Nvidia, AMD Set to Resume Some AI Chip Sales to China
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Equity Markets Fall as Trump Proposes Higher EU Tariffs
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Dollar Weakens as a Fed Official Calls for Rate Cuts
The dollar index (DXY00) Friday fell by -0.24%. The dollar came under pressure today following comments from Fed Governor Christopher Waller on Thursday evening, who stated that he supports a Fed interest rate cut at the July 29-30 FOMC meeting. Also, an easing of inflation expectations in today's University of Michigan July inflation expectations report was dovish for Fed policy and bearish for the dollar. Losses in the dollar were limited Friday due to the stronger-than-expected US housing starts and building permits reports. Also, the University of Michigan's US July consumer sentiment index rose more than expected to a 5-month high, a bullish factor for the dollar. More News from Barchart Could the Pentagon's $550 Million Bet on Rare Earths Signal the Next Market Boom? Solid US Economic News Lifts the Dollar Dollar Falls on Dovish Comments from a Fed Official Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! US June housing starts rose +4.6% m/m to 1.321 million, stronger than expectations of 1.300 million. Also, Jun building permits, a proxy for future construction, unexpectedly rose +0.2% m/m to 1.397 million versus expectations of a -0.5% m/m decline to 1.387 million. The University of Michigan's US July consumer sentiment index rose +1.1 to a 5-month high of 61.8, stronger than expectations of 61.5. The University of Michigan US July 1-year inflation expectations indicator fell to a 5-month low of +4.4%, better than expectations of no change at +5.0%. Also, the July 5-10 year inflation expectations indicator eased to a 5-month low of +3.6%, weaker than expectations of +3.9%. Thursday evening, Fed Governor Christopher Waller said, "With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate. I believe it makes sense to cut the FOMC's policy rate by 25 basis points two weeks from now." On the trade front, President Trump said late Wednesday that he intends to send a tariff letter to more than 150 countries notifying them their tariff rates could be 10% or 15%, effective August 1, and that the group was "not big countries who don't do that much business with the US." Federal funds futures prices are discounting the chances for a -25 bp rate cut at 5% at the July 29-30 FOMC meeting and 58% at the following meeting on September 16-17. EUR/USD (^EURUSD) Friday rose by +0.20%. Dollar weakness on Friday sparked gains in the euro after Fed Governor Waller said he supports a Fed rate cut later this month. Friday's Eurozone economic news was negative for the euro after Eurozone May construction posted its biggest decline in 2.5 years and German June producer prices fell at the steepest pace in 9 months, which are dovish factors for EBC policy. Eurozone May construction output fell -1.7% m/m, the biggest decline in nearly 2.5 years. German June PPI fell -1.3% y/y, right on expectations and the steepest pace of decline in 9 months. Gains in the euro were also limited Friday after the Financial Times reported that President Trump is pushing for a minimum tariff of 15%-20% in any trade deal with the European Union (EU), as Mr. Trump has been unmoved by the latest EU offer to reduce car tariffs. Also, the Financial Times said that EU trade commissioner Sefcovic gave a downbeat assessment of recent trade talks in Washington on Friday to EU ambassadors. Swaps are pricing in a 1% chance of a -25 bp rate cut by the ECB at the July 24 policy meeting. USD/JPY (^USDJPY) Friday rose by +0.11%. The yen on Friday gave up an early advance and turned lower as it remains under pressure ahead of Sunday's upper house election in Japan, where there is concern that Japanese Prime Minister Ishiba's Liberal Democratic Party (LDP) could lose its majority. The promises by Japan's ruling Liberal Democratic Party of cash handouts to voters and promises of lower taxes by the opposition have sparked concerns of fiscal deterioration, which are bearish for the yen. The yen initially moved higher against the dollar on Friday after Japan's June national CPI ex-fresh food and energy rose at the fastest pace in 17 months, a hawkish factor for BOJ policy. Also, lower T-note yields on Friday were bullish for the yen. Japan's June national CPI rose +3.3% y/y, right on expectations. June national CPI ex-fresh food and energy rose +3.4% y/y, stronger than expectations of +3.3% y/y and the largest increase in 17 months. August gold (GCQ25) on Friday closed up +13.00 (+0.39%), and September silver (SIU25) closed up +0.161 (+0.42%). Precious metals settled higher on Friday due to a weaker dollar. Also, lower T-note yields on Friday were bullish for precious metals. Dovish comments from Fed Governor Waller on Thursday evening boosted demand for precious metals as an inflation hedge, as he expressed support for a Fed interest rate cut at the July 29-30 FOMC meeting. Precious metals also received safe-haven support from global trade tensions, following President Trump's announcement on Wednesday that he intends to send a tariff letter to more than 150 countries, notifying them that their tariff rates could be 10% or 15%, effective August 1. Strength in US economic news on Friday is hawkish for Fed policy and limited gains in precious metals. Housing starts and building permits reports for June were better than expected. Also, the University of Michigan US July consumer sentiment index rose more than expected to a 5-month high. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
Fox News
30 minutes ago
- Fox News
Pentagon to probe Microsoft's use of Chinese engineers on sensitive defense systems, Hegseth says
Defense Secretary Pete Hegseth said the Pentagon was "looking into" a cloud computing program run by Microsoft utilizing foreign workers from China, which was criticized this week for potentially lacking adequate safeguards, which could provide the CCP easy access to classified defense data and systems. A ProPublica report released Tuesday accused Microsoft of allowing China-based engineers to assist with Pentagon cloud systems with inadequate guardrails in an effort to scale up its government contracting business. In response, Sen. Tom Cotton, R-Ark., sent a letter to Hegseth Thursday asking for information and documents about the program, including a list of all Department of Defense (DOD) contractors that hire Chinese personnel to provide maintenance or other services to DOD systems, a list of subcontractors that hire Microsoft's American-born "digital escorts" required to supervise foreign computer scientists while they work on DOD systems and documents on the training these supervisors receive to identify suspicious activity. "In light of recent and concerning reports about Microsoft using engineers in China to maintain DOD systems, I've asked the Secretary of Defense to look into the matter," Cotton said in a post on X sharing his letter to Hegseth. "We must guard against all threats within our military's supply chain." A few hours after Cotton's X post, Hegseth responded, "Spot on senator." "Agree fully," Hegseth said in his own X post responding to Cotton. "Our team is already looking into this ASAP. Foreign engineers — from any country, including of course China — should NEVER be allowed to maintain or access DOD systems." The ProPublica report cited current and former employees and government contractors who worked on a cloud computing program deployed by Microsoft in 2016, which involved a "digital escort" framework. The program, meant to meet federal contracting regulations, used a system of "digital escort" chaperones for global cybersecurity officials, such as those based in China, meant to create a security buffer so that they can work on agency computing systems. DOD guidelines require that people handling sensitive data be U.S. citizens or permanent residents. According to sources who spoke to ProPublica, including some who had intimate familiarity with the hiring process for the $18-per-hour "digital escort" position, the tech employees being hired to do the supervising lacked the adequate tech expertise to prevent a rogue Chinese employee from hacking the system or turning over classified information to the CCP. The sources elaborated that the escorts, often former military personnel, were hired for their security clearances more than their technical abilities and often lacked the skills to evaluate code being used by the engineers they were supervising. In China, people are governed by sweeping laws compelling government cooperation with data collection efforts. "If ProPublica's report turns out to be true, Microsoft has created a national embarrassment that endangers our soldiers, sailors, airmen and marines. Heads should roll, those responsible should go to prison and Congress should hold extensive investigations to uncover the full extent of potential compromise," said Michael Lucci. Lucci is the CEO and founder of State Armor Action, a conservative group with a mission to develop and enact state-level solutions to global security threats. "Microsoft or any vendor providing China with access to Pentagon secrets verges on treasonous behavior and should be treated as such," Lucci added. A Microsoft spokesperson defended the company's "digital escort" model Tuesday, saying all personnel and contractors with privileged access must pass federally approved background checks. "For some technical requests, Microsoft engages our team of global subject-matter experts to provide support through authorized U.S. personnel, consistent with U.S. government requirements and processes," the spokesperson added. "In these instances, global support personnel have no direct access to customer data or customer systems." The Defense Information Systems Agency's (DISA) public information office was initially unaware of the program when ProPublica began asking questions about it, but it eventually followed up to point out that "digital escorts" are used "in select unclassified environments" at the Defense Department for "advanced problem diagnosis and resolution from industry subject-matter experts." In Cotton's letter to Hegseth, the Republican senator requested answers to his questions by the end of the month. Microsoft did not immediately respond to Fox News Digital's requests for comment on this article.
