Calm Seas, Steady Gains - Markets Navigate Trade Currents

President Donald Trump said that the US and China are "very close" to extending their trade truce, which has helped slow the escalation of tariffs. He also warned of new tariffs, announcing tariffs of up to 250% on pharmaceutical imports and 100% on semiconductors, seeking to boost local production.

In trade terms, the deficit narrowed to $60.2 billion in June, the lowest since September 2023, thanks to a sharp drop in imports (-3.7%), mainly of cars, crude oil, and pharmaceutical products. The goods deficit also contracted sharply, to USD 84.85 billion, reflecting lower demand for consumer goods and industrial inputs.

Activity indicators offered mixed signals. The S&P Global Composite PMI rose to 55.1 in July, showing solid expansion driven by services. However, the ISM services index fell to 50.1, bordering on stagnation. On the other hand, labor productivity rose 2.4% q/q, while unit labor costs increased 1.6%, representing a slowdown compared to the previous quarter.

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