You’ve Got Mail

July 07, 2025
6 min read
  • US will start issuing tariff letters to countries today. USD rallies and stock markets are mostly lower. No policy relevant economic data releases today.
  • Japan wage growth unexpectedly cools in May. BOJ in no hurry to resume raising rates.
  • Sweden inflation ran hot in June. Riksbank is close to wrapping up easing. SEK outperforms across the board.

Check-out our Drivers for the Week for an in-depth look at what markets are facing this week.

You’ve Got Mail

US

USD edged up against most major currencies and global equity markets are down as higher US tariffs loom. President Donald Trump intends to deliver “tariff Letters, and/or Deals, with various Countries from around the World…starting 12:00 P.M. (Eastern), Monday, July 7th.” In parallel, Treasury Secretary Scott Bessent stressed that country’s that “don’t move things along, then, on Aug. 1, you will boomerang back to your April 2 tariff level.”

Moreover, President Trump said he would put an additional 10% tariff on “any Country aligning themselves with the Anti-American policies of BRICS…There will be no exceptions to this policy.” On a side note, the BRICS is not a coherent economic or political bloc that presents some strategic and long-term threats to the US. The only core unifying thread with the BRICS is shared grievances about Western dominance.

In our view, US protectionist trade policy will continue to weigh on USD for three reasons: First, higher US effective average tariff rate - currently the highest since 1936 - is a downside risk to US growth and upside risk to inflation. Second, the ongoing trade war threatens to accelerate the dollar’s declining role as the primary reserve currency as countries reassess their economic dependencies on the US. Third, effort to narrow the US trade deficit mean fewer dollars will flow overseas, reducing the need for those funds to be recycled back into US securities.

Crude oil prices dipped initially on supply concerns before retracing most of their losses. On Saturday, OPEC+ countries agreed to increase oil production by 548,000 barrels a day in August. Consensus was for OPEC+ to boost crude oil supply for a fourth consecutive month by 411,000 barrels a day. September production levels will be set at the next August 3 OPEC+ meeting.

JAPAN

USD/JPY edged-up above key resistance at 145.00. Japan wage growth unexpectedly cools in May. Nominal cash earnings growth plunged to the lowest rate since March 2024 at 1% y/y (consensus: 2.4%) vs. 2.0% in April due to swings in special cash earnings and fewer working days. The less volatile scheduled pay growth for full-time workers printed at 2.4% y/y (consensus: 2.6%) vs. 2.5% in April. Overall, Japan wage growth is not a source of significant inflation pressures given annual total factor productivity growth of about 0.7%.

Bottom line: the Bank of Japan will not be rushing to resume raising rates, limiting JPY upside. The swaps market is pricing-in less than 50% odds of a 25bps rate hike by year-end and a total of 50bps of tightening to 1.00% over the next three years.

SWEDEN

SEK outperformed across the board after Sweden preliminary CPI inflation ran hot in June. The policy relevant CPIF rose to a five-month high at 2.9% y/y (consensus: 2.5%, Riksbank forecast: 2.4%) vs. 2.3% in May while CPIF ex-energy surged to a 16-month high at 3.3% y/y (consensus & Riksbank forecast: 2.9%) vs. 2.5% in May. The inflation overshoot was most likely due to temporary factors like the higher weight of the volatile international travel component.

Regardless, the swaps market slashed Riksbank easing bets in half to price-in just one 25bps cut by year-end and the policy rate to bottom at 1.75%. At the last June 18 meeting, the Riksbank delivered on expectations and cut rates 25bps to 2.00%. The bank said “The forecast for the policy rate entails some probability of another cut this year” as it sees the policy rate at 1.92% by Q4 2025 before bottoming at 1.88% by Q1 2026. Bottom line: the Riksbank is getting to the end of its easing cycle, which bodes well for SEK.

Brown Brothers Harriman & Co. (“BBH”) may be used to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries.This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners.© Brown Brothers Harriman & Co. 2024. All rights reserved.

As of June 15, 2022 Internet Explorer 11 is not supported by BBH.com.

Important Information for Non-U.S. Residents

You are required to read the following important information, which, in conjunction with the Terms and Conditions, governs your use of this website. Your use of this website and its contents constitute your acceptance of this information and those Terms and Conditions. If you do not agree with this information and the Terms and Conditions, you should immediately cease use of this website. The contents of this website have not been prepared for the benefit of investors outside of the United States. This website is not intended as a solicitation of the purchase or sale of any security or other financial instrument or any investment management services for any investor who resides in a jurisdiction other than the United States1. As a general matter, Brown Brothers Harriman & Co. and its subsidiaries (“BBH”) is not licensed or registered to solicit prospective investors and offer investment advisory services in jurisdictions outside of the United States. The information on this website is not intended to be distributed to, directed at or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Persons in respect of whom such prohibitions apply must not access the website.  Under certain circumstances, BBH may provide services to investors located outside of the United States in accordance with applicable law. The conditions under which such services may be provided will be analyzed on a case-by-case basis by BBH. BBH will only accept investors from such jurisdictions or countries where it has made a determination that such an arrangement or relationship is permissible under the laws of that jurisdiction or country. The existence of this website is not intended to be a substitute for the type of analysis described above and is not intended as a solicitation of or recommendation to any prospective investor, including those located outside of the United States. Certain BBH products or services may not be available in certain jurisdictions. By choosing to access this website from any location other than the United States, you accept full responsibility for compliance with all local laws. The website contains content that has been obtained from sources that BBH believes to be reliable as of the date presented; however, BBH cannot guarantee the accuracy of such content, assure its completeness, or warrant that such information will not be changed. The content contained herein is current as of the date of issuance and is subject to change without notice. The website’s content does not constitute investment advice and should not be used as the basis for any investment decision. There is no guarantee that any investment objectives, expectations, targets described in this website or the  performance or profitability of any investment will be achieved. You understand that investing in securities and other financial instruments involves risks that may affect the value of the securities and may result in losses, including the potential loss of the principal invested, and you assume and are able to bear all such risks.  In no event shall BBH or any other affiliated party be liable for any direct, incidental, special, consequential, indirect, lost profits, loss of business or data, or punitive damages arising out of your use of this website. By clicking accept, you confirm that you accept  to the above Important Information along with Terms and Conditions.

 
1BBH sponsors UCITS Funds registered in Luxembourg, in certain jurisdictions. For information on those funds, please see bbhluxembourgfunds.com



captcha image ↻

Type in the word seen on the picture

I am a current investor in another jurisdiction

1 of 2

2 of 2