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Economic Update 8-25-2025

Economic data included gains in existing home sales and housing starts, while the index of leading economic indicators continued to move in a negative direction. Fed Chair Powell’s comments at their Jackson Hole symposium pointed to higher chances of a September interest rate cut.

Equities gained globally, with hopes for lower U.S. policy yields, with an especially strong week for U.S. small cap. Bonds gained as yields fell across the Treasury curve. Commodities also saw price gains broadly in a variety of segments.

U.S. stocks saw moderate gains, with flattish returns most of the week, and investors waiting for Friday’s keynote speech from Fed Chair Powell at their annual Jackson Hole Symposium, where a variety of economic and monetary policy matters are discussed. The hope (from markets anyway) was for more concrete hints of September rate cuts. The speech was seen as dovish by markets, which pushed stocks higher by over a percent. Specifically, he noted that the underlying outlook and “shifting balance of risks may warrant adjusting our policy stance,” and that lower immigration “suggests that downside risks to employment are rising,” and potential risks could materialize quickly if they did occur.

Economic Update 8-20-2025

Economic data for the week included inflation data that came in more robustly than expected, especially on the producer side. Positive news came from a gain in retail sales, offsetting a drop in industrial production and weaker consumer sentiment.

Equities gained around the world, with similar gains in the U.S. and abroad. Bonds were flattish domestically, with mixed results internationally. Commodities saw gains in agriculture offset by declines in energy and precious metals.

 U.S. stocks gained with sentiment that appeared to be driven by rising hopes for a Fed rate cut in September, along with comments from the U.S. Treasury Secretary, noting that Fed funds “should probably be 150, 175 basis points lower.” By sector, health care, communications, and consumer discretionary led with gains of several percent, while defensive utilities and consumer staples lagged with declines of just over a half-percent. With perceived rate impacts, small caps outperformed large caps by the widest weekly margins in several months.

Economic Update 8-11-2025

Economic data was light, and included a slight decline in ISM services, toward neutral, while jobless claims continued to tick up a bit.

Equities gained worldwide last week, with international outpacing U.S. by a bit. Bonds were mixed, with foreign bonds benefitting from a weaker U.S. dollar. Commodities saw gains in metals, but weaker energy prices due to both supply and demand concerns.

 U.S. stocks saw gains for the week, rebounding from a sharply negative prior week. By sector, gains were led by technology (largely from Apple, upon announcing U.S.-based manufacturing investments) and consumer discretionary (largely from Tesla), each up around 4%, followed by communications and consumer staples. Energy and health care saw declines of nearly a percent (with the latter exclusively due to Eli Lilly, related to GLP-1 product sensitivity). Real estate was down just slightly for the week.

Stocks were held back a bit early in the week by the poor ISM services reading, and continued investor focus on the poor labor market report the prior week, which made a Fed rate cut in Sept. even more of a foregone conclusion (even though it was anyway). In fact, there was some chatter as to whether the cut would be -0.25% or -0.50%, as seen in the Sept. meeting a year ago. There are several more data points to come out between now and then, but the speed of labor market slowing is certain to be a key Fed discussion point. Also, following the resignation of Fed Gov. Kugler late the prior week, speculation was growing around a possible replacement, who could vote as early as the Sept. meeting. The next Fed chair must be selected from a member of the board at that time, so a nominee could represent a current favorite for that role. (By Thursday, Stephen Miran, the current chair of the Council of Economic Advisors, was announced as her replacement for at least the remainder of her term ending Jan. 2026. This was seen as a move toward the dovish side, in line with what the administration had intended.)

Economic Update 8-06-2025

Economic data included the Federal Reserve keeping interest rates steady for another meeting. On the positive side, U.S. GDP saw strong growth for the second quarter (albeit with caveats), and consumer sentiment improved. However, the employment situation report was far weaker than expected, with several downward revisions, job openings declined, and the pace of home price appreciation continued to decelerate.

Stocks fell back last week globally along with more U.S. tariff announcements and negative labor market data. Bonds fared well domestically, as rates fell, but foreign bonds were mixed as the dollar strengthened. Commodities were also mixed as oil prices rose but fell in other groups.

 U.S. stocks lost ground last week, resulting from trade news and a weak labor market report. Markets started positively on Monday with the weekend news of a US-EU trade deal, where the EU accepts tariffs of 15% but levies a 0% rate in return, as well as agreements to purchase American energy and defense supplies. Though, by Thursday evening, the President signed an executive order to raise tariffs on most trading partners, to take effect Aug. 7, which markets took poorly on Friday. Otherwise, updated tariffs included Canada (25% to 35%, on non-treaty items), South Korea (15%), India (25%), Brazil (50%), certain copper products (50%, but not on all), several other countries at 30% (such as Switzerland), while keeping a 10% baseline on everyone else. This also included a 90-day reprieve for Mexico, allowing for further analysis and negotiations. The overall tariff rate picture remains convoluted, with markets assuming twists and turns as negotiated announcements are made.

Economic Update 7-28-2025

Economic data for the week included strength in S&P services PMI, and new home sales; these offset weaker results in S&P manufacturing PMI, durable goods orders, existing home sales, and the well-watched index of leading economic indicators.

Equities saw gains around the world, led by Japanese stocks. Bonds also fared positively, as interest rates declined slightly, with foreign bonds led by a weaker dollar. Commodities fell back as oil and natural gas prices declined.

U.S. stocks saw another week of gains, following decent corporate earnings on net, and the U.S. administration’s trade agreements with Japan, Indonesia, and the Philippines, in addition to negotiations with the European Union ahead of the Aug. 1 deadline for 30% tariffs on the latter. (The European discussions appeared to be completed over the past weekend, resulting in a 15% tariff deal. The U.S. talks with China continue, with reports of another 3-month extension to provide additional time for a potential deal.)

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.

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. 

Economic Update 7-7-2025

In a holiday-shortened week, economic data included improvement in both ISM manufacturing and services surveys. The monthly employment situation report was positive at the surface, but skewed by a few categories within it, muting the impact.

Equities experienced gains in the U.S., largely due to tax legislation passing, while international stocks were mixed. Bonds fared positively, as credit spreads tightened. Commodities gained with higher prices in oil and precious metals.

U.S. stocks saw gains last week, with little trade news and unsurprising economic data for the most part, but investors were watching the progress of the Congressional budget reconciliation bill, which was passed by the Senate on Tues. and the House Thurs. afternoon. This seemed to help equity sentiment along with the decent jobs report that continues to show tariff fears haven’t done too much damage to the economy (and earnings). Despite little trade news, the 90-day tariff pause is due to expire this coming week on Jul. 9, with market expectations for an extension. Stock earnings report for Q2 will begin mid-month, with an expected deceleration from the robust Q1 pace.

Every sector ended in the positive last week, led by materials up nearly 4%, then the diverse group of financials and technology. Bringing up the rear was a slight decline in communications. Real estate gained nearly 2%, despite higher interest rates.

Foreign stocks were mixed, with minimal gains in Europe and the U.K. offset by a small decline in Japan, as trade negotiations with the U.S. appeared to stall. Comments from the ECB again pointed to their policy targets having now been reached, lowering the chances for future cuts in the near-term. Emerging markets outperformed, with stronger rises in Turkey, Brazil, and South Korea; Chinese stocks fell back slightly.

Bonds were mixed to higher for the week. U.S. Treasuries fell back as interest rates ticked up, but tighter spreads pushed investment-grade and high yield corporate bonds higher, along with floating rate bank loans. Foreign bonds also gained, as the U.S. dollar weakened slightly and emerging markets benefited from a pro-risk environment.

Commodities gained broadly last week, led by energy and precious metals, and lesser movement elsewhere. Crude oil rose over 2% last week to $67/barrel, in a relatively calm week after the sharp drop from $75 in mid-June at the height of the Middle East Israel-Iran tensions. However, natural gas spot prices fell by -9%, along with higher inventory builds and mixed weather impacts.

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. 

Economic Update 6-30-2025

Geopolitical events continued to dominate last week, with a strong U.S. missile attack on Iranian nuclear facilities, followed by a limited retaliatory response, and ceasefire. Economic data included a downward revision for Q1 U.S. GDP and higher jobless claims, mixed housing data and consumer sentiment, but a sharp gain in durable goods orders.

Stocks saw strong positive returns of a few percent across the globe, with Middle East tensions abating, optimism on trade deals, and economic data otherwise stable. Bonds also saw gains with falling interest rates. Commodities fell back sharply, led by crude oil, with fewer concerns over supply disruptions caused by the Israel-Iran conflict.

U.S. stocks began the week strongly, following Operation Midnight Hammer, during which U.S. air forces struck several Iran nuclear facilities. Despite some consternation early Monday about Iran’s retaliatory missile attacks on U.S. forces in Qatar and Iraq, the limited nature of the Iranian response (with no reported casualties) alluded to an expected intention of saving face but not escalating further. A truce later Monday helped stock sentiment as well, with the President encouraging both Israel and Iran to cease military operations. On the financial side, later in the week, the U.S. Treasury announced a deal with G-7 allies that will exclude U.S. companies from some foreign-imposed taxes (OECD Pillar 2) in exchange for removing the pending Congressional tax bill’s Section 899 (“revenge tax”) provisions, which were intended to penalize foreign investors, businesses, and governments with holdings in the U.S. (It was assumed that seeking a deal was the true intention of inserting that section into the bill in the first place.) Reports that the U.S. and China were completing a new trade deal on Friday also helped investor sentiment. Some members of the Federal Reserve showing an openness to rate cuts was naturally taken positively as well.

Last week’s news featured the Federal Reserve keeping short-term policy interest rates steady at their June meeting. Economic data included weaker retail sales, industrial production, housing starts, and the index of leading economic indicators. Jobless claims were little changed.

Equities were mixed globally last week, with a variety of global influences. Bonds fared positively as interest rates declined. Commodities were driven higher by energy prices, tied to Middle East concerns.

U.S. stocks were little changed on net for the week, with most eyes still focused on potential escalation in the Middle East between Israel and Iran, with the U.S. administration pointing to possible negotiations that seemed to reduce fears somewhat for the time being. (The focused U.S. strikes on Iranian nuclear enrichment facilities happened on Saturday night, so will likely be a key sentiment factor in the coming week.) Otherwise, a mix of economic data and the Fed staying the course also provided little catalyst for extreme stock price movements. However, later in the week, Fed Gov. Waller noted that rate cuts could be considered sooner than later, with “We could do this as early as July.” By sector, energy, technology, and financials led with gains, while health care (Lilly and J&J primarily), materials, and utilities declined. Small caps outpaced large caps for the week. Real estate fell back by a few basis points.

Economic Update 6-16-2025

Economic data included consumer and producer price inflation coming in a bit cooler than expected, although both remain above long-term trend. Consumer confidence also improved, in keeping with paused tariff policies. However, continuing jobless claims kept rising, which could be due to some seasonal effects and/or labor markets softening further.

After starting positively, equities reversed course and fell in the U.S. and foreign developed markets, largely in response to escalation of the Israel-Iran military conflict. Bonds gained as yields fell back, especially abroad with a weaker dollar. Commodities gained as crude oil prices spiked, due to the same Middle East escalation concerns.

U.S. stocks were positive for most of the week, with a mix of influences, but ended down on net. Early in the week, investors reacted positively to a short London meeting between the U.S. and China, which resulted in no real breakthroughs, but getting the “negativity out,” as Commerce Secretary Lutnick put it, perhaps providing a restart point for further talks. The Chinese have been increasingly using exports of rare earth minerals as leverage (they aren’t really rare insofar as finding them in the earth’s crust goes, but the processing of them is, and they’re critical for modern technological devices like computers and phones). The Administration also indicated that an extension of the current 90-day tariff pause was possible for countries negotiating in “good faith.” Markets reacted positively to some extent on Wed. to the cooler CPI report; however, this was seen as making the Fed’s job a bit tougher as to the push-and-pull between higher and lower rate policy. However, all was undone as stocks fell back by Fri. morning in response to Israel’s strikes on Iran, which raised geopolitical concerns.

Economic Update 6-9-2025

Economic data included stronger job openings, while the ISM manufacturing and services PMI indexes weakened. The employment situation report showed in showing growth, but prior revisions downward, so generally neutral.

Equities gained globally, with few surprises on the trade front, and unsurprising economic data. Bonds fell back as interest rates ticked higher. Commodities gained, led by a sharp rise in crude oil prices.

U.S. stocks fared positively again last week, with small caps leading large caps. While trade tension between the U.S. and China remains, a late week phone call between the two leaders “resulted in a very positive conclusion for both countries,” as the President put it, and buoyed sentiment. Further discussions are scheduled in London this week. The Friday jobs reports, not too hot nor too cold, also was taken positively by markets. Overall, the U.S. stock market volatility from prior months appears to have calmed down a bit, with a general consensus that trade deals are expected to be in the works, and the maximum tariff rates won’t end up being a reality. On the other hand, U.S. steel and aluminum tariffs doubled to 50% last week.