Banana Republic

Oh yes, and after publicly calling out the inappropriately high expenses (they were) of the FED's building renovations, Trump announced torching US$200 million on a ballroom.

 

Donald Trump announces plans for new $200mn White House ballroom [FT]

Merchants Bank sees 50% drop in income, cites mortgage fraud [The Real Deal]

United States

US Economic Indicators

FED keeps FED Funds at 4.25/4.5% with inflation edging up, GDP at something like 1.5% per annum this year as numbers confused by tariffs and Gold repatriation i.e. unreliable, and a fictitious employment report. 

10 year yields dropped below long-term support again but we're seen this before. 

US 10 Year Government Bond Yield Monthly

The AI spending boom is eating the US economy [Sherwood.News]

China

China Economic Indicators

Data suggesting more negative economic activity but policy makers are distracted by the severe flooding;

1. Southwestern China – Guizhou & Hunan

• Torrential rains triggered “once‑in‑50‑years” flooding in Rongjiang county, Guizhou. Water levels surged more than 4 m above safe thresholds, forcing 80,000+ people to evacuate and resulting in at least six deaths. 

• Similar devastation in Hunan province, displacing over 95,000 people and affecting 400,000 residents. 

2. Northern China – Beijing & Surrounding Regions

• In Beijing, especially Miyun and Yanqing districts, nearly a year’s worth of rainfall fell over just a few days—up to 543 mm in one area—causing landslides, power outages in over 130 villages, and flooded roads.

• The death toll in Northern China has climbed to at least between 38 and 70 people, depending on the source. Included among the victims were 31 elderly residents at a nursing home in Miyun District who tragically drowned. 

• Over 80,000 people have been evacuated in northern regions. 

3. Nationwide Alerts & Causal Factors

• Authorities have issued flood, landslide, and monsoon warnings across 11 provinces, including Hebei, Shanxi, and Jilin, amid rising rivers and unstable mountain torrents. 

• Experts attribute the spike in intensity and frequency of rainfall to climate change, which exacerbates extreme weather and stresses aging infrastructure.

China launches $500 annual baby subsidy in effort to boost births [FT]

Japan

Japan Economic Indicators

Rates held at 0.5% and JGB yields still marching higher despite inflation numbers looking more benign. But it's not about economics. No-one, that doesn't have to, is going to buy a 10 year JGB at 1.5% with inflation at 2.5/3.0%. There's no reason to. Until rates are significantly higher for domestic investors, or significantly higher and YEN significantly weaker for overseas investors, BoJ and MoF are wasting their time. And everybody knows it.

With Bank of Japan owning 80% of ETF market and 50% of JGB market, it's a farce. Luckily the world has bigger problems to deal with otherwise the bond vigilantes would have Tokyo firmly in their sights.

Japan 10 Year Government Bond Yield Monthly

Europe

EU Economic Indicators

Probably the second best economic region in the world currently but only as the second cleanest shirt in a dirty laundry. But stable and that's a rare thing these days.

The Euro remains outside of the secular bear channel that started at the GFC.

Despite American experts calling the US/EU trade deal a disaster for the EU, the EC is benefitting from investment flows from the US where domestic entities are diversifying away from what always has been US only portfolios

EUR/USD Monthly

United Kingdom

UK Economic Indicators

No change in rates this week, and Starmer and Reeves firmly hiding in their bunker.

Canada

Canada Economic Indicators

Bank of Canada holds rate in front of tariff announcements.

Although 35% is a big number an effective rate of 5% is best in class currently. More TACO?

Key Decision

• The overnight policy rate was held steady at 2.75%, marking the third consecutive hold since it reached that level in March 2025. 

Central Bank Commentary & Economic Outlook

• Officials signalled an “easing bias”, indicating a willingness to cut rates if economic conditions deteriorate further and inflation remains subdued.

• The Bank noted growing economic slack, estimating the output gap between –1.5% and –0.5%, up from the previous range of –1.0% to 0%.

• While headline inflation is near 2%, core inflation remains elevated around 2.5–3%—a persistent concern. 

Economic Context

• Emerging data show Canada’s economy facing headwinds: Exports down sharply, Q2 GDP fell more than expected (estimated –1.5%), though more recent estimates suggest only minimal second-quarter downturn. 

• The labour market remains firm, including strong job growth in June, while wage growth is slowing. 

Outlook & Forward Guidance

• A majority of economists still expect two more 25-bps cuts by year‑end, potentially lowering rates to 2.25%—though this hinges on falling core inflation and increasing economic softness.

• Shorter-term, however, the focus remains on data dependency—the Bank will monitor incoming indicators before committing to any easing.

Summary in a Nutshell

Aspect	Key Takeaway
Rate Decision	Held at 2.75%
Inflation	Headline near 2%, core too high (~2.5–3%)
Growth Outlook	Q2 weaker; moderate growth expected later
Main Risk	Ongoing U.S. trade uncertainty and tariffs
Forward Bias	Easing bias signalled; cuts likely later in 2025 if data softens

A Quarter of Employed Canadians Now Work For The Government [Better Dwelling]

Australia

Australia Economic Indicators

10% tariffs for Australia but conversations coming re military and financial contributions to existing arrangement, AUKUS for example.

Like London buses we finally got a raft of data, with CPI still getting lower but remaining elevated, and the same for PPI but higher numbers. With strong retail sales in June less likelihood of RBA cut and supportive of AUD.

However the Aussie is bang up against a 15 year downtrend and will need significant help from a much weaker USD to convincingly break through. 

AUD/USD Monthly

Don’t cry for me, Australia [The Spectator]

Eye-watering cost to negotiate Victorian Indigenous treaty revealed amid government push to expand powers of state Voice [Sky News]

What's Next?

Watch equity markets for a bigger correction as AI/Semiconductor news can't get any better than it is now. Bank of England monetary policy meeting will be a non-event but US 10 and 30 year auctions definitely won't.

Flows out of equities may surprise in where they end up.

This Week's Important Economic Indicators [London time]