Economic Update 7-14-2025

In a strangely light week for economic news, jobless claims were mixed, while the FOMC minutes from the June meeting pointed to a continued ‘wait and see’ mindset around potential tariff inflation impacts and labor market conditions.

Equities were mixed globally, with the U.S. generally faring best. Bonds were lower as interest rates ticked up. Commodities were also mixed, with oil and gold higher, while other areas declined.

U.S. stocks started weaker and weren’t able to gain any ground through the week. Tariff news again dominated other news, in a week of few economic releases. By sector, energy and utilities led the way with gains, while losses were concentrated in financials, communications, and consumer staples. Real estate also lost a bit of ground for the week.

The July 8 deadline from the 90-day Apr. 8 ‘Liberation Day’ featured an extension until Aug. 1, which is not that far off. Treasury Secretary Bessent noted that countries will receive an extension if they continue to negotiate in good faith, and the government wants to see negotiations wrapped up by Labor Day. At the same time, the President announced several updated tariffs, including 25% on South Korea and Japan, as well as varying rates on Canada and several emerging nations. This included a proposed 50% tariff on copper, as well as 50% on Brazil, tied to legal proceedings there related to former President Bolsonaro.

The traditional start of the earnings season is this coming week, although a few companies have already reported, such as Delta Airlines, which was taken positively. Per FactSet, while Q1 growth was expected to be 7.2% as that quarter ended, it eventually ended at a robust 13.3%, being a similar tendency of upward revisions seen over the past few years. The expected year-over-year earnings growth rate for Q2 is 4.8%, which would be the slowest rate in a few quarters. Leadership is expected to originate again from communications and technology, showing double-digit growth, while energy stocks are bringing up the rear, with expectations of -25% (in keeping with oil price volatility). Also, consumer discretionary, materials, consumer staples, and industrials have early expectations of negative year-over-year growth, pointing to less overall breadth of positivity. However, some of this is expected to improve by Q3, with early expectations of 7.0-7.5% growth, although that remains a quarter away.

Foreign stocks were mixed, with small gains in Europe and the U.K. offset by a sharper drop in Japan, and moderate declines in emerging markets. U.S. trade uncertainty continued to drive sentiment globally, with little progress between the U.S. and Europe thus far in reaching an agreement, and new tariffs on Japan weighing even more negatively on sentiment.

Bonds also lost some ground last week as interest rates ticked higher, with U.S. Treasuries outperforming corporates slightly. Floating rate bank loans were the exception, with a small gain, as might be expected. International bonds all fell back along with a rise in the U.S. dollar.

Commodities were mixed by sector, with gains in precious metals and energy offset by sharper declines in industrial metals and agriculture. Much appeared to be in line with tariff uncertainty. Crude oil rose nearly 3% last week to $69/barrel, with early concerns over larger inventories offset by continued U.S. trade policy tension by the end of the week, which threaten demand.

Period ending 7/11/2025	1 Week %	YTD %
DJIA	-1.01	5.25
S&P 500	-0.29	7.18
NASDAQ	-0.07	6.99
Russell 2000	-0.62	0.94
MSCI-EAFE	-0.23	19.18
MSCI-EM	-0.16	16.07
Bloomberg U.S. Aggregate	-0.37	3.18

U.S. Treasury Yields	3 Mo.	2 Yr.	5 Yr.	10 Yr.	30 Yr.
12/31/2024	4.37	4.25	4.38	4.58	4.78
7/4/2025	4.42	3.88	3.94	4.35	4.86
7/11/2025	4.41	3.90	3.99	4.43	4.96

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.