Market Information Wednesday 9 July 2025

President Trump announced steep new tariffs of 25–40% on 14 countries, effective August 1, yet global markets responded calmly. Key Asian indices and European shares posted gains, as investors bet on Trump softening his stance, reviving the so-called “TACO” trade (“Trump Always Chickens Out”). Although the uncertainty has been extended, markets seem reassured by the possibility of exemptions and ongoing trade talks—particularly with the EU, which has not yet received a tariff letter. Analysts note the new tariffs could raise the effective U.S. import rate to 17.3%, but expect muted consumer price impact.

China’s producer prices fell 3.6% year-on-year in June, the steepest drop in nearly two years, as aggressive price competition and sluggish consumer demand deepen deflationary pressures. While consumer prices edged up 0.1%—marking the first positive reading in five months—economists warn the rebound is fragile, driven largely by short-term subsidies. Core inflation rose to 0.7%, but overcapacity and ongoing price wars continue to weigh on profitability, with industrial profits down 9.1% in May. Policymakers criticized unsustainable discounting and signalled tighter regulation, though Beijing remains cautious about large-scale stimulus as it waits to see how export dynamics evolve.

New U.S. tariffs on imports from Japan and South Korea are piling pressure on two of Asia’s most export-reliant economies, both of which saw GDP contract in Q1. Exports accounted for 22% of Japan’s and 44% of South Korea’s GDP in 2023. The U.S.—their largest versus second-largest export markets respectively—imported $145.8 billion in goods from Japan and $127.8 billion from South Korea in 2024. Existing tariffs on autos and steel have already weighed on growth, and now a 25% rate is being extended or reaffirmed on key goods like automobiles and steel. Japan’s GDP is expected to shrink by 0.1 percentage point by end-2026 due to the new tariffs, with economists warning the country may enter a technical recession if growth stalls further. Meanwhile, South Korea’s central bank slashed its 2025 growth forecast from 1.5% to 0.8%, citing weaker exports.

The 6M Euribor decreased with 1 basis point to 2.02% compared to previous business day. The 10Y Swap increased with 4 basis points to 2.64% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.