LIVE MARKETS-History repeating itself

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

WATCH OUT FOR HISTORY REPEATING ITSELF IN AUGUST

Late July and early August in 2024 saw equity markets suffer their biggest wobble of the year and Deutsche Bank macro strategist Henry Allen has looked at whether history could repeat itself in 2025.

From a market perspective, Allen says the late-July/early-August week looks "seriously problematic" this year, given the new August 1 tariff deadline and looming nonfarm payrolls report, coupled with higher long-end bond yields.

"Markets are clearly not pricing in these higher tariffs, and we may only know the outcome in the final hours, offering the potential for a sharp market reaction and heightened volatility," Allen says.

"If higher tariffs were followed by an underwhelming U.S. jobs report that same day, markets could face a big problem as investors re-assess the economic outlook," Allen adds.

The next thing to worry about is the long-end of the curve in countries such as the U.S., Germany and France.

"Long-end bond yields are starting at higher levels today, meaning that it would take less of a jump to move into problematic territory and re-ignite fears about fiscal policy," Allen notes.

The U.S. 30-year yield stood at 4.52% the day before Trump's "Liberation Day" announcement compared to 4.95% today. Long-end yields in German and France are at their highest since the 2011 euro crisis.

That week also has a Fed policy meeting, quarterly refunding announcement outlining borrowing from the U.S. Treasury and U.S. growth figures.

"Given how much the new tariff deadline is being discounted by markets, this is setting up a key period of event risk at the end of the month, at a time of year that crises often happen and when liquidity is thin in markets," Allen concludes.

(Samuel Indyk)

EARLIER ON LIVE MARKETS:

FOOTSIE TOPS 9000: "IT'S PARTY TIME" CLICK HERE

TECH LEADS ON NVIDIA HELP, TELCOS DOWN CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES UP, EARNINGS IN FOCUS CLICK HERE

US EARNINGS TO SHED LIGHT ON TARIFF IMPACT CLICK HERE