July 14 - 18, 2025: Weekly economic update

MACROECONOMIC STATISTICS

INFLATION

• Core Consumer Price Index (CPI) (m/m) (June): 0.2% (previous: 0.1%)
• Consumer Price Index (CPI) (m/m) (June): 0.3% (previous: 0.1%)
• Core Consumer Price Index (CPI) (y/y) (June): 2.9% (previous: 2.8%)
• Consumer Price Index (CPI) (y/y) (June): 2.7% (previous: 2.4%)

INFLATION EXPECTATIONS (MICHIGAN)

• 12-month expected inflation (May): 4.4% (prev: 5.0%)
• 5-year expected inflation (April): 3.6% (prev: 4.0%)

GDP (U.S. Bureau of Economic Analysis, BEA) – Q1 2025

• Annualized (third estimate): -0.5% (second estimate: -0.2%; Q4 2024: 2.4%)
• Federal Reserve Bank of Atlanta's GDPNow estimate for Q2: 2.4% (vs. 2.6%)

Business Activity Index (PMI):

(Above 50 indicates expansion; below 50 indicates contraction)

• Services sector (June): 52.9 (previous: 53.1)
• Manufacturing sector (June): 52.9 (previous: 52,0, revised)
• S&P Global Composite (June): 52.9 (previous: 52.8)

LABOR MARKET:

• Unemployment rate (June): 4.1% (previous: 4.2%)
• Nonfarm payroll employment change (June): 147K (previous: 144K revised)
• Change in US private nonfarm payrolls (June): 74K (prev: 137K)
• Average hourly earnings (June, y/y): 3.7% (previous: 3.8%)
• JOLTS job openings (May): 7.769M (vs. 7.395M)

MONETARY POLICY

• Federal Funds Effective Rate (EFFR): 4.25% - 4.50% (unchanged)
• Federal Reserve balance sheet increased: $6.659T (vs. previous week: $6.662T)

MARKET FORECAST FOR RATE

Today:

А week earlier:

Commentary

China

• Both imports and exports (y/y) increased in June compared to May. China’s trade balance (USD) continued to grow, reaching a surplus of $114.77 billion.
• China's GDP (y/y) declined by 0.2 percentage points to 5.2% (vs 5.4%), yet still exceeded market expectations. However, nominal growth came in lower, indicating that deflationary pressure persists in the Chinese economy.

China’s industrial production (y/y) rose by 6.8%, surpassing forecasts once again. Overall, industrial output has been on an upward trajectory since September 2022.

China’s unemployment rate remains low, holding steady at 5.0%:

China’s economic recovery remains gradual, with lingering risks stemming from escalating trade tensions with the United States and persistently weak domestic demand. In summarizing its report, the National Bureau of Statistics emphasized that current policy measures will continue to support consumption in the second half of the year, while also noting heightened uncertainty ahead.

United States

Consumer inflation in the U.S. has begun to show signs of acceleration. The Consumer Price Index (CPI) rose by 0.3% month-over-month in June, compared to 0.1% in May. On a year-over-year basis, both headline and core inflation increased, reaching 2.7% and 2.9%, respectively.

The housing price index rose by 0.2% in June, becoming the primary driver of the overall monthly increase in goods prices. The energy index climbed 0.9%, while gasoline prices increased by 1.0% over the month. The food index rose by 0.3%, with prices for food at home up 0.3% and food away from home up 0.4% in June. The Producer Price Index (PPI) remained flat in June, both month-over-month and year-over-year. Inflation expectations, however, improved according to the University of Michigan survey: the 12-month inflation expectation declined to 4.47% in May (vs prior 5.0%), and the 5-year expectation fell to 3.6% in April (vs prior 4.0%).

The rise in CPI inflation did not trigger negative sentiment in the markets—likely indicating that investors align with the stance of monetary authorities. Jerome Powell noted that the Fed sees risks of short-term inflation pressures.

Christopher Waller, President of the Federal Reserve Bank of Chicago, stated: “Tariffs represent a one-time increase in price levels and do not cause sustained inflation, aside from a temporary spike.” He further emphasized that “a wide range of data suggests that monetary policy should be close to neutral rather than restrictive.” Waller is considered one of the leading candidates for the position of Federal Reserve Chair.

Market Expectations According to FedWatch:

• For the upcoming meeting on July 30: no change is anticipated, with a 95% probability of the rate not being cut.
• Over the next 12 months: the market expects four 25-basis-point cuts, bringing the federal funds rate down to a range of 3.25–3.50%. The first cut is projected for September, although the probability has dropped notably.
• For the remainder of the year: only two cuts are currently priced in.
• The likelihood of a September rate cut has declined to 57%, compared to 94% just a few months ago.

Trade Wars

• The European Union has imposed sanctions on two Chinese banks and five China-based companies. In response, China stated that the sanctions have "caused serious harm to trade, economic, and financial ties" and pledged to take necessary measures to "protect the legitimate rights and interests of Chinese enterprises and financial institutions."
• The U.S. Department of Commerce will introduce preliminary anti-dumping duties of 93.5% on imports of Chinese graphite. Taking into account existing tariffs, the total effective rate will reach 160%.

Market

Equity Market

Sector performance across the U.S. stock market was mixed over the past week. The median decline stood at -0.31%. Leading the gains were the technology, utilities, and communication services sectors.

Year-to-date (YTD) performance stands at +0.2%. Year-to-date, the top-performing sectors remain utilities, basic materials, and financials.

SP500

Weekly: +0.59% (weekly close: 6296,78), 2025 YTD: +6.67%

NASDAQ100

Weekly: +1.25% (weekly close: 23065.47), YTD: +9.21%. This morning, the index opened pre-market trading at yet another all-time high of 23,135.

Euro Stoxx 600

The index remained largely unchanged, trading near the midpoint of its short-term range. Weekly performance came in at -0.33%, with a closing level of 546.2. Year-to-date, the index has gained 8.03%.

Chinese indices posted solid gains following confirmation from the National Bureau of Statistics that further accommodative monetary policy measures will be pursued.

###CSI Index +0.85% (weekly close: 4048), YTD: +2.98%

Hang Seng

Weekly: +5.53% (weekly close: 55,39,83), YTD: +24.84%

BOND MARKET

The bond market remains under pressure, with yields edging slightly higher over the week. Long-term U.S. Treasuries (20+ years, ETF: TLT) declined by 0.64%, closing the week at 85.24. Year-to-date performance stands at -2.92%. However, in today’s pre-market session, the fund is up by 0.80%.

YIELDS AND SPREADS 2025/06/30 vs 2024/07/07

• Market Yield on 10-Year U.S. Treasuries: 4.43% (vs. 4.41%)
• ICE BofA BBB U.S. Corporate Index Effective Yield: 5.33% (vs. 5.28%)
• Yield Spread: 10-year vs. 2-year Treasuries: 56.0 vs. 52.0 bps
• Yield Spread: 10-year vs. 3-month Treasuries: 0.9 vs. 0.5 bps

GOLD FUTURES (GC)

Gold futures remain technically within a bullish formation. Over the past week, the contract declined by 0.43%, closing at $3,355.5 per troy ounce. Year-to-date, however, gold has surged by an impressive 27.05%.

DOLLAR INDEX FUTURES (DX)

The dollar index is showing signs of recovery, posting a weekly gain of +0.67% and closing at 98.21. Despite the recent rebound, the index remains down 9.34% year-to-date.

OIL FUTURES

Crude oil futures declined toward a local support level, ending the week down 3.96% at $66.03 per barrel. Year-to-date, the contract has fallen by 8.10%.

Key Takeaways from the 9th OPEC International Seminar

• Long-Term Energy Demand: Global energy demand is projected to rise by 23% by 2050, reaching nearly 123 million barrels of oil equivalent per day. This outlook incorporates recent shifts in energy and economic policy, driven by mounting concerns over energy security, affordability, and the need to reduce emissions.
• Fossil Fuels Still Dominate: In 2024, oil, gas, and coal collectively accounted for about 80% of the global energy mix—only marginally lower than in 1960, the year OPEC was founded—despite a more than fivefold increase in overall energy consumption since then.
• Oil’s Enduring Role: Oil remains fundamental to the global economy and daily life. Demand for oil is expected to continue rising through 2050, with no clear sign of a peak in sight.

BTC FUTURES

Bitcoin futures posted a modest weekly decline of 0.40%, closing the week at $117,670. Despite the short-term dip, year-to-date performance remains strong, with a gain of 23.51% in 2025.

ETH FUTURES

Ethereum futures surged by 14.23% over the past week, closing at 3,417. However, year-to-date performance remains modest, with a gain of just 0.98%.

Crypto Market Capitalization:

The total crypto market capitalization rose to $3.95 trillion, up from $3.82 trillion a week earlier (source: CoinMarketCap).

• Bitcoin dominance declined to 60.0% (from 63.8%)
• Ethereum’s share increased to 11.6% (from 9.6%)
• Altcoins held relatively steady at 28.5% (vs 26.5%)