Support Daily discussion thread for July 23, 2026
The Trump administration has announced new 10% and 12.5% tariffs on 60 trading partners, alleging forced-labour violations. This decision has reignited inflation fears, pushed US Treasury yields higher, and dragged major equity benchmarks downward.
A new US 10%–12.5% tariffs announcement targets 60 trading partners, although key commodities such as crude oil remain exempt.
10-year US Treasury yields and Brent crude (surpassing $100 per barrel) spiked, raising the market-implied probability of Federal Reserve interest rate hikes in 2026.
The S&P 500, Dow Jones, and Nasdaq fell in tandem as heavy declines in Tesla (-14.5%) and Alphabet (-7.1%) weighed on sentiment.
The European Central Bank maintained its benchmark rate at 2.4%, adopting a cautious stance amidst global geopolitical friction.
US imposes new tariffs on 60 trading partners alleging forced-labour violations
According to reports from CNBC, the Trump administration will implement new tariffs after midnight on Friday against 60 trading partners, citing forced-labour violations. In turn, Reuters reports that these new tariffs will range between 10% and 12.5%, coming directly as a temporary 10% global tariff expires. This renewed protectionist policy follows the recent announcement of 25% tariffs on Brazilian imports and 50% tariffs on Canadian goods, both set to take effect next month.
Notably, a US administration official clarified that several key commodities will be exempt, including oil, gas, fertiliser, steel, aluminium, and copper, as well as highly integrated North American supply chains covered under the USMCA agreement, as quoted by Reuters.
Following the announcement, the 10-year US Treasury bond yield rose by 4 basis points to 4.7%, driven by concerns that persistent tariffs could generate sticky inflation for US consumers. Concurrently, the Brent crude futures contract (BRNU6) advanced by 7.04% to $100.69 per barrel amidst escalating geopolitical tensions in the Middle East, while the West Texas Intermediate (WTI) futures contract (CLU6) increased by 6.18% to $92.19 per barrel. Consequently, the benchmark US Treasury yield reached its highest level since January 2025, suggesting market participants could be expecting an imminent pivot by the Federal Reserve towards a more restrictive monetary stance to counter rising inflation expectations.
According to the CME FedWatch Tool, the probability of an interest rate hike at the Fed’s July meeting reached 35.8%, remaining as the second most likely outcome. Meanwhile, the market-implied likelihood of a hike at the September meeting reached 56%, representing the highest scenario.
US stock benchmarks fall amid persistent concerns over AI investment and valuations
Main US equity benchmarks dropped in tandem amidst compounding commercial, geopolitical, and inflationary concerns. Furthermore, persistent market anxieties regarding heavy artificial intelligence (AI) capital expenditure and stretched valuations continued to weigh heavily on broader indices.
In terms of Q2 earnings reports, Tesla led the market downturn, with shares in the automotive giant depreciating by 14.52% to close at $319.69 after missing analyst expectations on earnings per share (EPS). At yesterday's market close, Tesla reported total quarterly revenue of $28.24 billion, exceeding analyst forecasts of $25.55 billion. However, the firm delivered EPS of $0.33, which fell short of the consensus estimate of $0.49.
Additionally, despite technology giant Alphabet beating analyst estimates on both top and bottom lines, its shares declined by 7.13% to $317.69 under intense scrutiny regarding its AI capital allocation. Alphabet posted revenue of $119.8 billion, comfortably above the forecast of $116.51 billion, alongside EPS of $9.11, significantly surpassing the consensus estimate of $2.88.
Consequently, major US equity benchmarks retreated across the board: the S&P 500 index decreased by 1.21% to 7,408 points, the Dow Jones Industrial Average declined by 0.97% to 51,717, and the tech-heavy Nasdaq 100 dropped by 1.87% to 28,454 points.
ECB decides to keep benchmark interest rate unchanged in line with estimates
The European Central Bank (ECB) decided to maintain its benchmark interest rate at 2.4%, fully in line with market expectations. ECB policymakers adopted a cautious "wait and see" posture, observing that underlying price pressures persist and that geopolitical instability in the Middle East continues to generate significant uncertainty. Crucially, the ECB noted that it will continue evaluating the broader inflationary ramifications stemming from current global instability.
Figure 1. Euro Area Interest Rate (2021–2026). Source: Data from the European Central Bank; Figure obtained from Trading Economics.
