Financial Markets Daily Report24 July 2025
The announcement of a U.S. - Japan trade deal and hopes of a deal between the EU and the U.S. unleashed investors' risk-on sentiment in yesterday's session. Global stock markets rallied and sovereign yields declined across the board. Safe-haven assets (such as gold and the CHF) retreated while the EUR strengthened towards $1.18.
Market expectations about the Fed's next moves were little changed, with investors seeing no changes in July, assigning a 65% probability to a 25bp September cut and pricing another cut in December. However, yesterday's session did see a drop in the market-implied odds of an ECB September cut towards 40% (from 50%).
On the data front, consumer confidence improved in the euro area in July according to the European Commission's index (-14.7, below its historical average but touching a 4-month high). Today the focus will be on the ECB's monetary policy meeting (markets assign a 99% probability to no changes in rates) as well as the release of July preliminary PMI indices.