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MNI BRIEF: Fed's Powell: Getting More Confident On Rate Cuts

Last three readings add to confidence that inflation is moving sustainably toward 2%, Fed chair says.

LATEST INSIGHT

MNI Europe Pi (Positioning Indicator): German Longs Building

Structural positioning in European bond futures has continued to lean to the short side since early May.

MNI Gilt Week Ahead: Huge Week for UK Data and the King's Speech

It’s a big week for the UK with the release of inflation and the King's Speech on Wednesday as well as labour market data Thursday.

Political Risk

Attempt On Trump's Life Could Galvanise Support Amongst Soft Support Base

A new survey from ABC News/Washington Post/Ipsos has found that former President Donald Trump has stronger support than President Biden amongst his core base. The survey is notable as it shows that both Biden and Trump have large blocs of soft support who have "reservations" about their candidacy - a dynamic which could swing towards Trump in the wake of the attempt on his life.

  • ABC: “Trump's support is deeper than Biden's -- 57% of Trump supporters strongly favor him, while just 34% of Biden's supporters strongly back their candidate. And Biden's strong support is down 10 percentage points from April after his widely criticized performance in the June 27 debate.”
  • ABC adds: “Notably, three in 10 Biden supporters say they're mainly motivated not by support for Biden but by dislike of Trump. In contrast, just 12% of Trump's supporters mainly dislike Biden. Given that dislike can be a motivator, this result helps Biden counter Trump's strong support.”
  • Pollster Frank Luntz said in a thread on X: “…what happened in PA will definitely impact the final vote, guaranteeing that every Trump voter will actually vote.”
  • Luntz adds: “In recent months, President Trump has benefited from more passionate and engaged followers than the Biden campaign, but the shooting will turn that intensity gap into a chasm. That participation gap is worth at least +1% to +2%. And because the shooting happened in Pennsylvania, the impact will be most significant in Pennsylvania.”

Figure 1: 2024 Presidential Candidates, Strength of Support

Source: ABC News

Israel Remains Committed To Ceasefire, US State Dept

US State Department spokesperson Matthew Miller has told reporters that Israel is "still committed to reaching a ceasefire," despite concerns conveyed by Secretary of State Antony Blinken, "about recent civilian casualties in Gaza."

  • Miller says Blinken, Israeli Minister of Strategic Affairs, Ron Dermer, and Head of the Israeli National Security Council, Tzachi Hanegbi, met on Monday to discuss the latest on ceasefire negotiations.
  • Miller adds: "We believe the remaining issues between Israel and Hamas on a ceasefire deal are issues that can be solved."
  • Comes after Reuters reported on July 13: "Gaza ceasefire talks have been halted after three days of intense negotiations failed to produce a viable outcome, two Egyptian security sources said on Saturday, blaming Israel for lacking a genuine intent to reach agreement."
  • On recent Israeli strikes, Miller says: "Israel has the right to target militants, but that does not justify attacks on civilians."
  • Barak Ravid at Axios reports: "U.S. ambassador to Israel Jack Lew says in a briefing to the Jewish community in the U.S. that while it is not confirmed, there are indications that Israel managed to kill the commander of Hamas' military wing Mohammed Def."
  • Ravid adds: "The Israeli security cabinet will convene tomorrow and discuss the Gaza hostage and ceasefire deal, an Israeli official says."

Germany Appears Set To Abstain From EU Vote On Imposing China Tariffs

MNI London: Wires carrying comments from German Minister for Economic Affairs and Climate Action, Robert Habeck, ahead of a Monday midnight deadline for all 27 EU members states to declare their position on imposing EU tariffs on Chinese electric vehicles.

  • Habeck said: “Germany contributed to discussion on duties on EVs from China without making a decision... It is crucial to seek a rapid and consensual solution with China.”
  • Habeck added: “Only when decision on final tariffs is made is a decision by EU member states important, as it is legally binding.”
  • Reuters reports that, "Italy and Spain are backing European Union tariffs on imports of China-built electric vehicles..."
  • Reuters notes: "The vote is non-binding, but it could influence the final conclusion of the European Commission, which oversees the bloc's trade policy. It set provisional duties of up to 37.6% on EVs imported from China, ratcheting up tensions with Beijing."
  • Habeck said last week: “A race over tariffs is wrong. Wrong for an export nation like Germany, wrong for an automotive nation like Germany, but ultimately also wrong for consumers.”
  • Bloomberg notes that, “competition from China is undercutting German prices in nearly all areas of production. While average Chinese EV prices decreased to €32,000, Germany’s average EV price increased over the past years to €52,700. Support for German carmakers could come from the EU’s announced tariffs against Chinese EV’s — if there weren’t the potential counter tariffs from China.”

Metsola Set To Be Re-Elected As Parl't Pres. On 16 July

The 10th European Parliament meets for its constitutive plenary session on Tuesday following the 6-9 June elections. The first action at 1000CET (0400ET, 0900BST) will be to elect the President of the Parliament. Incumbent President Roberta Metsola is set for another two-and-a-half-year term in office. Metsola, from the Maltese centre-right Nationalist Party, is the candidate of the centre-right European People's Party (EPP).

  • Once the President is elected the fourteen vice presidents will be elected, followed by the election of the five 'quaestors' (who manage the administrative and financial business of the chamber) on Wednesday 17 July).
  • Euronews reports that the VP votes "...will assess the effectiveness of the cordon sanitaire: [the right-wing nationalist] Patriots for Europe is vying to secure one of the vice-presidents, something that the EPP, the Socialists and the Liberals have vowed to prevent."
  • The re-election of Metsola is seen as a fait accompli, having built a reputation as a popular, moderate, consensus-builder since taking over from the late David Sassoli in Jan 2022. She will serve until January 2027 when the centre-left Socialists and Democrats (S&D) group will put forward its own candidate.
  • Metsola's re-election is likely to be one of the few 'simple' tasks for MEPs in this constitutive session. The vote to approve Commission President Ursula von der Leyen for another five-year term is likely to be much closer and require more political horse-trading in order to ensure a majority for the German former defence minister.

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