Market Quick Take – 2 July 2025

Q3-2025 Macro Outlook: Less chaos, and hopefully a bit more clarity

Market drivers and catalysts

• Equities: Tech under pressure; tariff risks; Europe weak; UK defensive
• Volatility: VIX calm; mild jitters; sector rotation
• Digital assets: BTC, ETH steady; ETF flows strong; regulatory focus
• Fixed Income: US yields rebound at front end of curve on Powell comments, job openings data
• Currencies: USD hit a new cycle low yesterday before rebounding, especially versus a suddenly weak JPY
• Commodities: US fiscal debt concerns underpin gold. Crude remains stuck near lows
• Macro events: US June ADP Employment

Macro data and headlines

• The Senate approved their version of President Trump’s tax-and-spending bill, sending it back to the House, where it may not have the votes to pass in its current form, as both fiscal hawks are against the large deficits it will entail and moderates are against cuts to health care coverage for low income constituents. Currently, the House has 220 Republican and 212 Democratic members (three Democratic seats are vacant after the deaths of Representative since the November election).
• Federal Reserve Chair Powell was cautious on rate cuts, citing inflation risks this summer from Trump tariffs and the need for more data, but didn’t explicitly rule out a July rate cut, which the market currently prices at only slightly more than 20% likely.
• US President Trump cast doubt on whether a trade deal with Japan will be reached before the July 9th negotiation deadline and said he would not extend the negotiation deadline. He suggested Japan could face 30% or 35% tariffs as a result. The US will prioritise India in tariff talks, addressing Japan later, per Nikkei.
• The US June ISM Manufacturing PMI was out at 49 in June 2025 from 48.5 in May, slightly stronger than 48.8 consensus expectations. Manufacturing contracted for the fourth month, but the pace of contraction slowed, with production rebounding to 50.3 and inventories improving to 49.2.
• US job openings rose by 374,000 to 7.769 million in May 2025, exceeding expectations and reaching the highest level since November 2024. Accommodation and food services added 314,000 openings, finance and insurance increased by 91,000, while federal government openings fell by 39,000.
• Eurozone inflation rose to 2.0% in June 2025, meeting expectations and the ECB's target, up from 1.9% in May. Germany's inflation fell unexpectedly, France and Spain saw modest increases, and Italy's rate stayed steady.

Macro calendar highlights (times in GMT)

1130 – US June Challenger Job Cuts
1215 – US June ADP Employment
1415 – ECB President Lagarde to give closing remarks at ECB Sintra conference
1430 – EIA's Weekly Crude and Fuel Stock Report
0145 – China Jun. Caixin Services PMI

Earnings events

Next week: The Progressive Corporation, Fast Retailing, Cintas Corporation, Kongsberg, Delta Airlines

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• US: US stocks saw a mixed session as the S&P 500 hovered near record highs (-0.11%), the Nasdaq 100 dropped 1% on broad tech weakness, and the Dow surged 0.91% led by healthcare gains (UnitedHealth +4.5%, Amgen +4.1%). Tech giants like Nvidia (-3%) and Tesla (-5.3%) led the decline amid renewed political tensions and the looming July 9 tariff deadline. The Senate passed Trump’s massive tax-and-spending bill, sparking debate over the rising deficit. Fed Chair Powell signaled caution, highlighting the impact of tariffs on inflation and delaying any imminent rate cuts.
• Europe: European markets retreated on trade uncertainty and fading hopes for further ECB rate cuts. The DAX slid 1% as defense stocks tumbled on Norway’s fund blacklist and trade deal fears. Eurozone inflation hit the 2% target, leading ECB President Lagarde to cool expectations for more easing. Meanwhile, upbeat PMI data in Germany and a rebound in Swiss equities offered some support, but sentiment remained fragile as talks with the US continued.
• UK: The FTSE 100 gained 0.3%, outperforming peers thanks to strong advances in AstraZeneca (+2.8%) and Diageo (+3.8%). UK house price growth softened in June, and manufacturing PMI stayed weak. Bank of England’s Bailey suggested rates could trend lower, offering relief for borrowers. Investors kept an eye on ongoing government spending cuts and global tariff risks, while volatility in retail and banking stocks reflected the uncertain macro backdrop.
• Asia: Asian equities were mixed as tariff concerns dominated sentiment. Hong Kong’s Hang Seng rebounded 0.5% after a holiday, helped by strong property and financials. Japan’s Nikkei fell 1% as Trump cast doubt on a trade deal and threatened steep tariffs. South Korea’s KOSPI slid 0.8%, and China’s markets were mostly flat, with tech stocks under pressure but banking and liquor shares providing some resilience.

Volatility

Market volatility remains muted, with the VIX holding near 17—well below June’s brief spike above 20. VIX futures for mid-July trade around 18.9, reflecting only mild investor caution heading into the next earnings season. For long-term investors, these levels signal a market expecting “routine bumps,” not major disruption. Volatility is currently driven more by sector rotation than any new macro shock.

Digital Assets

Bitcoin drifted 2% lower to $106,500, while Ether held at $2,440 despite softer prices. Institutional flows continue: BlackRock’s IBIT ETF slipped 2.2% but remains up 13% YTD, with $75bn in assets. iShares’ ETHA drew $492m last week, highlighting robust demand for spot-Ether exposure. Regulatory news—potential for easier ETF approvals and Deutsche Bank’s crypto custody plans—kept the spotlight on institutional adoption. Crypto-linked equities like COIN and MSTR declined in line with digital assets.

Fixed Income

• US Treasury yields rose all along the yield curve yesterday. At the front end of the curve, yields rose as US Fed Chair Powell predicted that inflationary pressure might rise this summer due to Trump tariffs and said that the US economy is in solid shape, though he refused to rule out rate cuts for the July meeting. Later in the day, the strong US May JOLTS Job Openings survey boosted yields further. The 2-year US treasury yield benchmark ended the day up five basis points to 3.77%. The 10-year benchmark yield rose only a few basis points to 4.25% after US Treasury Secretary Bessent said earlier this week that he wouldn’t boost long term treasury issuance at current yield levels.
• Germany’s 10-year Bund yield slumped yesterday, with the benchmark closing three basis points lower at 2.57% the day after rising to the highest level in more than a month.
• US High yield credit spreads tightened sharply yesterday, with the Bloomberg measure of the spread between US high yield bonds and US treasuries tightening nine basis points to 281 basis points, the tightest level in four months.

Commodities

• Gold and silver trade higher for a third day as they continue to find fresh demand after finding support ahead of their recent lows—in gold at USD 3,245, and silver from the USD 35.30–40.00 area. Supported by US fiscal debt concerns after the Senate passed President Trump’s ‘Big Beautiful Bill’, which is now headed to the House for final approval. The focus now turns to the US jobs situation, with ADP today and June’s employment report due Thursday. Some short-term resistance at USD 3,350 and USD 3,374.
• Crude oil prices remain stuck near lows after last week’s flush-out of wrong-footed longs left the short-term appetite for risk somewhat subdued. Continued focus on the Middle East, where the Israel–Iran ceasefire remains fragile; the prospect for another OPEC+ production increase next month; and today’s EIA storage report.

Currencies

• The USD clawed back a bit of lost ground yesterday as US treasury yields rose on Fed Chair Powell comments and stronger than expected May job openings data. EURUSD posted a high on the day of 1.1829, but trades just below 1.1800 this morning in early Europe.
• The JPY weakened again broadly yesterday after initiating a strong rally earlier in the day, with USDJPY rebounding from new local lows at 142.68 to back above 143.50, while EURJPY tradesto .trading below 168.50 at one point, only to rebound back toward 169.50. The JPY was not reactive to Trump comments
• EURGBP rose to a new high since late April yesterday and nearly touched 0.8600 before falling back slightly.