NEW YORK/LONDON :MSCI’s global equity index edged up on Monday and U.S. Treasury yields edged higher as the latest U.S. tariff threats kept investors on edge while they waited for inflation readings and the start of earnings season due later in the week.

The euro briefly hit an almost three-week low while the dollar index held steady after U.S. President Donald Trump’s threat to impose a 30 per cent tariff on imports from the European Union and Mexico from August 1.

Trump said he was open to discussions while the European Union accused the U.S. of resisting efforts to strike a trade deal and warned of countermeasures if no agreement is reached.

Meanwhile, U.S. earnings season, is set to begin on Tuesday, with second-quarter reports from major banks. S&P 500 profits are expected to rise 5.8 per cent year-over-year, according to LSEG data. The outlook has dimmed sharply since the early April forecast of 10.2 per cent growth, before Trump launched his trade war.

“It’s all about earnings season now. People are not sure what it’s going to hold. They want to be optimistic. Usually earnings season pans out better than expected,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, but he noted that trading valuations are “a bit expensive relative to the five-year average.”

“That on top of the most recent tariff announcements has people sort of just waiting on the sidelines,” said the money manager.

On Wall Street at 2:39 p.m. EDT, the Dow Jones Industrial Average rose 68.28 points, or 0.15 per cent, to 44,439.79 while the S&P 500 rose 11.67 points, or 0.19 per cent, to 6,271.43 and the Nasdaq Composite rose 68.78 points, or 0.33 per cent, to 20,654.31.

MSCI’s gauge of stocks across the globe rose 0.86 point, or 0.09 per cent, to 923.42.

Earlier, the pan-European STOXX 600 index ended off 0.06 per cent, above its session lows. 

PRESSURING POWELL

Trading in long-dated U.S. Treasuries was choppy, with yields touching multiweek peaks as investors weighed the prospect of an exit by Federal Reserve Chairman Jerome Powell.

While Powell has indicated a patient stance on interest rate policy until the impact of tariffs is clearer, Trump has been pushing for aggressive easing. Trump said on Sunday that it would be great if Powell stepped down.

White House economic adviser Kevin Hassett warned that Trump might have grounds to fire Powell because of renovation cost overruns at the Fed’s Washington headquarters. 

The yield on benchmark U.S. 10-year notes rose 0.6 basis point to 4.429 per cent, from 4.423 per cent late on Friday.

The 30-year bond yield rose 1.6 basis points to 4.9729 per cent from 4.957 per cent late on Friday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.4 basis points to 3.9 per cent, from 3.914 per cent late on Friday.

Besides earnings season, investors are also waiting for U.S. consumer price data for June, due on Tuesday, and will monitor for any upward pressure from tariffs.

They will also watch for any tariff impact to supply-chain costs in producer price and import price figures also due this week, along with a view of consumer health in retail sales data.

In currencies, the euro was down 0.16 per cent versus the U.S. dollar at $1.167 while against the Japanese yen, the dollar strengthened 0.22 per cent to 147.72.

The Mexican peso weakened 0.39 per cent versus the dollar at 18.719, with Mexican President Claudia Sheinbaum on Monday hitting back at U.S. criticism that her government was not doing enough to combat fentanyl trafficking. She called for the U.S. to do more to arrest drug traffickers on its own turf and stop the flow of weapons south across the border.

Sterling was down 0.5 per cent at $1.3432 after Bank of England Governor Andrew Bailey said uncertainty weighs on growth expectations, in a letter to G20 finance ministers and central bank governors, urging vigilance against the risk of disruptive market moves.

Oil prices fell as investors worried about U.S. trade policy and after Trump gave Russia 50 days to avoid new sanctions and threatened sanctions on buyers of Russian oil.

U.S. crude settled down 2.15 per cent or $1.47 at $66.98 a barrel and Brent finished at $69.21 per barrel, down 1.63 per cent, or $1.15.

Bitcoin was last up 0.67 per cent at $119,924.23 after earlier crossing the $120,000 level for the first time.

Gold prices eased after hitting a three-week peak on Monday with attention on trade talks and upcoming U.S. economic data, while silver pared gains after hitting its highest level in almost 14 years earlier in the day.

Spot gold fell 0.17 per cent to $3,349.80 an ounce. U.S. gold futures fell 0.15 per cent to $3,351.00 an ounce. Spot silver was flat at $38.36 per ounce, after earlier hitting its highest level since September 2011.