Today's Digest covers Aramco's profit surge and Hormuz talks, the dying yen carry trade, France's deficit and Fitch downgrade, Kyiv missile strikes, AI wage algorithms, and San Andreas quake risks.

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Energy

Saudi Aramco reported a 33 percent jump in Q2 profit to $33.4 billion. The company sold oil at an average $108.10 a barrel versus $66.70 a year earlier. Liquids production fell 28 percent to 7.57 million barrels a day, and natural gas output fell 16 percent. CEO Amin Nasser called the Hormuz closure the largest oil shock in history.

Meanwhile, spot oil prices fell on Tuesday, with WTI falling $4.70 to $75.64 and Brent falling $4.61 to $79.16. This follows Treasury Secretary Scott Bessent's comments that a deal could come Tuesday or Wednesday. Secretary of State Marco Rubio also cited progress, and President Trump called an agreement to reopen the Strait and denuclearize Iran imminent.

However, Iran rejected reports that Washington, Tehran, and Oman were nearing a 60-day interim deal to reopen the Strait of Hormuz. A source close to the Revolutionary Guard told Al Mayadeen that Iran will not sign any agreement while under US military threats. An informed source told Iranian state TV that the ongoing Iran-Oman talks have no US involvement. Just six vessels transited Hormuz on Monday, and a cargo ship was struck near Oman. Goldman Sachs expects Brent between $80 and $90 absent confirmation or escalation.

Economy

According to analysis from The Kobeissi Letter, before April 2025, the USD/JPY relationship tracked closely with the 10-year US–Japan yield differential. That relationship broke down after April 2025, coinciding with President Trump's "Liberation Day." The 10-year Treasury yield now stands roughly 2.0 percentage points above the Japanese 10-year yield, down about a full point since April 2025, while the USD/JPY continued higher. In the words of The Kobeissi Letter, "The yen carry trade is dying." However, some market observers described the traditional carry-trade anchor as weakening rather than fully ended.

Speaking of potential triggers, France's central government deficit reached roughly €107 billion by the end of June, according to the French Ministry of Finance, 14.4 percent above the original plan. Revenues rose 3.7 percent while expenditures climbed 5.4 percent. Prime Minister Sébastien Lecornu extended a special levy on companies with over €1 billion in revenue, expected to raise €7.3 billion, and an extended tax on high incomes yielding roughly €650 million. Fitch downgraded France from AA− to A+, citing debt burden, political uncertainty, and the absence of a sustainable stabilization path. Government spending stands at 57 percent of GDP. Divergent signals emerged elsewhere in the eurozone, including positive employment surprises in Spain.