New Summary: President Trump's Tariffs

The Wall Street Journal (gated) Fed watcher Nick Timiraos highlights division within the Federal Reserve on the path for inflation and rate cuts.

• Trump's tariff hikes are fueling internal debate at the Federal Reserve over whether to delay or advance interest rate cuts, as policymakers weigh the inflationary impact against slowing growth.
• Fed Chair Jerome Powell has signaled a more flexible stance, suggesting the bar for cutting rates may be lower than it was earlier this year, especially if inflation softens or labor market data weakens.
• A rate cut isn't expected at the upcoming meeting, but Powell has outlined conditions under which cuts could come by the end of summer—without waiting for dramatic economic deterioration.
• April's surprise tariff increases disrupted earlier Fed plans to resume rate cuts, raising fears of a stagflation scenario with rising prices and slowing growth.
• In such an environment, Fed officials would likely need clearer signs of economic cooling to be confident that any inflation spike would be temporary.

This article was written by Eamonn Sheridan at www.forexlive.com

US Mortgage Applications Rise

The volume of mortgage applications in the US soared by 9.4% from the previous week in the first week of July 2025, the most in one month, according to data compiled by the Mortgage Bankers' Association. 

It was the third consecutive weekly growth in application volumes, the longest streak since early December 2024, as benchmark mortgage rates softened to their lowest since April. 

Applications for a contract to refinance a mortgage, which are more sensitive to short-term changes in interest rates, jumped by 9% from the previous week and 56% from the corresponding period of the previous year. 

In turn, applications for a mortgage to purchase a home also rose by 9% on the week, translating to a 25% increase on an annual basis. 

source: Mortgage Bankers Association of America

US 10-Year Rate Declines

The yield on the 10-year US Treasury note fell to 4.35% on Wednesday as markets digested fresh developments on trade policy and assessed their potential impact on future rates and risk premia. 

Minutes from the FOMC's last meeting indicated that most policymakers believe that multiple rate cuts will be warranted this year. 

Still, a portion of members believe that tariffs are inflationary, prompting some projections of no cuts for the year. 

Rate futures continued to reflect bets of a cut in September followed by a cut in December. 

The 10-year note was also supported by strong demand in the latest auction. 

Meanwhile, President Trump broadened fresh tariffs on more countries, in addition to threatening aggressive levies on copper, semiconductors, and pharmaceuticals. 

Bond investors also headed to signals by Trump that the Funds rate should be around 300bps lower, aligning with expectations of a dovish nominee for next year and adding to inflation expectations in the longer term.

Fed Funds News Update

Most Fed officials considered a reduction in the fed funds rate likely to be appropriate at some point this year, noting that upward pressure on inflation from tariffs may be temporary or modest, that medium- and longer-term inflation expectations had remained well anchored, or that some weakening of economic activity and labor market conditions could occur, minutes from the last FOMC meeting in June showed. 

However, while a few participants suggested that a rate cut could occur as early as the next meeting, others argued that no reductions should take place this year. 

Meanwhile, policymakers highlighted that uncertainty about the outlook was elevated due to trade policy, other government policies, and geopolitical risks, but that overall uncertainty had diminished since the previous meeting. 

The Fed left the federal funds rate unchanged at 4.25%–4.50% for a fourth consecutive meeting in June 2025, as it waits for more clarity on the outlook for inflation and economic activity. 

source: Federal Reserve

Copper's BIG Reaction Today

Copper futures surged to record highs above $5.8 per pound before retreating to around $5.5 per pound, after US President Donald Trump announced plans to impose a 50% tariff on copper imports. 

The move is aimed at bolstering domestic production and reducing reliance on foreign supply as the US currently imports nearly half of its copper, with Chile as the primary source. 

The new tariff brings copper in line with existing 50% duties on steel and aluminum, further escalating trade tensions and fueling volatility in the metals market. 

US Commerce Secretary Howard Lutnick confirmed that the investigation into copper imports has concluded, and said he expects Trump to sign a formal proclamation by the end of July. 

Traders anticipate the higher premium will attract more shipments into the US in the short term, potentially tightening global supplies and exacerbating market imbalances.

Copper rose to 5.61 USD/Lbs on July 9, 2025, up 3.12% from the previous day. 

Over the past month, Copper's price has risen 15.04%, and is up 21.73% compared to the same time last year, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity. 

Historically, Copper reached an all time high of 5.84 in July of 2025. 

Copper - data, forecasts, historical chart - was last updated on July 9 of 2025.

Copper Futures

Copper futures fell below $5 per pound on Monday, marking a third consecutive session of losses as investors continued to grapple with global trade uncertainties. 

The decline followed US President Donald Trump's latest threat to impose an additional 10% tariff on countries aligning with what he described as "anti-American policies on BRICS." 

Analysts warned that such measures could dampen global growth and curb demand for industrial metals. 

The pullback comes after copper rallied to a three-month high last week, driven by tightening global supply and a rush to redirect shipments to the US ahead of possible import duties. 

That surge contributed to notable inventory drawdowns at both the London Metal Exchange and the Shanghai Futures Exchange. 

However, analysts caution that the rally could quickly unravel if US demand falters or if upcoming tariff announcements underwhelm market expectations.