The second-quarter corporate earnings season kicks off in earnest next week, with consensus forecasts for annual S&P 500 profit growth just under 6% - half what was expected at the start of the year and less than half of the first quarter pace.
And yet, the S&P 500 is back stalking record highs - up about 6% for the year so far - with the Nasdaq hitting another new peak on Wednesday. All that's still lagging other world markets of course, especially dollar-denominated gains for Germany's record-high DAX of almost 40% for 2025 and almost 30% for euro stocks.
But mid-year calm remained the order of the day. The VIX "fear index" hit a five-month low on Wednesday, while the bond market equivalent is near its lowest for the year.
This week's postponement of the July 9 U.S. tariff deadline to August 1, along with pressure to get more deals done by then, has seen many investors revert to the immediate post-election thinking on trade policy - that deals, negotiations and shifting sands, rather than hard deadlines, will dominate the trade agenda.
In the latest development, U.S. and European Union negotiators moved closer to a deal.
EU trade chief Maros Sefcovic said on Wednesday the European Commission had made good progress on a framework agreement with Washington, and a deal could be reached within days. Negotiators were discussing potential measures to protect the EU auto industry, according to EU officials and auto industry sources.
More worryingly, U.S. President Donald Trump announced a new 50% tariff on copper imports and a 50% duty on goods from Brazil, both effective August 1 - with the former a considerable inflation concern over time given the breadth of goods with copper inputs.
U.S. copper prices surged more than 10% to record highs on Wednesday, while overseas copper prices came under pressure today.
But for all that inflation angst and recent debt supply jitters, Treasury demand remains surprisingly brisk, with a strong 10-year note auction yesterday helping drag yields lower as Federal Reserve meeting minutes showed splits about the timing of the next interest rate cut.
While most Fed officials seem keen to delay until the tariff horizon and its inflation impact become clearer, the minutes showed two - presumed to be board members Michelle Bowman and Christopher Waller - prepared to vote for an earlier cut.
Waller speaks in Dallas later on Thursday and some $22 billion of 30-year bonds go under the hammer too. The Fed meets again later this month.
Fed futures expect a near 80% chance of a cut in September and two cuts are fully priced by the end of the year.
The U.S. dollar index slipped back after a week of tentative gains, with the euro - still up 13% for the year - retaining a perch above $1.17.
Wall St stock index futures dialed back a touch early on Thursday, but world stocks pushed higher from Asia to Europe.
