According to the final reading published by Eurostat, Eurozone inflation fell 0.1% monthly in June, in line with both the preliminary estimate and market expectations. On an annual basis, the headline index moderated to 2.8% from 3.2% in May, while core inflation increased 0.2% monthly and decelerated its annual variation to 2.4% from the 2.6% recorded the prior month.

Our Take

The moderation in headline inflation and, especially, the decline in core inflation reinforce the perception that price pressures continue to ease in the Eurozone. Although headline inflation remains above the ECB's 2% target, the deceleration reduces the urgency of maintaining an especially restrictive monetary policy.

The US military declared it carried out a sixth consecutive night of attacks against Iran on Thursday. Iran has promised to retaliate against regional infrastructure if the United States carries out its plans to strike the country's key installations, as President Donald Trump has indicated. Additionally, it has threatened to block maritime transit through the Red Sea, a measure that, if materialized, would represent a new escalation of the conflict.

Our Take

The resumption of attacks, the return of threats against the Strait of Hormuz, and the rebound in oil prices have brought back the sense that the truce was barely a pause in a conflict whose main disagreements remain intact. For the time being, we believe it will continue to intensify before the parties close their positions.

Recent communication from several Federal Reserve members reflects a more restrictive tone. Philip Jefferson, Fed Vice Chair, noted that a new interest rate hikecould be necessary if inflation does not show more convincing moderation in the coming months. Along the same lines, Lorie Logan, Dallas Fed president, argued that inflation continues to be too elevated and that preemptive action would reduce the risk of applying more aggressive adjustments in the future. For his part, Jeffrey Schmid, Kansas City Fed president, reiterated that inflationary pressures remain incompatible with the price stability objective.

Our Take

The statements come after June CPI and PPI data showed greater-than-expected moderation. However, Fed leaders appear to consider that those figures may respond to temporary factors and do not yet confirm a sustainable trend toward the 2% target. Thus, the Fed does not seem inclined to interpret a single month of weaker inflation as a sufficient signal to declare the problem under control.

Later, US industrial production data (7:15am) and the University of Michigan consumer confidence index (8am) will be published, corresponding to June and July, respectively. Consensus expects industrial production to register monthly growth of 0.2%, slightly above the 0.1% observed in May, while the University of Michigan consumer confidence index would increase to 51.5 points from the 49.5 recorded in June. Both indicators will allow assessing the strength of economic activity and consumption behavior in an environment of high uncertainty due to inflationary pressures and the geopolitical context.

Our Take

The data could confirm that the US economy maintains moderate growth. An advance in industrial production would reinforce the manufacturing sector's resilience, while an improvement in consumer confidence would suggest that households are beginning to recover optimism despite the environment of elevated rates and uncertainty from the Middle East conflict.

Corporate news

Netflix reported net income of $3.401 billion in the second quarter, an 8.8% increase from the $3.125 billion obtained in the same period the prior year. However, it did not beat forecasts on revenues, which grew 13.4% annually to reach $12.560 billion, versus a projection of $12.590 billion. Doubts about Netflix are becoming something habitual rather than an isolated event, and this latest one arrives right after the poor figures of the first quarter.

Our Take

Investors are penalizing any signal of deceleration or lower visibility, even when current results remain solid. Second-quarter figures fit relatively well with expectations, but the third-quarter forecast implies the lowest revenue growth in three years and only feeds concern about competition and doubts about long-term growth prospects following its failed attempt to buy Warner Bros Discovery.

SpaceX shares fall after canceling the launch of its Starship rocket this Thursday. The delay refocuses attention on technical risks and on the importance that this rocket's development has for the company's future valuation. This episode has caused the aerospace and artificial intelligence (AI) company's shares to fall further below the IPO price of $135.

Nvidia retreats close to 3%, while TSMC and Intel record declines of similar magnitude. The selling is part of a broader semiconductor sector correction, following the sharp gains accumulated over the past months. Traders are beginning to take some profits while also showing some fatigue from the elevated AI-related investment commitments. The market wants to see confirmation that the heavy spending on data centers, processors, and computing capacity ultimately translates into sufficient returns.

The to-do list

  • Monitor oil throughout the day: Tehran threatens to block the Red Sea and Brent rises toward $86.

  • Follow the Michigan industrial production and consumer confidence data at 7:15 and 8:00am: markets will look for signals that the economy is withstanding the double headwind of high rates and geopolitics.

  • This weekend brings high-level football: Saturday at 3:00pm France vs. England for third place, and Sunday at 1:00pm the grand final Argentina vs. Spain, the best plan for closing out the 2026 World Cup.

  • Dedicate 20 minutes today to stretching or going for a walk, ending the week by moving your body makes a difference for the weekend.

Today's recommendation…

Math Without Numbers by Milo Beckman — an introduction to the most abstract and beautiful mathematics, written without a single equation. Topology, infinities, logic, and chaos explained with humor and clarity.