Weekly Market Update (July 06, 2025)

Market Hedwig
Jul 6
2 min read

HIGHLIGHTS

One Big Beautiful Bill (OBBB) brings more clarity to US fiscal policy, and the end of 90-day pause will clarify tariff policy. All eyes are on the trade deals deadline on 9 July.

OBBB: The OBBB changes the US debt outlook significantly. In short, US will have larger deficits and more Treasury issuance is likely to be required to fund such deficits. The deficit is projected to be 7% of GDP in the next decade.

Eurozone: European Central Bank (ECB) is reviewing its strategy this week. It highlighted that the vulnerability to supply shocks could lead to unstable inflation. That would require policy action to manage the deviations from target in both directions.

Bund: German government bond (Bund) has underperformed this year, after the announcement of expansion in Bund supply. Also, the government budget is higher than expected, further increasing the deficits in the coming years.

MARKETS

Nasdaq	20,601.10	+1.62%
S&P 500	6,279.35	+1.72%
Dow	44,828.53	+2.30%
10-Year	4.35%	+7bps
Brent	68.29	+2.86%
DXY	96.99	-0.27%

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

VIEW FROM THE STREET

Equity

HSBC: We remain overweight US equities, mainly driven by the strong earnings. However, it would still be volatile because of Trump’s “three-legged” policy agenda, which includes tariffs, fiscal policies and deregulation.

Standard Chartered: We see near-term headwinds in US equities. Valuations are relatively high, and the investor positioning on them is light. We suggest reducing long exposure on US equities by taking advantage of the current strength and adding other regional markets.

Fixed Income

Goldman Sachs: We expect earlier cuts and lower terminal rates. Lower short-term rates can reduce the risk of potential fiscal risk premiums and improve the attractiveness of holding US Treasuries.

Morgan Stanley: Under current valuations, we believe the small-mid cap stocks and bond markets are likely larger beneficiaries of cuts than S&P500 mega caps, which are already priced in rate backdrop aggressively.

Economy

UBS: Although the tariffs are likely to slow growth and increase inflation pressure in the coming year, we do not expect them to cause a recession or derail the economy. Market impact should moderate as Trump’s negotiation tactics become more familiar.

Standard Chartered: The US has completed the trade deal framework with UK, China and Vietnam. Agreements with EU, South Korea and India are also likely to be completed soon.

KNOWLEDGE TRANSFER

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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.