Market Quick Take – 26 June 2025

Market drivers and catalysts

• Equities: Nvidia drives Nasdaq higher; Europe cautious; defense stocks up on NATO spending
• Volatility: VIX falls to new lows; short-term calm, longer-term risks linger
• Digital assets: BTC steady above $107k; IBIT inflows; ETHA softens after rally; institutional focus
• Fixed Income: US short treasury yields fall again on speculation of early Fed Chair nomination to replace Powell
• Currencies: USD weakens to new three-year lows
• Commodities: Platinum hits 11-year high. Key crops tumble amid perfect growing conditions
• Macro events: US Weekly Jobless Claims

Macro data and headlines

• Trump could speed up naming Jerome Powell's successor as Fed Chair due to frustration with slow interest rate cuts, the Wall Street Journal reported Wednesday. Candidates would be those who have argued the Fed policy rate should be lower, leading to a downward shift in rate expectations.
• The Federal Reserve has proposed lowering capital requirements under the enhanced supplementary leverage ratio, allowing large banks to hold more U.S. Treasuries and better support the $29 trillion market. While aimed at improving Treasury market stability, critics like Governor Michael Barr warn it could weaken safeguards and heighten the risk of bank failures.
• US Fed Chair Powell said stagflation isn't the current scenario for the Fed. He noted a potential inflation shock requires careful handling, as inflation exceeds the 2% target. Powell stressed cautious policy to avoid long-term economic costs, without committing to a firm inflation outlook.
• US new single-family home sales fell by 13.7% in May 2025 to 623,000 units, reversing April's 9.6% rise. This was below the expected 700,000 units, the sharpest drop since June 2022, as higher mortgage rates and economic uncertainty led households to delay buying..

Macro calendar highlights (times in GMT)

0600 – Germany July Gfk Consumer Confidence
1230 – US May Goods Trade Balance
1230 – US 1Q GDP (Third estimate)
1230 – US 1Q Personal Consumption, PCE
1230 – US Weekly Jobless Claims
1430 – EIA's Weekly Natural Gas Storage Change
1700 – US to Sell $44 billion 7-year Notes

Earnings events

• Today: Nike, Hennes & Mauritz
  
  For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• US: US stocks were steady on Wednesday, with the S&P 500 flat and the Nasdaq hitting a new record as Nvidia rallied over 4%. Fed Chair Powell signaled caution on rate cuts, citing tariff-related inflation risk, but left the door open if data softens. Tech outperformed, with Nvidia, Alphabet, and AMD all strong; Tesla slid on weak European sales. Energy prices stayed low as Middle East tensions eased, while US futures point to little change ahead of jobless claims and Nike earnings.
• Europe: European markets closed lower, with the DAX down 0.6% and CAC 40 off 0.7% as investors assessed NATO’s move to lift defense spending targets. Defense stocks like Rheinmetall outperformed, but banks and consumer names lagged. The FTSE 100 fell to a four-week low despite a boost for defense firms. Shell and BP declined amid denied merger rumors. Sentiment is cautious, with little data due except German consumer confidence.
• UK: The FTSE 100 dropped 0.46%, led by weakness in oil, advertising, and pharma stocks. WPP and BP slipped, while Babcock surged on better guidance and a buyback plan. Defense names benefited from NATO’s new 5% GDP spending goal. Broader data shows British living standards remain stagnant, and job cuts are in focus for small businesses. UK futures indicate a muted open.
• Asia: Asian markets were mixed: the Nikkei jumped 1.6% on tech strength as Nvidia’s rally lifted Japanese chip names, while the Hang Seng pulled back after a four-day climb. South Korea’s KOSPI fell 2% on profit-taking. China’s markets were quiet as investors watched the July 9 US tariff deadline. Hong Kong remains near three-month highs, helped by optimism about China’s consumer sector.

Volatility

Volatility continues to fade, with the VIX closing at 16.76—its lowest in over a month. Short-term volatility dropped further, and bond market nerves are easing, as seen in multi-month lows for Treasury volatility. Investors seem more confident as war and inflation fears subside, though demand for longer-term protection remains. For long-term investors, markets are more stable, but surprises can still happen around events like the July Fed meeting.

Digital Assets

Bitcoin is steady near $107,700, up 1.3% in 24 hours, reflecting better risk sentiment as the Middle East truce holds. Spot ETFs remain in demand: BlackRock’s IBIT rose 2% to $61.28, now above $74B in assets. In contrast, ETH lags at +1.9%, and iShares’ ETHA ETF slipped 0.3% after a multi-day rally. Altcoins are mixed and trading volumes are low, signaling a selective and cautious tone. Institutional crypto adoption is in focus, with US mortgage giants set to recognize digital assets as reserves—a milestone for mainstream acceptance.

Fixed Income

• US Treasury yields fell all along the curve to new local lows yesterday and overnight with a slight steepening in the curve over the last week. The 2-year Treasury benchmark is now six basis points lower from Tuesday’s close at 3.76% while the 10-year benchmark has only fallen two basis points since Tuesday’s close, trading at 4.27%.
• European yields stayed elevated once again even as US treasury yields dropped yesterday on the anticipation of more German bond issuance to support fiscal stimulus. The German 10-year Bund trades at 2.56% this morning as the US-Germany yield spread has narrowed to 1.7%, its tightest since late April.

Commodities

• Crude trades steady for a second day following the biggest two-day drop since 2022, after Trump reaffirmed his "maximum pressure" campaign on Iranian oil, and the EIA reported another large stockpile draw to an 11-year seasonal low. Focus is on the OPEC+ meeting on 6 July, where another 411k b/d increase from August is expected, and a report saying China—the engine behind crude demand growth in the past two decades—may have peaked already.
• While gold remains stuck in a USD 3,300-400 range, platinum continues to surge higher, trading near USD 1,400, an 11-year high and a 53% YTD gain, supported by a tight supply outlook amid rising demand from Chinese jewellers, where customers are turning to platinum following gold's surge to a record earlier this year.
• The grains sector trades down 6% on the week, with losses seen across the three major crops with warm, rainy weather in the US Midwest expected to aid crop development for the recently planted corn and soy crops. Wheat has tumbled 8% amid a strong production outlook across the Northern Hemisphere, where harvesting is under way.

Currencies

• The US dollar fell again late yesterday and the weakness accelerated overnight on the story that Trump may look to appoint a new Fed Chair early in his frustration with Powell’s slow pace of easing rates. EURUSD reached a new high since 2021, testing above 1.1700 overnight before dropping back to 1.1680 as of this writing, while USDJPY fell as low as 144.57 before bouncing.
• The Norwegian krone (NOK) has been the weakest of the G10 currencies, extending lower across the board yesterday as crude oil prices have recently deflated since the spike inspired by the Iran-Israel war and brief US involvement. EURNOK trades above 11.81 after a 11.40 low last week.

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