Last week: biggest US job report revision since 2020; new US tariffs apply; 4 of the ‘Magnificent 7’ earnings were released
WEEKLY TRENDS
It had to happen… US jobs creation figures were finally revised (down). May and June figures were revised down by a combined 258k from previously announced levels. July jobs creation was only +73k (above the revised +14k in June)
Trump’s August 1st tariffs deadline was a wake-up call for investors too, with Canada hit by a 35% new tariff, Brazil with 50% and Switzerland with 39% (new tariffs apply on Augst 7th)). Stocks drove much lower (2 to 4% down for the major indices on the week)
On the earnings front, Meta and Microsoft produced strong revenues and promising outlooks (up +5% and +2% on the week) while Novo Nordisk weakened by a whopping -33%, Ferrari by -14%, Apple -5% and Amazon by -8%, on poor outlooks
The OPEC+ met over the weekend, deciding on a +548k barrels a day increase starting Sep 1st. The FOMC (FED) decided to stay put on its base rate last week
MARKETS
Equities
Earnings released stock weekly performances:
Meta (+5%), Microsoft (+2%), Rolls-Royce Holdings (+7%)
Apple (-5%), Amazon (-8%), Novo Nordisk (-33%), Ferrari (-14%)
Nearly 35% of all SP500 companies have now released their Q2 earnings, results overall are mixed to slightly positive.
US curve (2-10 years) steepening higher at 54bps (+7bps) Yields lower after US job reports massive revision (258k less jobs created in May-June)
HY corporate spreads at 286bps for US (+4) at 272bps for EU (-10)
Commodities
Oil price higher (+3%, due to Trump’s latest 10 day ultimatum to Russia)
Copper price lower (finally exempt from 50% new tariffs)
Gold price higher (due to lower US bonds yields, despite a stronger USD)
US
Q2 GDP at +3% yoy vs +2.3% expected
July NFP job report +73k new jobs but May-June figures revised by -258k (May finally at +19k and June finally at +14k)
June PCE inflation at 2.6% yoy vs 2.4% in May and Core at +2.8%
Crypto
Paypal enabled crypto payments for US merchants (incl BTC and stablecoins) JPM & Coinbase enabled direct ‘Bank-to-Wallet’ connection
Under the watch
Silver (lease rates spiked above 6%)
Nota Bene
FED governor Kugler resigned (Trump is to nominate her replacement)
CALENDAR
Upcoming earnings releases: USBerkshire Hathaway, Palantir (4 Aug), AMD, Pfizer (5), McDonald’s (6), Eli Lilly (7) EUBP (5 Aug), Siemens Energy (6), Allianz, Siemens AG (7)
Upcoming CB meetings: BOE (7 Aug)
WHAT ANALYSTS SAY
Julius Baer: EU-US tariff agreement: 15% - Trump's new model?
BlackRock: Stablecoins looks here to stay
Vanguard: Markets confirm diversification in the face of uncertainity
Julius Baer, 31 July 2025
Author: Julian Schaerer, Economist
These new customs duties will entail significant economic costs, although Europe's refocusing on domestic demand could help to mitigate their impact.
The European Union and the United States reached a trade agreement on 27 July, thereby avoiding a further escalation of transatlantic tensions. Under the agreement, the United States will impose 15% tariffs on most products imported from Europe, while the EU will refrain from imposing additional tariffs on imports from the United States.
Although the 15% rate is lower than the 30% brandished by US President Donald Trump just two weeks ago, it remains high in historical terms: bilateral tariffs between the US and the EU have been below 10% for decades.
In recent weeks, the US has agreed to tariffs of 10% on most products from the UK, 15% on those from Japan and 20% on those from Vietnam. Furthermore, the EU's commitment to invest $600 billion in the United States echoes a similar promise made by Japan, which has committed to investing $550 billion as part of its own trade agreement with the United States. Indeed, the 15% rate and large-scale investment commitments in return appear to be characteristic of the United States' trade strategy, with the United Kingdom's 10% tariffs potentially representing a lower limit and Vietnam's 20% tariffs an upper limit.
For businesses, this agreement provides some visibility on a new reality: that of permanently higher tariffs. However, compared to the low tariff regime prior to 2025, the economic costs are considerable. As is often the case in a high-tariff environment, the new tariff regime poses challenges for businesses and consumers.
On the one hand, the competitiveness of European companies affected by the 15% tariff will be impacted.
On the other hand, US consumers can expect higher prices, which will erode their purchasing power. The inflationary impact of these higher tariffs is likely to be reflected in upcoming inflation figures in the United States, and the uncertainty surrounding this impact is one of the main reasons why the Federal Reserve kept interest rates unchanged at yesterday's FOMC meeting.
While these tariffs will undoubtedly pose a challenge for Europe, its economy is resilient enough to withstand the repercussions. After several years of underperformance, domestic demand in Europe has recently shown signs of growth, thanks in particular to a more expansionary fiscal policy, especially in Germany. With domestic demand regaining strength, Europe is less dependent on its manufacturing exports, which helps to cushion the impact of tariffs.
BlackRock, 28 July 2025
Author: Wei Li, Global Chief Investment Strategist
Stablecoins look here to stay
• Recent U.S. law cements the role of stablecoins as a means of digital payment in the future of finance. We still see bitcoin as a potential return diversifier.
• U.S. stocks pushed to all-time highs, partly on signs of big tech companies upping AI investment plans. Japanese stocks also hit record highs.
• We expect the Fed will hold rates steady this week. We watch for U.S. trade deals as the Aug. 1 deadline approaches and for tariff impacts in Q2 GDP data.
New U.S. legislation – notably this month’s Genius Act – is cementing the role of stablecoins as a payment method in the future of finance, one of five mega forces we see driving returns. Stablecoins are pegged to major currencies, mainly the U.S. dollar and could solidify its dominance in global markets, though other countries are exploring alternatives. We think rising demand for stablecoins will have little impact on short-term Treasury yields. We still see bitcoin as a distinct return driver.
This has been a banner year for bitcoin, up 25% this year as the U.S. is in the process of adopting a couple of key laws aimed at bringing digital payments and assets into the mainstream – and making the U.S. the crypto capital of the world. One determines which financial regulator oversees different digital assets. That bill is still working its way through Congress. Another – the Genius Act, signed into law earlier this month – creates a comprehensive payment stablecoin framework. Stablecoins are digital tokens pegged to a fiat currency and backed by reserve assets. They fuse the frictionless transfer of crypto with the perceived stability of fiat currency. Though stablecoins are small relative to the size of the overall crypto universe at a 7% share, their adoption has grown quickly since 2020 to reach about $250 billion.
We see two implications of the Genius Act on the U.S. dollar and Treasury bills. The act defines stablecoins to function as a payment method, not an investment product; prohibits issuers from paying interest; and limits issuance to federally regulated banks, some registered nonbanks and state-chartered firms. This regulation could reinforce dollar dominance by enabling a tokenized U.S. dollar-based ecosystem for international payments. Users in emerging markets may get easier access to the U.S. dollar over volatile local currencies. Yet in major economies, adoption may be limited by the ban on interest payments, which aims to prevent a low-friction rival that could compete with bank deposits and hurt traditional lending.
The act also spells out what assets stablecoin issuers may hold in reserve: mostly repurchase agreements, money market funds and U.S. Treasury bills with a maturity of 93 days or less. Leading stablecoin issuers Tether and Circle together hold at least $120 billion in Treasury bills, only about 2% of the Treasury’s roughly $6 trillion bills outstanding. That demand could grow with the stablecoin market and spur new buying of bills – but the impact on yields will likely be limited. First, stablecoin demand for bills is likely to be offset by money shifting from similar assets, so little net new demand. Second, bill issuance is set to keep surging due to the Treasury’s preference to boost the funding of persistent deficits with more short-term debt.
The U.S. is not alone in acting. Hong Kong’s new regulation aims to attract stablecoin innovation. Europe is exploring a digital euro, though its use would be limited to avoid hurting banks. If other countries permit interest-bearing stablecoins or pursue central bank digital currencies, it could weaken the dollar’s role in trade finance, though the U.S. could then permit interest.
Vanguard, 31 July 2025
Author: Roger Bootz, Head of Switzerland and Liechtenstein
Asset allocation and outlook
The risk premium on US equities is now close to zero, a historically low level that has only been seen twice in 70 years. Equities appear more expensive than bonds, a situation that has not been seen for nearly 25 years. Credit spreads remain narrow. Despite the overall resilience of markets in 2025, performance remains mixed and volatility remains high, exacerbated by geopolitical tensions. In this context, diversification is more important than ever as a prudent strategy — far from being a luxury, it is the most robust approach in the long term.
Economic outlooks
United States - Outlook improving despite ongoing political uncertainty
The US economy continues to show remarkable resilience despite ongoing economic policy uncertainties. The labour market is showing signs of easing without any major deterioration, while inflation is below expectations. The de-escalation of trade tensions with China marks an important turning point. The risk of renewed hostilities on the trade front has eased considerably, reducing the stagflationary impact on the economy. The debate is now likely to refocus on fiscal policy in the second half of the year.
Eurozone - A growing risk of underestimating inflation
Growth in the eurozone is expected to be around 1% in both 2025 and 2026, slightly below the long-term trend. The slowdown in global activity, linked in part to persistent political uncertainty and rising trade barriers, is expected to weigh on final demand. The positive effects of the German fiscal stimulus plan and increased defence spending in the European Union are expected to materialise mainly in 2026. Only one further rate cut is anticipated between now and the end of the cycle, probably in September, which would bring the key rate to 1.75%.
United Kingdom - Slowdown in the labour market paves the way for further rate cuts
UK GDP growth is expected to remain close to 1% in 2025 and 2026. Compared to expectations at the beginning of the year, activity proved to be more robust than expected in the first quarter. However, a slowdown is expected from the second quarter onwards, with uncertainty weighing on household and business spending. The Bank of England is expected to continue its quarterly pace of monetary easing.
Japan - Uncertainty surrounding global trade justifies a cautious approach by the BoJ
Domestic demand was robust in the first quarter, with private consumption rising for the fourth consecutive quarter. However, real GDP growth turned negative due to the deterioration in net external trade. In the medium term, private consumption is expected to remain solid. Wages continue to rise steadily, and with inflation gradually stabilising – mainly driven by food prices – consumer confidence and real income are expected to improve. The year-end policy rate forecast has been revised downwards from 1% to 0.75%, suggesting only one further rate hike by the Bank of Japan (BoJ) this year.
China - Deflationary pressures persist despite easing tariff shocks
The Chinese economy is expected to maintain stable growth in 2025, supported by solid activity indicators in the first five months of the year. Despite the increase in US tariffs, exports remain resilient. However, uncertainty related to tariff policies remains high and continues to represent a downside risk to growth. The GDP growth forecast for 2025 was recently raised from 4.2% to 4.6%, mainly due to the de-escalation of trade tensions with the United States. With the easing of tariff shocks, the authorities are expected to adopt a more cautious and reactive approach. A slight cut in the key interest rate of 10 basis points to 1.3% is expected by the end of the year (one basis point being equivalent to one hundredth of a percentage point).
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