analysis, and thus, the recent tariff actions will not lead to immediate adjustments in their economic outlook for the region [3][4]. Group 2: Economic Sentiment - The euro has continued to decline, dropping 0.3% against the dollar to 1.1555, marking its lowest level in five weeks [3]. - German Chancellor Friedrich Merz and French Prime Minister François Bayrou have expressed that the agreement will cause considerable damage to Germany, Europe, and even the U.S. itself, with Bayrou labeling the day as "dark" for the EU [2]. Group 3: Future Risks - While Fitch maintains its baseline scenario, it acknowledges potential risks, stating that the tariff increase itself is not expected to drive rating changes for EU countries [3][4]. - However, the agency warns that the tariffs could exacerbate existing credit pressures within the EU, adding uncertainty to future economic stability [1][4].

Group 1 - The U.S. government has allowed citizens to make voluntary donations to help reduce the national debt through Venmo and PayPal, expanding payment options beyond traditional bank transfers and credit cards [1][2] - As of July 25, the U.S. national debt has reached a record $36.7 trillion, an increase of 87% from $19.59 trillion in 2010 [2] - The donation program, which has been in place since 1996, has raised only $67.3 million, representing a mere 0.0002% of the current national debt [1][2] Group 2 - Concerns about the sustainability of U.S. debt are growing, with hedge fund founder Ray Dalio warning of increasing risks of a fiscal crisis unless urgent policy changes are made [3][4] - Dalio suggests that the U.S. should aim to reduce the federal deficit to 3% of GDP, a level last maintained during the Clinton administration, to stabilize markets and control interest expenses [4] - The recent "Big and Beautiful" tax and spending bill is projected to increase the federal deficit by approximately $3.4 trillion over the next decade, raising concerns about the long-term fiscal outlook [5] Group 3 - The U.S. Congressional Budget Office estimates that the new tax and spending bill will lead to a direct spending reduction of about $1.1 trillion and a revenue decline of approximately $4.5 trillion, exacerbating the fiscal deficit [5] - Fitch Ratings has downgraded the outlook for 25% of U.S. industries to "negative," citing increased uncertainty and anticipated prolonged high interest rates [5] - The U.S. stock market has reached new highs, but there are concerns about the sustainability of this growth due to excessive liquidity from the Federal Reserve and the Treasury, which may lead to a market correction [6]

Group 1 - Gold prices surged over 1%, reaching a five-week high of $3401.41 before closing at $3396.91, with a slight decline observed in the Asian market [1] - The U.S. stock market saw the Nasdaq and S&P 500 indices hitting historical highs, with the Nasdaq briefly surpassing 21000 points, while the Dow Jones Industrial Average experienced a minor decline [2] - The trade issues have resurfaced as a focal point, with the White House reaffirming its stance on tariffs [3] Group 2 - As the August 1 deadline approaches, President Trump's trade negotiation stance has become more aggressive, with the U.S. Commerce Secretary stating that this date is a "hard deadline" for countries to start paying tariffs [5] - The European Union is considering a "nuclear option" in response to U.S. tariffs, which could involve significant retaliatory measures, including restricting U.S. companies from participating in EU public procurement [5] - The Federal Reserve's likelihood of a rate cut in July is nearly zero, with traders now believing there is over a 50% chance of a cut in September [7] Group 3 - Fitch Ratings has downgraded the outlook for 25% of U.S. industries to "deteriorating," predicting default rates for high-yield bonds and leveraged loans to rise by 2025 [8] - Wall Street institutions are increasingly optimistic about the U.S. stock market, with Goldman Sachs forecasting the S&P 500 to rise to 6900 points in the next 12 months [10] - Foreign capital is re-evaluating Chinese assets, with around 60% of Middle Eastern sovereign wealth funds planning to increase their allocation to Chinese assets, particularly in the technology sector [11] Group 4 - Recent developments in the Russia-Ukraine conflict include a large-scale airstrike by Russia, which involved 426 drones and 24 missiles, resulting in casualties [14] - The Russian Defense Ministry reported intercepting 74 drones, including those targeting Moscow, amidst ongoing tensions and preparations for a third round of negotiations [15][16]

Market Overview - International gold prices surged significantly on July 21, closing at $3,397.91 per ounce after reaching a high of $3,401.44 [1] - The SPDR Gold Trust, the world's largest gold ETF, increased its holdings by 3.43 tons, bringing the total to 947.06 tons [6] Economic Indicators - The U.S. Conference Board's Leading Economic Index for June recorded a month-on-month decline of -0.3%, worse than the market expectation of -0.2% [2] - The six-month growth rate of the Leading Economic Index weakened, with the diffusion index remaining below 50 for the third consecutive month, signaling a recession [2] - The U.S. GDP growth is projected at 1.6% for the year, with tariffs expected to have a more pronounced impact in the second half [2] Geopolitical Developments - Ukraine and Russia are set to hold the next round of peace talks in Turkey, as stated by Ukrainian President Zelensky [5] - Israel's Foreign Ministry rejected a multi-national joint statement regarding the Gaza conflict, emphasizing Hamas's responsibility for the ongoing violence [5] Federal Reserve Insights - The probability of the Federal Reserve maintaining interest rates in July is at 97.4%, with a 2.6% chance of a 25 basis point cut [6] - The outlook for the U.S. credit rating has been downgraded by Fitch due to increased policy risks and economic slowdown [4]

Group 1: US Dollar - The Federal Reserve's research report warns of uncertain economic outlook potentially leading to zero interest rate risks [1] - Fed Chair candidate Walsh suggests interest rates should be lowered further [1] Group 2: Major Non-USD Currencies - ECB council member Centeno states that the timing and extent of further rate cuts are difficult to determine [2] - Fitch predicts Japan's debt trajectory will rise again by the end of this century [2] - ECB indicates that risks to financial stability in the Eurozone have increased due to rising global geopolitical uncertainties [2] - Japanese Prime Minister expresses regret over US tariff information and emphasizes ongoing negotiations [2] - South Korean Trade Minister states that a three-week extension of tariff suspension is insufficient and negotiations must accelerate [2] - Japan's Economic Revitalization Minister Akizawa announces agreement with US Commerce Secretary to actively participate in trade talks, prioritizing national interests [2] - The Reserve Bank of Australia unexpectedly keeps the benchmark interest rate at 3.85%, indicating a wait for more information to confirm sustainable inflation at 2.5% [2] - RBA Governor Bullock mentions a cautious and gradual easing stance is appropriate, with confidence in future rate cuts [2] - Australian Treasurer notes that the RBA's decision to maintain rates was not expected by millions of Australians or the market, clarifying future inflation and rate trajectories [2] Group 3: Other Developments - Emerging market ETFs see inflows for the sixth consecutive week, with China receiving the largest inflow [3] - The World Bank reports that Syria is facing a severe liquidity crisis due to cash shortages and broader disruptions in currency circulation [3] - Moody's maintains Israel's Baa1 rating while warning that conflict with Iran will increase fiscal pressure [3]

Currency Market Overview - The Euro is trading slightly lower against the US Dollar around 1.1765 during the European session [1] - The Australian Dollar is accelerating its decline towards 0.6500 in the Asian session [1] - The US Dollar is showing positive momentum against the Canadian Dollar, rising to the range of 1.3920-1.3925 [1] - The US Dollar has rebounded above 144.50 against the Japanese Yen [1] - The British Pound has increased for the fourth consecutive day against the US Dollar [1] Key News on Currencies Japanese Yen - Fitch Ratings states that a significant reduction in auto tariffs is necessary for a trade agreement between Japan and the US [2] - Moody's maintains that the Bank of Japan is likely to continue raising interest rates, but weak wage data complicates the situation [2] Australian Dollar - ING reports that ongoing inflation slowdown opens a window for the Reserve Bank of Australia to consider rate cuts [3] - Analysts warn that strong employment data in Australia raises concerns for the Reserve Bank's dovish stance [3] Other Economic Indicators - Indonesia's foreign exchange reserves increased to $152.6 billion at the end of June [4] - Thailand's consumer price index in June fell more than expected [4] - President Putin calls for expanded local currency settlements and proposes the creation of a new BRICS investment platform [4] - Economists predict that the Reserve Bank of New Zealand will adopt a "dovish pause" this week to allow for economic assessment [4] Technical Analysis - The Euro to US Dollar (EUR/USD) remains in the upper half of an ascending regression channel, with the RSI around 60 indicating a bullish tendency, though lacking momentum [5] - Key resistance levels for EUR/USD are at 1.1840 and 1.1900, while support levels are at 1.1740, 1.1700, and 1.1630 [5] - The USD/JPY is forming a symmetrical triangle, with the 50-day EMA at 144.90 acting as immediate resistance [5] - A breakout above this area could pave the way for a bullish trend towards the triangle's upper boundary at 146.50-147.00 [5] Australian Dollar Technicals - If the AUD/USD breaks the 0.6535-0.6545 range, it will activate a double top pattern, confirming a deeper correction with a target at 0.6510 [6] - For a bullish trend to resume, the price must break above the July 1 and 2 highs at 0.6590, targeting the Fibonacci extension levels at 0.6610 and 0.6640 [6] Upcoming Economic Data - Eurozone May retail sales data is scheduled for release at 17:00 [7] - The US global supply chain pressure index for June will be released at 22:00 [7]

Group 1 - The "Big and Beautiful" tax and spending bill was signed into law by President Trump, extending tax cuts for corporations and individuals, and implementing tax exemptions for tips and overtime pay [1] - The bill will stop tax credits for electric vehicles starting September 30, while allowing tax benefits only for wind and solar projects that begin production before the end of 2027 [1] - The International Monetary Fund (IMF) expressed concerns that the bill would further increase the U.S. fiscal deficit, which is critical for stabilizing the debt-to-GDP ratio [1][2] Group 2 - The IMF has been advocating for the U.S. to increase taxes to address the fiscal deficit, but the new bill continues the previous administration's tax reduction policies [1] - The U.S. federal debt has reached $36.2 trillion, with interest payments in May alone exceeding $9.2 billion, making it the second-largest federal expenditure after Medicare and Social Security [3] - Moody's has downgraded the U.S. credit rating, citing that the deterioration of fiscal indicators cannot be offset by the size of the economy and financial system [3]

Group 1 - The new tax reform plan proposed by the U.S. President Trump may have significant negative impacts on international trade, financial markets, and the U.S. economy itself [1][2] - The tax reform is expected to increase the federal government debt by approximately $3.3 trillion over the next decade, potentially reaching nearly $4 trillion when including interest payments [1] - Moody's has downgraded the U.S. credit rating, indicating that the continuous deterioration of U.S. fiscal indicators cannot be fully offset by its economic and financial size [1] Group 2 - The tax reform will negatively affect the green technology and renewable energy sectors by reducing tax support for new energy projects and tightening subsidy conditions for wind and solar equipment [2] - The uncertainty surrounding U.S. policies is prompting investors to reassess their global strategies, particularly affecting countries like Germany and Denmark that are major exporters of wind energy equipment [2] - The article warns that if the U.S. pursues tax cuts without a sustainable revenue mechanism, it will exacerbate fiscal imbalances and global market volatility, making U.S. economic policy uncertainty a significant source of global risk [2]

Group 1 - China reduced its holdings of US Treasury bonds by $8.2 billion in April, bringing its total holdings down to $757.2 billion, the lowest level in nearly 16 years [1] - Since April 2022, China's US Treasury holdings have remained below $1 trillion, with significant reductions of $173.2 billion in 2022, $50.8 billion in 2023, and $57.3 billion in 2024 [1] - The US national debt has surpassed $36 trillion, with a debt-to-GDP ratio of approximately 122.3%, projected to rise to 150% by 2028, indicating a severe fiscal burden on the US economy [3] Group 2 - The US government's annual interest payments on its debt exceed military spending, highlighting the fiscal challenges it faces [3] - Moody's downgraded the US sovereign rating from Aaa to Aa1 in May 2025, raising concerns about the US's debt repayment capacity [3] - The reduction of US Treasury holdings by China is seen as a necessary risk mitigation strategy to avoid potential losses from US debt [4] Group 3 - The decline in demand for US Treasuries due to China's sell-off could lead to falling prices and rising yields, increasing the financing costs for the US government [6] - Higher yields on US Treasuries could suppress investment and consumer spending, potentially slowing down economic growth and increasing the risk of recession [6][7] - The instability in the US Treasury market could impact the broader financial system, leading to capital outflows and asset price declines in other markets [7] Group 4 - The trend of reducing US Treasury holdings aligns with the global movement towards "de-dollarization," as countries seek alternatives to the US dollar in international trade [7] - China's actions reflect a strategic response to the challenges posed by US financial dominance and debt issues, indicating a shift in the balance of power in international finance [9]

Core Viewpoint - The downgrade of the U.S. sovereign credit rating by Moody's marks the end of the AAA era, highlighting structural issues in U.S. debt sustainability and raising concerns about the country's fiscal outlook [1][3][10] Group 1: Credit Rating Downgrade - Moody's downgraded the U.S. sovereign credit rating from "Aaa" to "Aa1," the first loss of the highest rating since 1919, indicating a significant shift in the perception of U.S. fiscal health [3][4] - The downgrade is attributed to the rising total debt, structural expansion of fiscal deficits, and increased interest payments amid a higher interest rate environment [3][4] Group 2: Market Reactions - Following the downgrade, there was a poor subscription for the 20-year Treasury bond auction, indicating rising financing pressures and a shift in market sentiment [1][4] - As of May 27, the 20-year Treasury yield fluctuated around 5%, while the 10-year yield remained at approximately 4.5%, reflecting heightened market concerns [1] Group 3: Structural Challenges - The U.S. debt sustainability is increasingly reliant on short-term debt refinancing, which exposes the financial system to significant vulnerabilities amid policy uncertainty and market volatility [4][5] - The current fiscal structure shows a growing dependency on short-term debt, which, despite its lower proportion, poses a critical risk due to its frequent issuance and reliance on market confidence [4][5] Group 4: Global Implications - The downgrade signals a potential reassessment of the risk-return profile of U.S. dollar assets by long-term investors, leading to increased allocations towards non-U.S. currencies and physical safe-haven assets [2][10] - The shift in the perception of U.S. Treasury securities as a "risk-free asset" could trigger a broader re-evaluation of asset pricing and liquidity expectations in global capital markets [10][11]