Weekly Market Commentary July 7th to July 11th 2025
This past week was very light with economic data, with the most meaningful release being the minutes of the June 17-18 FOMC meeting. Additional data included Consumer Credit and Initial Jobless Claims.
The minutes of the FOMC meeting highlighted the division within the committee over the appropriate path for interest rate policy. While most of the 19 participants are calling for at least one rate cut for 2025, a remarkable seven participants are calling for no cuts amid concerns that inflation will prove persistent. Although there are differing opinions on the timing and frequency of rate cuts, the committee generally agreed that they could afford to wait for more clarity. Since the meeting, solid labor market data and renewed tariff escalation are likely to reinforce the case for patience.
U.S. consumer borrowing increased in May by $5.1 billion due to an increase in non-revolving debt such as student, auto, and personal loans. Credit card and other revolving debt declined by $3.5 billion driven by moderation in household spending during the month. Data from the New York Fed showed credit card delinquencies rose in the first quarter to a five-year high due to past-due payments on student loans. As Fed policymakers indicate keeping rates higher for longer, headwinds will remain persistent for Americans holding higher loan balances.
Initial Jobless Claims decreased by 5,000 to 227,000 in the week ending July 5th. Although new claims for unemployment insurance fell on the week, the final number is in line with the multi-year average. Claims that are continuing from prior weeks increased to 1.97 million, pointing toward a cooling labor market.
The equity markets took a breather on the week after rallying 5% over the two weeks prior. The S&P 500 closed 0.3% lower to 6,260, the Nasdaq 0.1% lower to 20,585, and the Dow Jones Industrials 1.0% lower to 44,371. U.S. Treasury yields were modestly higher, with the 2-Year Treasury yield finishing mostly flat at 3.91%, and the 10-Year yield increasing 7bps to 4.42%.
This upcoming week will be full of important economic data including CPI, PPI, Retail Sales, and Housing.
