July 2025 Commentary
Market Overview
Lingering tariffs, disappointing readings from leading economic indicators and a less-than-ideal U.S. jobs report weighed on the economy in July. The ISM Manufacturing PMI dropped to 48% in July, a 1% decrease from June, with new orders contracting for the sixth month in a row. According to the Bureau of Labor Statistics, the U.S. economy added 73,000 jobs in July, while the May and June numbers were revised 285,000 lower than previously reported. The S&P 500 reached new record highs in July, ending the month at 6,339.39, up 0.65%. U.S. Treasury yields, as measured by iBoxx $ Treasuries, increased to 4.56%, up 16 bps from 4.40% in June. Against this backdrop, the U.S. Federal Reserve held interest rates unchanged in late July for the fifth consecutive meeting, keeping rates in the 4.25%-4.50% range.
In Europe, the European Central Bank target inflation reached 2% in July, in line with expectations. Among the measured countries, the highest inflation rates were recorded for Greece, at 3.7%, and Croatia, at 4.5%. On the tariffs front, the European Union negotiated a rate of 15%, similar to Japan. In Latin America, the U.S. is still negotiating with Mexico, while Brazil was hit with a 50% tariff, one of the highest rates seen thus far.
In Asia, the HSBC India Manufacturing PMI climbed to a 16-month high of 59.1 in July due to increases in new orders and outputs, as well as favorable demand from Indian goods producers.
Lingering tariffs, disappointing readings from leading economic indicators and a less-than-ideal U.S. jobs report weighted on the economy in July. The ISM Manufacturing PMI dropped to 48% in July, a 1% decrease from June, with new orders contracting for the sixth month in a row. According to the Bureau of Labor Statistics, the U.S. economy added 73,000 jobs in July, while the May and June numbers were revised 285,000 lower than previously reported. The S&P 500 reached new record highs in July, ending the month at 6,339.39, up 0.65%. U.S. Treasury yields, as measured by iBoxx $ Treasuries, increased to 4.56%, up 16 bps from 4.40% in June. Against this backdrop, the U.S. Federal Reserve held interest rates unchanged in late July for the fifth consecutive meeting, keeping rates in the 4.25%-4.50% range.
In Europe, the European Central Bank target inflation reached 2% in July, in line with expectations. Among the measured countries, the highest inflation rates were recorded for Greece, at 3.7%, and Croatia, at 4.5%. On the tariffs front, the European Union negotiated a rate of 15%, similar to Japan. In Latin America, the U.S. is still negotiating with Mexico, while Brazil was hit with a 50% tariff, one of the highest rates seen thus far.
In Asia, the HSBC India Manufacturing PMI climbed to a 16-month high of 59.1 in July due to increases in new orders and outputs, as well as favorable demand from Indian goods producers.
