Weekly Market Update – July 11, 2025

Quick Takes

• The White House spent much of last week sending out letters to trading partners with newly set tariff rates that ranged as high as 50%. Unlike the dramatic tariff-induced losses in early April, the markets last week largely shrugged off this round of tariff threats. 
• For the week, the S&P 500 slipped -0.3% while the Nasdaq Composite dipped -0.1% and the Russell 2000 Index slid -0.6%. That snapped three-week win streaks for the Nasdaq and the Russell and a two-week win streak for the S&P. Foreign stocks were also down slightly.
• Treasury bond yields were modestly higher for the week, with the 10-year Treasury yield up +6 basis points (to 4.41%). With yields up, the Bloomberg U.S. Aggregate Bond Index slipped -0.4% for the week, and the Bloomberg Global Aggregate ex U.S. Bond Index fell -1.3%.

Source: Bloomberg. Data as of July 11, 2025.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Stocks score more record highs, but slip for the week

Last week, the White House was busy sending out letters to trading partners with newly set tariff rates that ranged as high as 50%. Unlike the dramatic tariff-induced losses in early April, the markets last week largely shrugged off this round of tariff threats. In fact, by Thursday, the S&P 500 Index and Nasdaq Composite Index closed at new all-time highs. President Trump issued letters to major trading partners that included Japan, South Korea, Canada, Brazil, and the Philippines. In addition to the country-specific tariffs, the President also targeted copper imports with a 50% tariff and said pharmaceuticals could be charged a levy of as much as 200%. By Friday, the tariff actions finally caught up to stocks when the President threatened Canada with a 35% tariff rate. Most major indexes were down enough on Friday to leave them slightly negative for the week. The S&P 500 slipped -0.3% for the week, while the tech-heavy Nasdaq Composite dipped -0.1%, and the small cap Russell 2000 Index slid -0.6%. That snapped three-week win streaks for the Nasdaq and the Russell and a two-week win streak for the S&P. Foreign stocks also closed the week slightly negative. The MSCI EAFE Index (developed market non-U.S. stocks) and the MSCI Emerging Markets Index were both down -0.2%. 

It was a slow week for economic data releases, but on Wednesday afternoon, the Federal Reserve released the minutes of the June Federal Open Market Committee (FOMC) rate policy decision meeting that showed that overall, policymakers remained content to wait and see how tariffs will impact inflation. There was some disagreement among members of the FOMC about the direction of monetary policy. While “most” policymakers said that they anticipate cutting rates this year, two stated that they would be open to rate reductions as soon as the late-July FOMC meeting. On the other hand, some committee members said that they don’t anticipate cutting rates at all in 2025.

While stocks showed little reaction to the FOMC minutes, Treasury Bonds rallied off it. But by the end of the week, those gains were gone. Long-term bond auctions went smoothly during the week, which soothed fears that the market had lost its appetite for long-dated government debt. Ultimately, U.S. Treasury bond yields were modestly high for the week. The benchmark 10-year Treasury yield ended the week up +6 basis points at 4.41% following the prior week’s +7 basis point rise. The 2-year Treasury yield was up a mild +1 basis points after jumping +13 basis points two weeks ago. With yields up, the Bloomberg U.S. Aggregate Bond Index slipped -0.4% for the week (bond prices and yields move in opposite directions). Non-U.S. bonds, as measured by the Bloomberg Global Aggregate ex U.S. Bond Index, were down -1.3%.

Chart of the Week

The U.S. Treasury Department recorded a surprise Federal Budget Surplus of +$27 billion in June to bring the fiscal year-to-date deficit down to -$1.337 trillion, compared to the -$71 billion deficit in June 2024 and 2024 year-to-date deficit of -$1.273 trillion. Wall Street was expecting a -$30.0 billion deficit for June. Receipts rose +12.9% from last year to $526.4 billion, while Outlays fell -7% from June 2024 to $499.4 billion. The increase in receipts was largely driven from Customs Duties that totaled about +$27 billion for the month, up from $23 billion in May and a whopping +301% increase from June 2024. For the year, receipts are up +7% while spending has risen +6%. On an annual basis, tariff collections have totaled $113 billion, or +86% more than a year ago. The government last posted a June surplus in 2017, during President Donald Trump’s first term. Trump levied across-the-board 10% tariffs on imports in April on top of other select duties. He also announced a menu of so-called reciprocal tariffs on various U.S. trading partners and has been in negotiations since. In terms of outlays, Net Interest on the $36 trillion national debt totaled $84 billion in June, down slightly from May but still higher than any other category except Social Security.

Treasury Posts Unexpected Surplus in June as Tariff Receipts Surge

Receipts and Outlays, and Surplus/Deficit for June 2025

Source: U.S. Treasury Department.

The Week Ahead

Inflation data will be the key economic releases of the week, beginning with the Consumer Price Index (CPI) for June, released on Tuesday by the Bureau of Labor Statistics. The BLS also releases the Producer Price Index (PPI) on Wednesday. Import and Export Prices come on Thursday. Also on Thursday, the Census Bureau reports Retail Sales data and housing starts on Friday.

Second-quarter earnings season will also be in focus, kicking off Tuesday with reports from major banks like Citigroup, JPMorgan Chase, and Wells Fargo. Financials make up half of the 38 S&P 500 companies slated to report quarterly results next week, including nine of the 10 largest banks by assets. Bank of America, Goldman Sachs, and Morgan Stanley follow on Wednesday. U.S. Bancorp announces results on Thursday, and American Express and Charles Schwab close out the week on Friday. Outside the financial sector, other megacap companies reporting next week include Johnson & Johnson on Wednesday, and GE Aerospace and Netflix on Thursday.

Did You Know?

THE MAGIC NUMBER – The first six months of 2025 saw the S&P 500 and the Bloomberg Aggregate Bond Index both gain over +4%. Since 1990, in the four other years when stocks and bonds both gained +4% in the first half, they traded higher in the second half all four times, with median gains of +12.6% and +4.5%, respectively. (Source: Bloomberg)

EMERGENCY FOR EMERGENCY SAVINGS – 24% of U.S. adults have no emergency savings, and only 46% have enough to cover at least three months of expenses. 37% of adults have tapped their emergency savings in the last year, and four out of five used the money to cover spending on essentials. (Source: Bankrate)

LESS DOWN, MORE BORROWED – A record high 19.1% of new car buyers committed to a monthly payment of $1,000+ during Q1, and a record 22.4% of all new car loans had terms of 84+ months. Buyers are financing a record $42,388 of their purchase, but the average down payment of $6,433 declined 2% YoY. (Source: Edmunds)

This Week in History

BAD DEAL – On July 10, 1986, discount airline People Express rejected a takeover offer from the hated Texas Air, instead selling off a division and vowing to remain independent. Nearing bankruptcy two months later, it sold out to Texas Air for about half the original offer price. (Source: The Wall Street Journal)

Economic Review

• The National Federation of Independent Business (NFIB) reported that their Small Business Optimism Index slipped to 98.6 from an unrevised 98.8 the prior month. That was in line with Wall Street expectations. Of the 10 component indexes, four increased, four declined, and two were unchanged. The improvements came from Earnings Trends, which was up +4 points to a net-22%, and Current Job Openings, which rose by +2 point to +36%. Plans to Increase Employment and Now a Good Time to Expand and Real Sales Higher both ticked up +1 point.  Plans to Increase Employment and Expected Credit Conditions were unchanged. The biggest decline came from Current Inventory, which fell -5 points to -6%. Expect Economy to Improve and Expect Real Sales Higher were both down -3 points. The separately produced Uncertainty Index that is released with the Small Business Index declined -5 points to 89. “Small-business optimism remained steady in June while uncertainty fell,” said NFIB Chief Economist Bill Dunkelberg.
• Outstanding U.S. Consumer Credit increased +$5.1 billion in May, half of expectations for a +$10.5 billion increase, and the prior month’s +$16.871 billion rise (revised down from the initially reported +17.873 billion). That amounts to a +1.2% annual growth rate for the month, down from the +4.0% annualized growth rate the prior month. Growth for revolving credit, such as credit cards, fell at a -3.2% rate, down from the prior month’s +6.9% rate. Nonrevolving credit, which tends to be much less volatile than revolving credit and includes auto as well as school loans, rose at a +2.8% rate following the prior month’s +3.0% increase. The data from the Federal Reserve is not adjusted for inflation and does not include mortgage loans, which is the largest category of household debt.
• The Census Bureau reported Wholesale Inventories fell -0.3% to $905.5 billion in May, matching expectations, but down from $908.3 the prior month. Year-over-Year (YoY) inventories were up +1.4%, down from the +2.1% annual rate the prior month. That is still well below the typical +4% to +6% annual increase in strong economies. Inventories are goods produced for sale that have not been sold yet. Wholesale Trade Sales also declined -0.3%, down from the prior month’s flat reading (revised down from +0.1%) and below expectations for +0.2%. Wholesale inventories data isn’t adjusted for inflation. The Inventory-to-Sales Ratio was steady at 1.30 months, down from 1.39 a year earlier. The ratio reflects how long it would take a company to sell all the goods sitting on warehouse shelves.  
• Weekly MBA Mortgage Applications rose +9.4% for the week ending July 4, following a +2.7% rise the prior week. The Purchase Index jumped +9.4% after rising +0.1% the prior week. The Refinance Index rose +9.2% after a +6.5% gain the prior week. The average 30-Year Mortgage Rate fell to 6.77% from 6.79% the prior week, the lowest rate since April 4.
• Weekly Initial Jobless Claims were down -4,000 to 233,000 for the week ending June 27, better than expectations for 241,0000. The prior week was revised higher by +1,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) was unchanged at 1,964,000 for the week ending June 20 after the prior week’s reading was revised lower from 1,974,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.