To The Moon

On Wed, 30 Jul 2025 US market was chuggng along nicely until the 2pm FOMC press conference.

As expected, the Fed kept interest rates unchanged and US market fell because of investors’ negative sentiments.

Their hopes of a more dovish tone or explicit timeline for rate cuts, came to nothing, especially with political figures (eg. Trump, Bessent) pressing for monetary easing.

Instead, the lack of signals from Fed chair, led to a rise in Treasury yields:

• The 10-year Treasury yield rose +4.2 basis points to 4.37%.

• The 2-year yield was up +6.6 basis points at 3.941%.

• The 30-year bond yield added +3.0 basis points to 4.898%.

And as we came to know, a decline in S&P 500 and Dow stock indices.

CME Fedwatch.

Almost immediately, market analysts lowered probability of a September 2025 rate cut to 56.8% from 68%. (see above)

By the time market ended the day:

• $Dow Jones(.DJI)$ : -0.38% (-171.71 to 44,461.28)

• $S&P 500(.SPX)$ : -0.12% (-7.96 to 6,362.90).

• $NASDAQ(.IXIC)$ : +0.15% (+31.38 to 21,129.67).

US Economic Reports.

Besides a non-committal response from the Fed, US economic reports out so far did not boost market sentiments either.

(1) US Consumer Confidence (July 2025).

US consumer confidence improved less than expected in July 2025.

Households' perceptions of current job availability were the weakest in nearly 4½ years, consistent with easing labour market conditions.

The Conference Board said on Tues, 29 Jul 2025, its consumer confidence index (July 2025) increased 2.0 points to 97.2 vs economists polled by Reuters had forecasted index would increase to 95.0.

(2) US Jobs opening & Labour turnover surveys (JOLTs).

Latest data from US Bureau of Labour Statistics (BLS) revealed a decrease in JOLTs job openings, a key indicator of job vacancies in June 2025.

Actual number of job openings stood at 7.437 million, falling short of (a) estimates (7.510 million) and (b) last month’s numbers (7.712 million).

This indicates:

• Job market growth is slowing down.

• Businesses might have trouble finding the suitable candidates or create new positions.

(3) US ADP Non Farm payroll.

ADP National Employment Report for July 2025, showed that US private payrolls increased more than expected, in the face of slowing US labour market.

Private payrolls rose by +104,000 jobs, its largest increase in 4 months, after an upwards revised of -23,000 jobs decline in June. 2025.

US labour market has lost steam amid an unsettled economic outlook stemming from import tariffs.

This is consistent with latest US Consumer Confidence report (see above) that showed more people in July 2025, felt that “jobs were harder to get”, the highest level in nearly 4½ years.

(4) US Gross domestic product (GDP).

On Wed, 30 Jul 2025, the first preliminary reading of US GDP for Q2 2025 was released.

• It registered a +3.0% annual growth rate, rebounding strongly from a -0.5% contraction in Q1 2025.

• GDP Q2 boost was primarily driven by (a) a sharp decline in imports, that is subtracted during GDP calculation and (b) rise in consumer spending.

However, Q2 robust readings masked US domestic weaknesses:

• Domestic demand grew slowly, business & residential investments declined.

• Trade policy uncertainty continued to affect economic activity & confidence.

(5) US Jobless claims.

(a) US Weekly Jobless claims.

• For week ending 26 Jul 2025, US weekly jobless claims rose by +1,000 claims to 218,000, from previous week’s 217,000.

• It is a modest uptick, still reflecting a relatively resilient labour market.

(b) US Continuing claims.

• The same could not be said for US continuing claims for week ending 19 Jul 2025.

• Continuing claims remained steady at 1.95 million.

• This shows sustained unemployment insurance recipients and highlights a slowdown in hiring momentum, despite overall low unemployment.

(6) US Personal Consumption Expenditure (PCE).

On Thu, 31 Jul 2025, the latest reading of US inflation gauge for June 2025, showed price increases accelerated, as inflation remained above the Fed's 2% target.

Headline PCE.

• MoM : was +0.3%, inlined with analysts’ forecast of +0.3% vs May 2025’s upwards revised +0.2%.

• YoY: came in at +2.6% vs analysts’ estimates of +2.5% vs May 2025’s upwards revised +2.4%.

Core PCE.

• MoM : came in at +0.3% vs analysts’ estimates of +0.3% vs May 2025’s +0.2%.

• YoY: was +2.8% vs economists’ forecast of +2.7% vs May 2025’s upwards revised +2.8%.

According to Capital Economics, Asst. economist, Harry Chambers:

The June 2025’s PCE report released a day after US’s Fed FOMC meeting, does nothing to ease Fed’s concerns about US tariff-driven inflation:

• This as June’s core PCE prices rises further above 2% target.

• Previous month inflation data gets revised upwards.

• Sharp rise in core goods inflation.

(7) US Non-Farm Payroll (Forecast)

• A recent Reuters survey of economists expects US employment report for July 2025 to fall.

• Non-farm payroll is forecast to increase by +110,000 jobs vs June 2025’s 147,000.

• At the same time, unemployment rate is forecast to increase to 4.3% from 4.1% a month ago.

Non-US Economic Report.

On 29 Jul 2025, US Treasury department announced that it plans to borrow about $1.3 trillion in Q3 2025 and another $590 billion in Q4 2025. (see below)

This is in addition to US Treasury dept’s Q2 2025 borrowing of US$65 billion in privately held marketable debt.

The large-scale borrowing is very concerning as it:

• Adds significantly to US national debt, standing at $37.17 trillion and counting..

• Raises the risk of higher interest costs, that could crowd out private investment and limit fiscal flexibility.

The sheer volume of debt issuance, combined with ongoing economic uncertainties and trade policy tensions, suggests potential:

• Negative effects on market confidence.

• Borrowing costs.

• Longer-term impact on economic growth.

Thus, while necessary to fund the government, above elevated borrowing levels could weigh on the US economy’s stability and growth prospects.

As we approach mid Q3 2025, what are the odds that US will not slip down inflationary slope by year end ? Whatever your conviction maybe, it will be your investment strategy guiding light.

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