A pivotal week lies ahead for markets and policymakers.
- With the Administration’s updated trade deadline fast approaching, the U.S. has secured significant tariff agreements with some of its largest trade partners. Over the weekend, reports confirmed that the U.S. and EU reached a deal mirroring last week’s agreement with Japan. Both agreements establish a uniform 15% tariff on imported goods—subject to limited country-specific exemptions—and include commitments for massive investment in the U.S. economy, potentially amounting to hundreds of billions, if not trillions, of dollars in total.
- Meanwhile, the Federal Open Market Committee (FOMC) meeting finished today, with three remaining sessions in 2025. As expected, the Fed held rates steady, reinforcing its commitment to inflation control while acknowledging the moderation of economic growth and increased uncertainty due to the evolving U.S. tariff rates. Two Fed governors, both of whom were appointed by President Trump, did dissent from the decision to hold rates steady – showing an increasingly divided central bank. At the post meeting press conference, Chair Powell emphasized the need to pursue a measured, data-dependent approach and resist political pressures.
- This morning, the latest GDP report was released and showed a return to economic growth. After contracting in the first quarter of 2025, the U.S. economy grew at a 3.0% annual rate in the second quarter, as reported by the Commerce Department. Today’s reading far exceeded expectations of 2.3%.
- Later in the week, a series of high-impact economic data releases will further shape market sentiment. On Thursday, the Fed’s preferred inflation gauge—the PCE Index—will be publish with both headline and core readings for June expected to rise 0.3% year-over-year. On Friday, the U.S. employment report is scheduled for release, with the unemployment rate projected to edge up by 0.1% to 4.2%. Further, it is expected that the jobs report will show 100,000 jobs were added in July – a significant decrease from the 147,000 added in June. Economists continue to characterize the current labor market as a “no fire, no hire” environment—i.e. steady but stagnant.