Weekly house view | You’ve got mail

Weekly house view | You’ve got mail

The CIO's view of the week ahead.

The week in review

US stocks rose to record closing highs last week, buoyed by a robust jobs report that boosted investor confidence in the economy’s resilience even if it effectively killed off any chance of an interest rate cut this month. With US markets closed on Friday for Independence Day, European investors ended the week on a nervous note as they looked ahead to the 9 July expiry of a 90-pause for reciprocal tariffs. President Trump said the US would mail letters to some countries in the coming days detailing tariffs they will face. In a parallel major policy development, Trump signed into law on 4 July his One Big Beautiful Bill Act (OBBBA), which front-loads stimulus but also raises questions about the sustainability of the long-term US fiscal position. The 10-year US Treasury yield rose to 4.35% on the week. The S&P 500[i] rose 1.7% (in USD). The Euro Stoxx 50[ii] fell 0.75% (in EUR). In the UK, government bonds and the pound fell sharply after Prime Minister Starmer declined to back a tearful Chancellor Reeves in parliament, following Labour’s gutting of its welfare bill. Starmer later backed Reeves, calming markets. At a meeting of central bankers in Portugal, Fed Chair Powell – who has resisted Trump’s pressure to cut rates – received strong support for his focus on the Fed’s mandate. In Japan, “Shunto” wage negotiations exceeded last year’s levels and marked the third straight year of base pay rises over 2%.

Quote of the week

The Committee for a Responsible Federal Budget called the passing of the OBBBA: “A Dark Day for Our Fiscal Future.”

Key data

US nonfarm payrolls rose by 147,000 in June, defying expectations for a slowdown. However, the rise was partly driven by hiring of government workers. Private hiring slowed, consistent with an orderly labour market slowdown. In Switzerland, the consumer price index (CPI) increased unexpectedly to 0.1% year-on-year in June, with core inflation at 0.6%. Japan’s Tankan survey of business conditions was stronger than expected in the second quarter. Swedish retail sales slumped 4.8% month-on-month in May.

[i] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, S&P 500 Composite (net 12-month return in USD): 2020, 18.4%; 2021, 28.7%; 2022, -18.1%; 2023, 26.3%; 2024, 25%.
[ii] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, Euro STOXX 50 (net 12-month return in EUR): 2020, -2.6%; 2021, 24.1%; 2022, -8.8%; 2023, 23.2%; 2024, 11.9%.
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