Weekly Market Commentary July 14th to July 18th 2025
This past week was packed with important economic data, with the most meaningful data releases being inflation data for CPI and PPI, as well as retail sales.
Consumer Price Inflation (CPI) data for June was the first noteworthy report, with headline inflation rising 0.3% and core rising 0.2%. On a year-on-year basis, headline increased by 2.7% while the core was 2.9%, up from 2.4% and 2.8% respectively from May. Overall, as forecasted, tariffs increased prices on sensitive items, including furniture, apparel, toys and appliances.
As for producer prices, measured by the Producer Price Index (PPI), prices were unexpectedly flat in June, but slightly offset by modest upward revisions in May. Overall, PPI is 0.1% lower since February and unusual under any circumstances, but particularly surprising with the implementation of tariffs.
Retail sales have been weak thus far in 2025, so investors were keyed in on the release for June, which were considerably stronger than expected. Both headline and core (ex-auto and gas) retail sales increased by 0.6%, well-above the 0.1% and 0.3%, estimates respectively. While one month doesn’t reverse the recent trend this should adjust GDP forecasts, and it is likely that the Federal Reserve will continue with a wait and see approach on potential rate cuts.
Equity markets continued grinding higher despite continued threats of European Union tariffs during the week. The S&P 500 opened the week at 6,268, reached a new all-time high on Thursday then closed the week at 6,297, up 0.5% and now up 7.1% YTD. U.S. Treasury yields were almost unchanged, with the 2-Year Treasury yield finishing at 3.87%, and the 10-Year Treasury yield closing at 4.42%.
This upcoming week will include Fed Chairman Powell speaking at the Large Banks Conference in Washington, DC, both the S&P Services and Manufacturing data and Durable Goods for June.
