Back to Reality, Markets and All

For the week ended 7/5/2025.

I hope you had a rousing, fireworks-filled 4th of July and welcome back to another week of data, decisions, and all the fun that makes the markets such a rollercoaster of rationality (or lack thereof).

First up, and you’ve likely already heard, President Trump’s “One Big Beautiful Bill” squeaked through both chambers of Congress and was signed into law on Independence Day. Depending on your preferred news outlet, it’s either going to add $3 trillion to the national debt over the next decade or magically reduce it. I’ll let you decide which math to believe – just keep your blood pressure meds nearby.

Turning to the real economy, the Labor Department gave us a surprisingly solid jobs report: 147,000 new payrolls in June, outpacing expectations. Meanwhile, the unemployment rate ticked down to 4.1%, ending its three-month stay at 4.2%. Not bad at all. And for those tracking the Fed’s every breath, this strengthens the case for leaving rates right where they are. As Chair Powell has said (on loop): no need to cut unless the labor market buckles.

Speaking of the Fed, a few FOMC members have taken off the kid gloves and are now publicly jockeying for the 2026 Fed Chair race. This sudden outbreak of ego and ambition? Likely encouraged by the President’s efforts to inject a little chaos into the Fed’s historically boring proceedings. If future Fed appointments start to resemble cabinet reality TV, well… buckle up.

As for the markets? Another good week for equities. The S&P 500 rose 1.8%, with global real estate up 1.4%. Most asset classes posted modest gains, somewhere between 0.1% and 1.0%, except for our sulking friend, the bond market, which fell 10 basis points. At the halfway point of 2025, it’s foreign stocks leading the charge (thank you, falling U.S. dollar), while risk assets are holding their ground. Bonds and cash? Still pulling up the rear.

This week’s economic calendar is light, but don’t confuse that with a forecast for low volatility. These days, the real action is in the theater of politics – both domestic and geopolitical. So stay caffeinated, stay diversified, and don’t stare at the headlines too long. You might start yelling at your TV.

Good morning. Let’s get to work.

Interesting data point of the week.

Source: Visual Capitalist

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