On Wednesday, a sense of unease continues to permeate the broader economic outlook, as inflation concerns once again come into focus. Even mild signs of rising prices were enough to prompt investors to reassess their expectations and strategies. Deutsche Bank issued a note lamenting the "remarkable complacency" across key assets when it comes to inflation.

Tuesday's inflation report amounted to little more than a reaffirmation of the Federal Reserve's prevailing mood: one of cautious inertia. Consumer prices rose 0.3% month-on-month, a movement neither jarring nor revelatory. Core CPI, the Fed's preferred gauge, inched up just 0.2%, modestly undershooting forecasts. On a year-over-year basis, headline inflation ticked up to 2.7%, from 2.4% in May, while core inflation held steady at 2.9%—numbers that hum rather than shout. The true impact of new tariffs on domestic prices remains, for now, elusive. In this uncertain light, the Fed appears content to wait. The probability of a September rate cut has slipped to 52%, from 59%, a statistical shrug suggesting that monetary policy will remain on pause. Investors may tolerate this ambiguity—for a while. Whether Donald Trump extends the same courtesy to Jerome Powell is another question entirely.

The trigger for inflation this time? Tariffs, drawn from the pen of Donald Trump. in the latest salvo, he's unveiled a 19% tariff on Indonesian imports. It's part of a broader, hastily-stitched web of protectionist maneuvers set to unfurl by August 1. It's a chess game with the clock running out, and Brussels is already laying the groundwork for retaliation.

American semiconductor stocks—Applied Materials, Lam Research, KLA Corp, and Teradyne—are feeling the tariff tremor first. Their shares slipped after Dutch peer ASML offered a bleak prophecy: growth in 2026, once assumed, is now uncertain. And in this climate, uncertainty is the ultimate contagion.

Yet while silicon sagged, the banks fared better. Bank of America offered a surprise glimmer: a bump in quarterly profit, a reward for navigating turbulent markets with uncommon dexterity. JPMorgan and Citigroup, too, posted better-than-expected earnings on Tuesday—though with a caution more telling than their margins. Then there's Johnson & Johnson, the reliable old warhorse of American pharma, trotting ahead with a second-quarter beat and a full-year sales forecast plumped by $2 billion. 

This morning, the Producer Price Index was released—another piece of the puzzle. The market was waiting for reassurance. In June, U.S. producer prices were flat month-over-month, falling short of the expected 0.2% rise, while the year-over-year increase of 2.3% also undershot the anticipated 2.5%. This subdued PPI reading aligns with Tuesday's CPI data, which portrayed core inflation as more muted than forecast. The broader inflation narrative—characterized by modest monthly increases and steady core readings—reinforces the Federal Reserve's current stance of cautious patience. With little in the way of price pressure surprises, policymakers seem inclined to delay action, evidenced by the slight drop in the probability of a September rate cut. Amid geopolitical uncertainties and opaque tariff impacts, the Fed's wait-and-see approach is likely to persist—at least for now.

In Asia-Pacific trading this morning, the Nikkei remained just above zero, and so did the Hang Seng, while South Korea's Kospi fell 1.08%, as did Australia's ASX (-0.82%) and India's Sensex (-0.19%). European indices are mostly in the green, while Wall Street futures are just hovering near zero. 

Today's economic highlights:

On today's agenda: in the United Kingdom, the CPI GM and the CPICH GA; in the eurozone, the trade balance CVS; in the United States, the final demand PPI GM, capacity utilization, industrial production GM, and DOE crude oil inventories. See the full calendar here.

  • Dollar index: 98,255
  • Gold: $3,335
  • Crude Oil (BRENT): $68.01 (WTI) $65.76
  • United States 10 years: 4.47%
  • BITCOIN: $119,020

In corporate news:

  • JPMorgan Chase reported a decline in Q2 profits due to tough comparisons with the previous year's accounting gain.
  • Citigroup reported a 25% profit jump due to market volatility and improved investment banking outlooks.
  • Wells Fargo reported strong earnings amidst economic uncertainties.
  • Boeing involved in a trade deal with Indonesia for 50 jets; India orders inspections of Boeing aircraft.
  • Gulf Air is considering a firm order for around 12 Boeing 787 Dreamliners, with options to purchase additional aircraft.
  • Goldman Sachs reported a 22% rise in Q2 profit to $3.7 billion, driven by record equities trading revenue and a resurgence in investment banking.
  • Morgan Stanley posted Q2 profit of $3.5 billion, as strong trading revenue offset declines in investment banking.
  • Hewlett Packard Enterprise reached a cooperation deal with Elliott Investment Management and appointed tech veteran Robert Calderoni to its board.
  • Bank of America beat Q2 profit expectations with $7.1 billion in earnings, buoyed by strong trading gains and rising interest income.
  • Thermo Fisher Scientific is acquiring Sanofi's Ridgefield, NJ site as part of an expanded partnership to boost U.S. drug manufacturing capacity.
  • Apollo Global Management is in talks to invest in Atletico Madrid, potentially acquiring a stake in the club's holding company via a capital increase.
  • Tesla registered a new six-seater Model Y L in China, hinting at a fall launch for the extended-wheelbase variant.
  • PNC Financial Services posted Q2 earnings of $1.64 billion, surpassing expectations due to strong loan growth and higher net interest income.
  • Johnson & Johnson raised its 2025 forecast after Q2 sales and profit exceeded expectations, helped by strong performance in its medtech and Darzalex cancer drug segments.
  • AngloGold Ashanti announced it will acquire Augusta Gold Corp for C$1.70 per share, valuing the deal at about C$197 million.
  • M&T Bank reported a 9% increase in Q2 profit to $679 million, helped by higher fee income and reduced credit loss provisions.
  • First Horizon posted higher Q2 net income of $233 million and raised its EPS to $0.45, citing operational strength and geographic positioning.

Analyst Recommendations:

  • Airbnb, Inc.: Zacks upgrades to outperform from neutral with a price target raised from USD 138 to USD 159.
  • Atlassian Corporation: Capital One Securities downgrades to equalweight from overweight with a target price reduced from USD 241 to USD 211.
  • Axalta Coating Systems: BMO Capital Markets downgrades to market perform from outperform and reduces the target price from USD 51 to USD 33.
  • Cnh Industrial N.v.: Goldman Sachs downgrades to neutral from buy with a target price reduced from USD 12.50 to USD 11.50.
  • Dexcom, Inc.: Zacks upgrades to outperform from neutral with a price target raised from USD 92 to USD 98.
  • Fluor Corporation: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Gitlab Inc.: Capital One Securities downgrades to equalweight from overweight with a target price reduced from USD 54 to USD 46.
  • Jacobs Solutions Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 155.
  • Phillips 66: Citi downgrades to neutral from buy with a target price raised from USD 126 to USD 130.
  • Sprouts Farmers Market, Inc.: Zacks downgrades to neutral from outperform with a price target reduced from USD 186 to USD 174.
  • Valero Energy Corporation: Citi downgrades to neutral from buy with a target price raised from USD 134 to USD 150.
  • Amd (Advanced Micro Devices): Deutsche Bank maintains its hold recommendation with a price target raised from 105 to USD 130.
  • Aptiv Plc: Barclays maintains its equalweight recommendation and raises the target price from 65 to USD 85.
  • Citigroup Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 84 to USD 104.
  • Datadog, Inc.: Cantor Fitzgerald maintains its overweight recommendation and raises the target price from USD 134 to USD 171.
  • Ford Motor Company: Barclays maintains its equalweight recommendation and raises the target price from 9 to USD 11.
  • Fortive Corporation: Mizuho Securities maintains its outperform recommendation and reduces the target price from USD 85 to USD 65.
  • Ge Vernova Inc.: JP Morgan maintains its overweight recommendation and raises the target price from 460 to USD 620.
  • General Motors Company: Barclays maintains its equalweight recommendation with a price target raised from 45 to USD 55.
  • Marathon Petroleum Corporation: Citigroup remains neutral recommendation with a price target raised from USD 144 to USD 182.
  • Norwegian Cruise Line Holdings Ltd.: Goldman Sachs maintains its buy recommendation and raises the target price from 18 to USD 26.
  • Royal Caribbean Group: Goldman Sachs maintains its buy recommendation and raises the target price from USD 260 to USD 364.
  • Unity Software Inc.: Jefferies maintains its buy recommendation and raises the target price from USD 29 to USD 35.