Weekly Macro Report, July 11 2025
1. Economic Growth & Outlook
The S&P 500 rose by 13.63% year-over-year through June 2025, marking solid equity gains despite downward earnings revisions reducing Q2 EPS growth outlook to 5.0%. U.S. GDP contracted at an annual rate of 0.5% in Q1 2025, the first quarterly contraction in three years, driven by weaker consumer spending and trade headwinds. The Fed Funds Effective Rate remains elevated, while futures indicate the market anticipates rate cuts later this year, reflecting expectations of slower growth and a cautious approach to inflation and employment dynamics.
2. Labor Market
Initial jobless claims fell to 227,000 for the week ending July 5, continuing a steady decline from 250,000 in early June, signaling reduced layoffs. The insured unemployment rate remained steady at 1.3% as of late June, with a slight rise in continuing claims indicating some persistent labor slack. This mixed momentum of fewer new claims but stable ongoing claims suggests the labor market retains resilience but shows hints of moderation. The Federal Reserve may interpret this as a signal to hold policy steady while monitoring further data before easing tightening.
3. Interest Rates
As of July 11, 2025, the 10-year Treasury yield edged up to around 4.39%, reflecting modest upward pressure on long-term government borrowing costs. Corporate yields remain elevated, sustaining relatively high borrowing expenses for businesses while offering attractive returns to investors. Meanwhile, mortgage rates have risen above 6.8%, intensifying affordability challenges for homebuyers and weighing on household purchasing decisions. These rate dynamics signal continued cost pressures across credit markets affecting consumers, businesses, and fixed-income portfolios alike.
4. Yield Spreads
As of July 2025, fixed-income markets indicate mixed signals. The US yield curve shows an upward slope, with the 10-year yield at 4.39%, indicating some economic confidence. The 10-Year TIPS real yield is 1.98%, suggesting growth may outpace inflation, but this situation warrants close monitoring given the overall economic context.
5. Inflation Dynamics
As of May 2025, U.S. headline CPI rose 2.4% year-over-year, with core CPI steady at 2.8%, led primarily by shelter and rising transportation costs. The Producer Price Index, which often leads CPI, increased modestly by 0.1% month-over-month in May after a sharp April decline, signaling moderate upstream inflationary pressures. Meanwhile, 10-year breakeven rates remained around 2.3%, reflecting stable medium-term inflation expectations priced into TIPS. Relative to global peers, U.S. inflation momentum appears contained but driven by shelter and services inflation components.
6. Money Supply
As of May 2025, M2 money supply reached $21.94 trillion, marking a 4.5% year-over-year increase, the fastest pace in nearly three years. This growth is primarily driven by central bank policy actions expanding liquidity amid moderate commercial bank lending. Meanwhile, loans and leases growth remains subdued, indicating limited credit-driven money creation. CPI inflation stands steady at about 2.4% year-over-year in May 2025, suggesting that the current liquidity environment is broadly neutral—sufficient to support economic activity without generating excessive inflationary pressure.
7. Consumer Sentiment
In June 2025, University of Michigan consumer sentiment rose to 60.7 from 52.2 in May, with current conditions at 64.8 and expectations at 58.1, narrowing their usual negative spread but still signaling guarded confidence. The spread between expectations and current sentiment, about -6.7, continues to reflect consumers’ cautious outlook despite recent improvement. Meanwhile, the US yield curve (10-year minus 3-month spread) hovered near inversion at -2 basis points in June, implying elevated recession risks within a year. This alignment underscores cautious confidence across micro and macro perspectives.
8. Housing Market
Nationwide inventory surged over 33% year-over-year, topping 1.2 million homes for sale as of late May. Median home prices remained nearly flat, averaging $357,600 in April, while average mortgage rates held between 6.5–7%. With rising supply and stagnant demand, buyers now have more leverage, but affordability stays pressured by persistent high rates and prices, squeezing out many potential buyers.
9. Stock Market Sectors
As of mid-2025, sector performance varies significantly. The Financials sector has been robust, driven by banking indices like the EURO STOXX Banks with a notable return. In contrast, sectors like Consumer Staples and Utilities have been more subdued, with investors favoring growth narratives in Technology and Communication Services.
10. Stock Market Valuation
As of July 2025, the S&P 500 trailing P/E stands at 25.6, above its 5-year average range, indicating elevated valuations. The forward P/E estimate for the S&P 500 is lower at 22.6 for Q4 2026, reflecting anticipated earnings growth pressures. US equities maintain a premium relative to global markets, where the All-World P/E hovers near 20.9. This valuation gap stems mainly from robust earnings in US mega-cap tech firms and sustained investor preference amid slower growth and geopolitical uncertainties internationally. The Buffett Indicator and Shiller PE data are currently unavailable.
11. Stock Market Internals
As of July 9, 2025, the CBOE Volatility Index (VIX) fell to 15.94, marking a significant drop from 17.79 just two days prior. The decline in expected volatility highlights decreased market uncertainty. This shift, alongside continued interest in growth-oriented stocks, suggests rising investor confidence and a heightened willingness to undertake risk.
12. Global Equity Performance
Global equity markets rebounded in the second quarter of 2025, with notable performances in the USA, Germany, and China. US equities rose significantly, driven by strong growth stocks. International developed markets, led by Germany, outperformed, while Chinese equities lagged other non-US markets.
13. Commodities
Gold gained 39.2% year-over-year as of July 11, 2025, despite a 0.9% decline month-over-month, reflecting strong safe-haven demand amid ongoing macroeconomic uncertainties. The price recovery to around $3,355 per ounce is supported by bullish technical signals, including a short-term moving average crossover and expanding Bollinger Bands. Copper, conversely, slipped 2.1% month-over-month but remains up 19.1% year-over-year, pressured by concerns over global manufacturing growth and trade tensions, which tempered demand prospects despite tighter supply conditions.
14. Crypto Market
Bitcoin surged to a new all-time high above $118,300 on July 11, 2025, driven by $1.2 billion in ETF inflows and $570 million in short liquidations. Ethereum outperformed with an 8% gain, briefly topping $3,000 amid robust whale buying and short covering. The total crypto market cap surpassed $3.65 trillion with a 5.2% daily increase, supported by heightened trading volumes and growing investor appetite ahead of upcoming regulatory discussions in the U.S. Congress. Market sentiment has shifted decisively bullish, with the Fear & Greed Index rising to 67.
15. Currencies
The US dollar weakened to 0.8516 EUR on July 11, reflecting easing pressure on the Fed to hike rates further amid moderating inflation. The euro gained on this dynamic, supporting Eurozone exports but risking imported inflation. The Japanese Yen remains pressured near recent lows, undermining Japan’s export competitiveness but attracting yield-sensitive capital flows. Commodity-linked currencies like the Australian and Canadian dollars showed resilience, reflecting stable global demand and bolstering trade balances. The Chinese yuan’s steadiness indicates cautious policy amid growth uncertainties, influencing global supply chains and capital allocations.
16. Debt Levels
As of early 2025, U.S. federal debt was about 121% of GDP. This surpasses the Euro Area's 87% but is less than Japan's 235%. The primary risk is rising U.S. interest costs, which could strain government finances and impact investor confidence.
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