Financial Markets 08/07/2025
The beginning of July gave wings to U.S. markets, which once again reached new all-time highs (the S&P 500 hit 6,284.65 points and the Nasdaq 100 reached 22,896.01 points). However, in Friday’s session, with the New York stock exchanges closed, both the markets and U.S. futures gave back some of those gains after a better-than-expected employment report, which brought the unemployment rate down to 4.1%. While non-farm job creation exceeded forecasts, the private payroll component fell short of targets, so the strength of the data should be interpreted with nuance. In any case, the market reaction was broad-based selling in both equities and U.S. fixed income, as the initial takeaway was that the economy remains very strong. And with inflation, although under control in the short term, potentially rebounding in the coming months, the Fed would have no reason to cut interest rates in the near term. It would make sense for the Fed to wait for conclusive data on the impact of tariffs—both on growth and on price levels.
Tariffs will indeed be the main focus of market attention in the coming days. The United States is sending letters to its main trading partners with whom it has not yet reached an agreement, offering tariff terms on a take-it-or-leave-it basis. This could once again test market nerves, especially if the proposals are as aggressive as those made on April 2.
As for macroeconomic data, last week’s highlights were the PMI figures. In China and Europe, they remain around the 50 mark as in recent months, but in both cases the published data exceeded expectations, giving them a positive tone. In the U.S., the figure was the same—52.9—so there is no sign of economic weakness in either the industrial or services sectors. Additionally, the European CPI data again showed that inflation is not currently a concern for monetary policymakers—especially after OPEC+ announced a production increase of more than 500,000 b/d starting in August, when the market had expected only 150,000. This should support a medium-term decline in crude oil and derivative prices.
In equity markets, the S&P 500 posted a weekly gain of 1.72%, ending Thursday’s session at 6,279.35 points, while the Nasdaq 100 closed at 22,866.97 points, up 1.47%. In Europe, Friday’s bearish session led major indexes to close in negative territory: the Euro Stoxx 50 fell 0.69% to 5,288.85 points. The Ibex 35 also closed slightly lower, virtually unchanged at 13,967.10 points.
The 10-year U.S. Treasury yield rose, reflecting the potential delay in the Fed’s next rate cut, ending the week at 4.35%—8 basis points higher than the previous week. In contrast, yields in Europe moved in the opposite direction: the Bund and the 10-year Spanish bond closed at 2.56% and 3.21%, respectively, down 4 and 1 basis points.
Gold rose 1.79% after two weeks of declines, closing at $3,346.50/oz—a defensive move as markets await Trump’s decision on tariffs when the moratorium ends next Wednesday, July 9. Meanwhile, Brent crude gained 2.56%, ending the week at $68.51/b, amid expectations of a stronger U.S. economy and fears of worsening conditions in both the Middle East and Near East. We’ll see how the week ends following the OPEC+ announcement.
The Quote:
We close with a quote from Mohith Agadi, journalist and activist for the Sustainable Development Goals (environmental conservation and zero hunger):
“The environment is not anyone’s property to destroy. It’s everyone’s responsibility to protect it.”
Summary of Key Financial Asset Performance (7/7/2025)
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