Early-week trading showed a softening in equity markets as investors reacted to intensifying rhetoric around U.S. tariff policy, especially a looming 50% duty on imported copper. Yet despite the headlines, markets remained broadly steady, underlining investor confidence in larger trends like earnings momentum and central bank guidance.
Tariff rhetoric again took center stage recently following President Trump’s announcement that a steep 50% tariff on imported copper could go into effect on August 1 if concessions aren’t achieved. This threat triggered a surge in U.S. copper futures, with COMEX prices hitting a record $5.68 per pound, spurred by anticipatory stockpiling even before the tariff takes effect. Similarly, European and other global markets saw rising premiums, although some expect inventories could surge so much that prices may eventually retreat.
On the broader commodity front, analysts describe copper as the “metal with a Ph.D. in economics”—a bellwether for global economic health. Accelerated imports and storage build-ups reflect both concern and opportunism, creating an oversupply that may invert price trends post-tariff.
The consumer goods sector has felt mild heat from tariffs, notably household furniture and small electronics, where even modest duties—up to 25% from earlier rounds—are beginning to filter through retail channels. Yet market sentiment largely considers such cost pressures transitory as businesses leverage existing inventory buffers and weak goods demand limits pricing power.
Equity futures displayed a cautious tone, dipping modestly as talk of “reciprocal” tariffs resurfaced. Still, the so-called “TACO trade”—investor belief that Trump ultimately retreats from the full weight of his threats—helped maintain market equilibrium. U.S. equity benchmarks closed the week near flat, while bond markets showed a slight flattening in yields ahead of the Treasury’s 10‑year note auction.
Inflation watch remains top of mind. June’s CPI report, due Tuesday July 15, is projected to show a 0.3% monthly rise in headline and core inflation—the most pronounced tariff-led increase yet. This would lift year-over-year core inflation to around 3%, above the Fed’s 2% target but still decoupling somewhat from service-driven pressures.
Crucially, despite measured easing in April and May CPI prints, the tariff-related spike this month may pressure the Federal Reserve to delay potential rate cuts that markets have priced in, potentially shifting expectations toward September. Futures markets indicate declining odds of a June cut, although a guidepost for a September move remains in play.
Corporate earnings, especially from banking giants such as JPMorgan, Goldman Sachs, and Bank of America, are adding another layer of complexity. With robust performance expected from trading operations and supportive economic data, investors are hopeful that solid earnings could counterbalance fears stirred by trade headlines.
Internationally, Europe and the UK continue to monitor U.S. tariff threats. European markets took a modest hit after Trump floated 30% tariffs on EU imports beginning August 1, triggering EU preparations for counter-tariffs totaling approximately €72 billion. Meanwhile, the Bank of England weighed in on rate-cut dynamics, suggesting potential easing if labor softness continues—highlighting global rates’ sensitivity to economic and policy developments.
Despite all the noise, economists largely agree inflation upticks tied to tariffs will prove temporary and limited to goods. Services-driven inflation, which accounts for the bulk of price movement, remains unaffected. With labor markets cooling and consumer sentiment softening, the Fed is likely to adopt a “wait-and-see” stance—holding steady at July’s meeting while promising to reassess after CPI and PPI reports are in.
In sum, the current bout of tariff-related volatility highlights fragile supply chains and cost inflation in select sectors, yet broader financial markets remain resilient. Investors appear to treat these developments as manageable headwinds rather than structural threats. While commodity prices like copper remain especially sensitive to policy twists, equities and fixed income instruments are being anchored by expectations that the Federal Reserve will act with prudence, that earnings remain robust, and that inflation pressures will prove manageable.
Going forward, markets are poised to absorb headline shocks with a measured outlook, watching closely for confirmation in inflation data, earnings performance, and further tariff policy developments. Despite simmering policy unease, the prevailing view paints a calm market narrative: investors expect that inflation impacts tied to tariffs will fade, central banks will adapt gradually, and earnings will sustain the bull case. As such, markets may wobble in response to headlines, but remain anchored by structural optimism.
