2025 W31 Global Market Recap
Markets Narratives
Macro Overview
- U.S. job growth slowed significantly in July (only 73,000 jobs added), with May and June data revised down by 258,000. Unemployment rate ticked up to 4.2%.
- U.S. inflation accelerated in June: Core PCE rose 0.3% MoM and 2.8% YoY. Q2 GDP grew 3%.
- Eurozone data showed steady but stagnant economy: Q2 GDP expanded 0.1%, headline inflation held at 2.0%, core inflation at 2.3%. Jobless rate remained 6.2% in June.
- Japan's industrial production rose 1.7% MoM in June, retail sales up 2.0% YoY. BoJ revised up fiscal 2025 core CPI forecast to 2.7%.
- China's manufacturing PMI contracted in July (S&P Global at 49.5, official at 49.3). Economy could see slower growth due to weak domestic demand and trade uncertainty.
- China's housing market remains weak: New home prices fell 0.27% MoM, existing home values fell 0.61%, and residential sales dropped 12.6% YoY in June.
Policy Developments
- U.S. President Donald Trump signed an executive order to raise tariffs on most U.S. trading partners, effective August 7. New trade deals with EU and South Korea, and 90-day extension for Mexico.
- Federal Reserve held rates steady at 4.25% to 4.50% for the fifth consecutive meeting. Market expectations for a September rate cut lowered after Powell's press conference.
- EU and U.S. reached a framework trade deal, with a 15% tariff on most European exports to the U.S. (half of initial mooted rate).
- Bank of Japan kept key interest rate unchanged at 0.5%. Governor Ueda hinted at potential rate hike later this year.
