Weekly Market Update (July 27, 2025)

Market Hedwig
Jul 26
2 min read

HIGHLIGHTS

The FOMC decision, July job report and Treasury’s refunding announcement are going to carry potential market impact, especially on treasury yield and dollar.

Trade Deal: Markets are euphoric after Japan’s trade deal and expect a similar deal in Europe. However, the economic effect of the tariffs is still uncertain. Growth in the eurozone is expected to be stronger when the uncertainty is reduced.

FOMC: Although there is pressure from the president, the Fed is expected to hold its rate again this week. It is also unlikely to have additional forward guidance in this meeting.

Speculative Trading: The recent increase in speculative trading has been followed by more short squeezes. A basket of most short stocks has rallied more than 60%. Retail traders and social media sentiment are also the reasons of the high level of short squeezes.

MARKETS

Nasdaq	21,108.32	+1.02%
S&P 500	6,388.64	+1.46%
Dow	44,901.92	+1.26%
10-Year	4.39%	-4bps
Brent	67.66	-2.34%
DXY	97.67	-0.80%

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

VIEW FROM THE STREET

Equity

Morgan Stanley: We believe the excess cash is exhausted, supported by the current low level of Money Market Fund assets versus S&P500 market cap. Continuous bullish has to rely on earnings realization instead of multiples.

J.P. Morgan: For 2025, markets are calling for 8.8% earnings-per-share (EPS) growth now, down from 10.5% in April. Although tariffs increase the downside pressure, tech firms provide a floor. Investors should evaluate whether the positives of tech growth can mitigate the negatives of tariffs’ impact.

Fixed Income

Standard Chartered: The recent volatile markets have reinforced our views to buy more 5-7 year bonds. Although long-end bond yields are attractive, they are also sensitive to volatility. We suggest using USD rebound to add Emerging Market local currency bonds exposure.

HSBC: European government bond prices dropped as markets reduced the expectation of the ECB easing. 10Y yields of German and French government bonds have increased by 6bps and 8bps respectively.

Economy

Goldman Sachs: Markets are pricing a significant divergence between US and Euro area policy paths ahead. The divergence will be driven further if the potential US-EU trade deal is done, reducing the uncertainty.

UBS: We believe that the US administration will not want the tariffs to be too high, which would choke off trade, boost inflation and potentially lead to recession. Japan’s deal has showcased that US is aware of the economic impact of a no-deal scenario.

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.