Nvidia Earnings Overshadowed By Tariff Court Ruling

WHERE WE STAND – The football season is over (mercifully!), which means that the transfer window will soon be open.

Judging by yesterday’s reporting, it looks like the central banking transfer window might be open as well, with the FT having noted that ECB President Lagarde has held discussions over cutting short her term at the helm of the central bank, in order to take over at the helm of the World Economic Forum (WEF), possibly in early-2027, albeit once inflation has fallen back in line with the 2% target.

Naturally, the ECB rushed to rapidly deny this story, as it’s safe to say that your President mulling throwing in the towel doesn’t tend to do many favours to your credibility as an institution. Still, bearing in mind that Lagarde’s career has been defined by ‘failing upwards’, I wouldn’t be ruling these reports out entirely – no smoke without fire, as the saying goes. As for who replaces the perma-tanned one in Frankfurt, I’d give the job to Chief Economist Philip Lane, though political as opposed to economic acumen will likely be the top consideration when the time comes for a successor to be chosen.

Anyway, besides that, yesterday was a pretty choppy and indecisive day, as participants eagerly awaited earnings from Nvidia after hours, while month-end flows made a bit of a mess of the FX market.

In terms of those earnings, NVDA delivered both top- and bottom-line beats with revenues at $44.1bln, and EPS at $0.96, while margins also topped expectations just a touch at 71.3%. Guidance for the upcoming quarter was also solid, with the firm seeing Q2 revenues of $45bln +/- 2%. The stock traded about 3% higher after the figures which, while a sizeable move, was only about half what options had priced.

The figures also provided some support to equity futures, but cash markets had closed in the red prior to the print anyway. I remain in dip buying mode, however, with earnings still pretty solid across the board, economic data proving resilient, and peak tariff uncertainty in the rear view mirror. For spoos, 6k, then fresh highs, remain my targets.

Overnight developments reinforce that thesis, after the Court of International Trade ruling against some of Trump’s tariffs enacted under the IEEPA. Roughly, the Court ruling to block the tariffs impacts about 7pp of the tariff increases seen since the start of 2025, though crucially does not impact any sectoral tariffs already imposed. While risk assets have understandably popped in reaction to the news, the decision will be appealed by the Trump Admin,  while there remain other legal mechanisms for tariffs to be imposed, which officials will no doubt be scrambling to find ahead of 8^th July.

Away from the equity space, the dollar found some demand into the EoM fixing against most major peers seeing the DXY test the 100 figure to the upside, before breaking above overnight. I’d not be reading too much into these moves, though, as this time of the month always produces much more by way of ‘noise’ than it does ‘signal’. That said, it was notable that we saw the greenback restore its typical correlation with Treasuries yesterday, in a notable departure from the ‘buy America’ or ‘sell America’ vibes on which we’ve been trading for some time.

Treasuries traded softer across the curve, with the belly underperforming, though some of the selling pressure did abate after a solid 5-year sale, following Tuesday’s well-received 2-year auction. It still feels too early to say that Treasuries are entirely out of the woods, but the bulls at least appear to have the upper hand for the time being and, barring any surprises from the Trump Admin, could retain it until next Friday’s NFP figures.

I wonder, actually, whether that applies to markets more broadly. Now that those NVDA earnings are out of the way, besides any tariff stories, and potential progress on the ‘One Big Beautiful Bill’ through the Senate, there is little for investors to digest until that labour market report. Still, a period of stability, especially in the fixed income space, coupled with the reassurance provided by a marginally firmer greenback, should keep the ‘path of least resistance’ on Wall Street pointing higher for the time being.

LOOK AHEAD – A few bits and bobs worth bearing in mind on the docket for the day ahead.

On the data front, the weekly US jobless claims print is probably the highlight, with the continuing claims number coinciding with the May NFP survey week. The jobs report is due next Friday. Elsewhere, we also get the 2^nd revision of Q1 US GDP, which might vary a bit more than usual from the initial print given the volatility associated with imports in the first three months of the year, while the latest pending home sales data is also due.

Besides that, a handful of Fed speakers are due, while we’re also due to hear from BoE Governor Bailey for the first time since the ‘Old Lady’s’ surprisingly hawkish 25bp cut earlier in the month. Treasury supply is also due, with this week’s slate wrapping up with a  7-year sale later on today.