Daily Brief | July 21 2025

Top News

·     The People’s Bank of China decided to leave its benchmark interest rates unchanged in July.

·     The European Union is considering a broader set of potential countermeasures against the United States, as hopes of reaching an acceptable trade agreement with Washington continue to fade, according to EU diplomats.

·     Companies in the Eurozone remain optimistic about their growth prospects, but are also facing pressure on their profit margins, partly due to trade tensions, according to a survey by the European Central Bank.

·     Japanese Prime Minister Shigeru Ishiba vowed on Monday to remain in office after his ruling coalition suffered a heavy defeat in upper house elections, prompting some within his own party to question his leadership. 

Economic Outlook

The People’s Bank of China decided to keep its benchmark lending rates unchanged in July. In its latest monetary policy decision, the central bank left the one-year loan prime rate at 3.0% and the five-year rate at 3.5%, both at historic lows and in line with market expectations. The move came after second-quarter economic data showed annual GDP growth of 5.2%, slightly above forecasts but slower than the pace observed in the previous two quarters. Despite the headline figure, signs of weakness in domestic demand, producer price deflation, and a prolonged adjustment in the property sector persist. Against this backdrop, authorities opted to maintain a cautious stance following a 10-basis-point cut in May. The one-year rate serves as the benchmark for most corporate and consumer loans, while the five-year rate underpins mortgage lending; both have remained at their lowest levels since being adopted as key policy tools in 2019. Although growth has shown some resilience in the face of newly imposed U.S. tariffs, analysts expect the central bank may deliver further rate cuts in the second half of the year, particularly if deflationary pressures continue and a sustained recovery in domestic demand fails to materialize.

Markets and Stocks

U.S. major index futures are trading higher this morning as earnings season continues. U.S. Commerce Secretary Howard Lutnick reiterated that August 1 is the deadline for countries to begin paying tariffs, though negotiations can continue beyond that date. Meanwhile, earnings season has had a strong start, with over 85% of the 62 S&P 500 companies that have already reported exceeding expectations. In Europe, London-listed companies issued 59 profit warnings in the second quarter, a 20% increase from the prior year, with 46% citing policy changes and geopolitical uncertainty. In Asia, markets closed mixed after the People’s Bank of China kept its 1-year and 5-year loan prime rates unchanged.

In the commodities market, oil prices saw a slight decrease. The latest European sanctions on Russian oil are expected to have minimal impact on supplies, while threats of U.S. tariffs continue to weigh on demand concerns. Gold prices stood at $3,387 per ounce, boosted by a weaker U.S. dollar, as investors seek clarity on trade developments ahead of the August 1 U.S. tariff deadline.

In fixed income, U.S. Treasury yields remained lower. The 10-year bond yield was at 4.37%, while the 2-year bond yield stood at 3.85%.

Today, Volaris will report its second-quarter 2025 results after market close. We anticipate weak revenues due to pressures in the VFR segment and the peso’s depreciation during the quarter. The most relevant aspect will be the updated guidance, as the airline had previously withdrawn its current outlook citing high macroeconomic uncertainty.

Corporate News

– Stellantis announced it expects a net loss of 2.3 billion euros in the first half of the year, leading to a drop in its shares. This projection is attributed to net pre-tax charges, as well as the initial effects of U.S. tariffs and higher industrial costs. Additionally, the company’s vehicle shipments in the second quarter decreased by 6% year-over-year, with a significant decline in North America.

– Verizon raised the lower end of its annual profit forecast, which boosted its shares. This comes from strong demand for its higher-tier plans and a 2.2% increase in wireless service revenues. Despite a drop in monthly-paying wireless subscribers, the company surpassed revenue and earnings per share expectations.

– Block’s shares rose more than 10% as the fintech company is set to join the S&P 500 index, replacing Hess.