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By Reuters
Published 3 weeks ago on
July 15, 2025

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 19, 2020. (Reuters File)

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LONDON – U.S. shares opened higher on Tuesday, and Treasury yields inched down, as investors digested an expected slight pick-up in inflation alongside a raft of moderately positive quarterly results from big banks.

The S&P 500 opened up 0.5% with the Nasdaq up 0.9% after the data that showed U.S. consumer prices increased 0.3% in June, in line with forecasts, but the largest gain since January.

The data likely marks the start of a tariff-induced increase in inflation that has kept the Federal Reserve cautious about resuming its interest rate cuts, but did not offer any reason for it to increase its caution.

U.S. futures had earlier taken a lift after megacap Nvidia said it would resume sales of its H20 chips to China, sending its shares up around 4%.

Europe’s Stoxx 600 also rose, and was last up 0.3%

Traders stuck to their bets that the Federal Reserve is more likely than not to cut rates in September, continuing to price around a 60% chance of a move after the data.

Benchmark 10-year Treasury yields dropped around 2 basis points to 4.41%. [US/]

“The market is reacting to month-on-month core CPI which was slightly below expectations, but marginally,” said Nick Rees, head of macro strategy at Monex Europe.

“What this does is set up a big fight between the Fed and the president. It gives enough of a reason for the Fed at least not to cut in June and feel pretty nervous about cutting in September, but just enough to convince Trump they should be.”

In contrast to the Fed’s cautious stance, U.S. President Donald Trump has repeatedly said U.S. interest rates should be significantly lower.

Investors were also processing results from JPMorgan Chase, Citigroup and Wells Fargo which beat expectations, but saw a mixed market response, with Wells Fargo down 3% as it cut its 2025 net interest income guidance, but Citi up 3%, and JPMorgan up 1%.

S&P 500 profits are expected to rise 5.8% year-over-year, according to LSEG data.

The outlook has dimmed sharply since the early April forecast of 10.2% growth, before Trump launched his trade war.

Trade War

Trade remained in focus for the big picture on Tuesday as well, after U.S. President Donald Trump threatened over the weekend to impose 30% duties on the European Union and Mexico from August 1 – above the 20% on the EU he had initially proposed in April.

However, giving support to investor bets that the final levels will be lower, Trump said on Monday he was open to further negotiations before the tariffs kick in.

Japan is also reportedly trying to schedule high-level talks with the U.S. this Friday.

“At face value it (the tariff level for Europe) was clearly worse than expected,” said Andrzej Szczepaniak, senior Europe economist at Nomura.

“However, this is likely to be seen as a bargaining tool ahead of 1 August, in line with how investors perceived most letters (from Trump to trading partners) from last week.”

Japanese Election

It is not just U.S. politics that is top of mind for global investors, with an upcoming election to Japan’s upper house shaking up the Japanese government bond market and spilling over into other markets.

Polls show the ruling coalition may lose its majority in the upper house to opponents who advocate more spending.

Worries about the impact on Japan’s already-frail finances caused Japanese government bond prices to plunge for another day, with the benchmark 10-year yield rising to 1.595%, its highest since October 2008. [JP/]

Higher Japanese yields have also been factors in sending long-dated European and even U.S. yields higher in recent days, though Germany’s 30-year yield, which hit a near two-year high Monday, was down 6 basis points on Tuesday at 3.19%. [GVD/EUR] [US/]

Also in Asia, data showed China’s economy slowed less than expected in the second quarter in a show of resilience against U.S. tariffs.

Moves in currency markets on Tuesday were muted. The euro was flat on the dollar at $1.1665, though the dollar did gain 0.4% on the Japanese yen. [FRX/]

Gold strengthened 0.3% to $3,351 per ounce, while spot silver was flat at $38.14 per ounce after hitting its highest since September 2011 in the previous session. [GOL/]

Oil was near flat, with Brent futures at $69.18 a barrel and U.S. futures at $67.0 a barrel [O/R].

(Reporting by Alun John and Lawrence White in London and Rocky Swift in Tokyo. Editing by Sonali Paul, Bernadette Baum, Mark Potter and Aidan Lewis)

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