We hope your week is off to a good start! Casey is back to break down the latest US-EU trade agreement.

And while investors will be watching Wednesday’s Federal Reserve interest rate decision closely, there’s other economic data to monitor too. Here we go:

The art of the deal

Friday’s the deadline for most countries to negotiate new trade agreements with the US.

President Trump on Sunday reached a deal with the European Union that would establish a 15% levy on imports to the US. It’s less than the original rate proposed on Liberation Day (20%) and half of what Trump threatened the EU with earlier this month (30%). 

The rate is higher than the 10% baseline most imports to the US have had since the spring, when the White House first said it would delay higher rates. 

Additionally, the EU will purchase $750 billion in US energy and invest $600 billion in the US by 2028, the White House added in a Monday statement. The feasibility of the investment, however, is being questioned. 

Investor reaction to the deal was subdued, but still positive. Futures moved higher on Sunday night, and the S&P 500 and Nasdaq Composite indexes were trading in the green for the first half of Monday’s session. Both had dipped lower by 2 pm ET. 

Economists largely agree that the deal is a good thing — or, at the very least, it’s better than nothing. An all-out trade war between the US and EU would have been a true worst-case scenario, so the agreement brings a sense of relief to both sides. That said, the details are not exactly being universally celebrated. Plus, the details are still a bit murky.

Some “strategic products” are exempt from the 15% tax (i.e. aircrafts, select chemicals and agricultural products and other raw materials). What’s currently not exempt? Luxury goods. LVMH shares were trading 2% lower at the time of writing.

European Commission President Ursula von der Leyen said Monday that more items could be added to the exemption list should negotiations continue. 

The White House called the agreement a "colossal deal” that helps “liberate America from unfair trade practices.” Other countries involved are less enthused. Just ask French Prime Minister François Bayrou.

It’s a busy day for the president, and not just because of tariffs. He’s currently in Scotland meeting with British Prime Minister Keir Starmer. 

The two are discussing trade and the humanitarian crisis in Gaza, per the White House. Trump told reporters Monday morning that the US will offer aid to Gaza, saying there is “real starvation” in the region. 

And let’s not forget about China. Officials have a little longer to ink a deal, but not much. Higher tariffs on both Chinese and American goods will go into effect on Aug. 12. 

Chinese and American officials are meeting in Sweden today to discuss how to proceed. More on that (and future trade developments) later this week.

— Casey Wagner

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The chance interest rates will remain unchanged at the Federal Reserve’s policy-setting meeting this week, CME Group’s FedWatch tool indicated Monday afternoon.

That expectation has held firm despite President Trump vocalizing he wants rates lower than the current level between 4.25% and 4.5%.

Happy Monday. It’s a busy week ahead with the FOMC’s July meeting wrapping on Wednesday and lots of economic data on the docket. Here’s what we’re watching: 

• The most important event of the week is the FOMC meeting. The central bank will announce its interest rate decision on Wednesday afternoon. Though markets, as noted above, are overwhelmingly expecting the committee to hold interest rates, investors will be listening for any hints about a September rate cut. If Powell pushes back on the notion that the rate-cutting cycle will resume come fall, markets will not react kindly. 

• We’re also getting some key labor data points this week. The JOLTS report is out Tuesday, followed by Wednesday’s ADP report, initial jobless claims Thursday and the US employment report on Friday. The latter is the most important (in terms of market moves), and is expected to show that the economy added 102,000 positions in July (compared to 147,000 in June). Unemployment is expected to tick up just slightly to 4.2% (vs. 4.1% the month prior). 

• June’s PCE report drops on Thursday. The headline figure is expected to show a 0.3% month-over-month increase after the 0.1% rise in May. Annually, economists project the rate to come in at 2.5% (vs. 2.3% in the 12 months ended May). Investors will be looking for signs at how tariffs are impacting prices now that the data has had more time to catch up.

— Casey Wagner