Weekly Market Update (Aug 17, 2025)

Market Hedwig
Aug 17
2 min read

HIGHLIGHTS

The CPI was slightly higher than expected. More market participants increased their wager on the September cut. Tariffs impact is still limited with most areas showed little reaction.

Trump-Putin: Trump and Putin met in Alaska on Friday. Trump mentioned that the meeting had made great progress while the final negotiation and deal closing would be up to Ukrainian President Zelenskyy. The outcome of the talk would be key for the 25% secondary tariffs on India, as India continued to purchase oil from Russia.

Central Bank: Market is pricing a 90% likelihood of September Fed rate cut. The strong PCE and firmer inflation data support a precautionary cut. In Europe, growth is still slow, inflation aligns with ECB target while more disinflationary factors are in the pipeline.

China: The economic data (i.e. retail sales and industrial production) are disappointing. Markets rebounded as they believed that the Chinese government would intervene if things get worse. Besides, the recent truce between US and China also eliminates the risk in near term.

MARKETS

Nasdaq	21,622.98	+0.81%
S&P 500	6,449.80	+0.94%
Dow	44,946.12	+1.74%
10-Year	4.33%	+4bps
Brent	65.85	-1.11%
DXY	97.84	-0.43%

*Data as of market close. 5-day change ending on Friday.

VIEW FROM THE STREET

Equity

Morgan Stanley: Although S&P500 earnings have been impressive, most of the beats come from higher-than-expected top-line revenue, which has benefited from tariff delay. It has also shown significant sector skews - only 3 sectors (IT, Communication & Financials) have double-digit gains.

UBS: Cyclical risks in the AI-related industries may weigh on revenue growth in near term. It is partly due to the strong front-loading shipments in 1H of this year. We believe destocking is going to affect revenue growth negatively in the next few quarters.

Fixed Income

UBS: Lowering yields is the top priority of Trump administration as it aims to stimulate demand and reduce budget pressure. They understand that the recent One Big Beautiful Bill Act is going to accelerate debt growth and boost interest costs.

Morgan Stanley: After July’s disappointing nonfarm payroll, the bond markets have violently repriced expectations to 60bps cut by end of this year.

Economy

Morgan Stanley: Markets are assuming the next Fed Chair will finish cutting rates in mid-2026, with only limited concerns that the tariff impact or inflation would affect the forecast. We are less optimistic on this.

J.P. Morgan: The US Treasury has collected record-high tariffs in last quarter - $64 billion within April to June, about 2.6 times higher than previous year. Trade deficit narrowed by 10%, with most of the reduction coming from China.

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DISCLOSURE

This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.