July 21 - 25, 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 (July): 55.2 (previous: 52.9)
• Manufacturing sector (July): 52.0 (previous: 52,9, revised)
• S&P Global Composite (July): 54.6 (previous: 52.9)

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: $6.667T (vs. previous week: $6.59T)

MARKET FORECAST FOR RATE

Today:

А week earlier:

Commentary

The People’s Bank of China has maintained its benchmark lending rates within the 3.00%–3.50% range.

The European Central Bank also kept its rates unchanged, signaling a possible pause ahead. The decision was driven by inflation risks stemming from the trade war and increased government spending (notably, the meeting took place before the trade agreement with the U.S.).

• ECB Deposit Facility Rate (July): 2.00%
• ECB Marginal Lending Facility Rate: 2.40%
• Main Refinancing Operations Rate (July): 2.15%

An agreement has been reached on 15% tariffs covering the majority of European exports, including automobiles and pharmaceuticals. While the deal helps prevent further escalation, it creates a clear imbalance: the EU will face higher duties compared to the U.S.

As part of the agreement, the EU commits to:

• Investing $600 billion into the U.S. economy
• Purchasing $750 billion worth of American energy products
• Opening its markets to tariff-free access
• Increasing procurement of U.S. military equipment

EU steel and aluminum exports remain subject to 50% tariffs. Brussels hopes to ease these terms through further negotiations, aiming to secure partial quotas. Currently, business activity indices in the EU show a phase of expansion in the services sector, while the manufacturing sector is experiencing a slowdown.

United States

The GDPNow indicator from the Federal Reserve Bank of Atlanta for Q2 stands at 2.4%, unchanged from the previous estimate (vs 2.4%).

PMI Readings:

• Services sector: Stronger-than-expected expansion at 55.2 (previous: 52.9)
• Manufacturing sector (June): Continued slowdown at 52.0 (previous: revised 52.9)
• S&P Global Composite PMI (June): 54.6 (previous: 52.9)

Monetary Policy

The Federal Reserve's balance sheet has remained virtually unchanged for the fourth consecutive week.

Market expectations (CME FedWatch Tool):

• Next FOMC meeting (July 30): No change anticipated — 97% probability of no rate cut
• Over the next 12 months: Markets are pricing in four 25 bps rate cuts, bringing the target range to 3.25–3.50%
• The first cut is expected in September, with a probability (percentage unspecified)
• By year-end: Only two rate cuts remain priced in.

Market

Equity Market

Over the past week, U.S. equity sectors posted broadly positive performance. The median sectoral gain was 1.04%. Leading sectors included:

• Healthcare
• Consumer Discretionary
• Basic Materials

YTD Performance

Year-to-date, the U.S. equity market has posted a cumulative gain of +0.74%. Top-performing sectors since the beginning of the year include:

• Utilities
• Basic Materials
• Financials

SP500

Weekly: +1.46% (weekly close: 6388,5), 2025 YTD: +8.22%

NASDAQ100

Weekly: +0.90% (weekly close: 23272.25), YTD: +10.19%.

Euro Stoxx 600

Weekly performance: +1.14%, with a closing level of 552.4. YTD: +9.26%

CSI Index

Weekly performance: +1.95% (weekly close: 4127), YTD: +4.99%

BOND MARKET

Yields declined over the past week, supporting price gains in the bond market. Long-term U.S. Treasuries (20+ years, ETF: TLT):

• Weekly performance: +1.40%
• Week’s closing price: $86.43
• YTD performance (2025): –1.56%

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

• Market Yield on 10-Year U.S. Treasuries: 4.39% (vs. 4.43%)
• ICE BofA BBB U.S. Corporate Index Effective Yield: 5.28% (vs. 5.33%)
• Yield Spread: 10-year vs. 2-year Treasuries: 46.0 vs. 56.0 bps
• Yield Spread: 10-year vs. 3-month Treasuries: 300 vs. 9.0 bps

GOLD FUTURES (GC)

Weekly performance: –0.51%. Week’s closing price: $3,338.50 per troy ounce. Year-to-date (YTD) performance: +26.41%.

DOLLAR INDEX FUTURES (DX)

Weekly performance: –0.79%. Week’s closing level: 97.435. Year-to-date (2025) performance: –10.06%

China is ramping up its gold acquisitions at an accelerating pace, including both physical gold and gold ETFs.

OIL FUTURES

Weekly performance: –1.45%. Week’s closing price: $65.07 per barrel. Year-to-date (YTD) performance: –9.44%.

BTC FUTURES

Weekly performance: +0.53%. Week’s closing price: $118,295. Year-to-date (2025) performance: +24.17%.

ETH FUTURES

Weekly performance: +9.03%. Week’s closing price: $3,725.50. Year-to-date (2025) performance: +10.09%.

Cryptocurrency Market Overview

• Total market capitalization: $3.95 trillion, unchanged from the previous week (source: coinmarketcap.com)
• Bitcoin dominance: 59.9% (vs 60.0% a week earlier)
• Ethereum dominance: 11.9% (vs 11.6%)
• Altcoins (all other cryptocurrencies): 28.2% (vs 28.5%), showing minimal change

Crypto News

President Trump has signed a landmark policy document titled "Guiding Elements of National Innovation for U.S. Stablecoins" (GENIUS), setting the regulatory foundation for stablecoins in the United States. Key provisions include:

• KYC/AML requirements for large-scale transactions
• Authority for the U.S. Treasury to freeze suspicious flows
• Tiered federal and state-level oversight based on scale
• Full backing by cash or U.S. Treasury securities
• Mandatory monthly disclosures of reserve holdings