Weekly Market Recap – Week Ended July 11, 2025
Weekly Market Review — Week Ended 11 July 2025
Tone: Equities ground higher for a second straight week, helped by collapsing volatility, upbeat early-season earnings and another powerful leg of the AI trade, but headwinds from a renewed back-up in long-bond yields and an ever-shifting tariff backdrop kept conviction in check.
What put a floor under risk assets
| Catalyst | Why it mattered |
|---|---|
| Volatility vacuum | VIX and Treasury MOVE both slid to five-month lows, unlocking mechanical buying from volatility-targeting strategies and underpinning the T+0 “TACO” (tail-risk-controlled) flow into equities. |
| Tariff deadline kicked to 1 Aug | Pushing the reciprocal tariff date out three weeks bought time for negotiations with Japan, South Korea and others, trimming near-term policy tail risk. |
| Fiscal clarity | Passage of the reconciliation bill extended key TCJA provisions and lifted the debt limit, while Treasury signalled a slower-than-feared TGA rebuild—implying lighter bill supply through quarter-end. Auctions of 10- and 30-year paper tailed only modestly, easing supply-absorption worries. |
| Disinflation progress | NY Fed one-year inflation expectations ticked down to 3.0 %, soothing fears that tariff rhetoric had already filtered into consumer psychology. |
| Earnings and AI momentum | Delta and Levi Strauss both beat and raised, painting a healthier picture of the U.S. consumer. Nvidia’s market cap sailed past $4 T and TSMC posted ~40 % revenue growth, keeping the AI demand narrative front-and-centre. |
| M&A pulse | A flurry of deals—Ferrero/WK Kellogg, Merck/Verona Pharma, and reports surrounding Autodesk–PTC and AES—reinforced the idea that balance-sheet firepower is being deployed despite higher rates. |
What kept investors cautious
| Overhang | Why it mattered |
|---|---|
| Tariff trajectory still hawkish | The administration paired the short-term deadline extension with letters outlining steep prospective levies—including 50 % on copper, 35 % on Canadian goods and threats up to 200 % on pharma—cementing tariffs as a structural policy lever. |
| Rates reprice higher | Long-end Treasury yields pushed back toward the May highs that had previously cooled equity enthusiasm, driven by sticky core inflation, resilient jobs data and deficit worries. |
| FOMC minutes & political noise | Minutes flagged tariff-driven inflation risks; simultaneously, the White House renewed calls for 300 bp of rate cuts and criticism of Fed leadership, stoking concern about central-bank independence. |
| Growth headwinds | A Dallas Fed study estimated immigration policy could shave up to 1 pp from 2025 GDP, while the NFIB survey showed small businesses wrestling with labour quality and cost pressures. |
| Narrow leadership | “Mag 7” weightings in the S&P 500 and forward-earnings share hit fresh peaks, reviving worries about concentration and fragility if mega-cap momentum stalls. |
Cross-asset snapshot
| Asset | Weekly move* | Comment |
|---|---|---|
| S&P 500 | ▲ ~1 % | AI and M&A offset rate-sensitive sector laggards. |
| Nasdaq-100 | ▲ ~1.6 % | Nvidia alone added ~$300 B of cap to the index. |
| 10-yr UST | ↑ ~11 bp to ~4.46 % | Supply concerns ebb, but macro resilience lifts term premium. |
| WTI crude | ▼ ~2 % | Slower demand expectations outweighed hurricane preparedness bid. |
| Gold | Flat | Mixed signals: lower vol/strong dollar vs. macro/policy uncertainty. |
*Approximate; figures round intraday Friday moves versus prior Friday closes.
Looking ahead
- Macro: June CPI (17 Jul), retail sales and the first look at July PMIs will test the “soft-landing” narrative against tariff-inflation fears.
- Earnings: The reporting calendar ramps (JPM, CITI, UNH, PEP) and guidance language on pricing power and wage pressure will shape rate-path expectations.
- Policy/POLITICS: Watch for further negotiation leaks ahead of the 1 Aug tariff deadline, and any Fed commentary that clarifies the path to a potential September cut.
Bottom line: Ultra-low volatility, steadier inflation expectations and strong AI-led earnings kept risk appetite alive, but higher long yields, unresolved tariff policy and still-narrow leadership argue for selective positioning rather than blanket risk-on enthusiasm.