Global Economy & Markets, Weekly Roundup 22/07/25
The US earnings season kicked off on a strong note, with market focus turning to the upcoming ECB meeting
US equity markets reached new all-time highs (6306), supported by solid corporate earnings reports and generally favourable economic data.
Citigroup ($1.96 vs. $1.66), JPMorgan ($5.24 vs. $4.48), Wells Fargo ($1.60 vs. $1.41), and Goldman Sachs ($10.91 vs. $9.65) surpassed consensus earnings expectations. Management teams expressed optimism about the investment banking outlook, albeit remained cautious about the economic environment due to the evolving US tariff policy, evaluating the potential impact of higher prices on consumer saving and spending patterns.
Out of the 59 companies that have reported results so far (12% of the S&P500), 83% have surpassed analyst estimates, above the 10-year average “beat-rate” of 75%. In addition, actual reported earnings are 7.9% above consensus estimates, compared to a 10-year average of 6.9%.
The earnings season will pick up pace this week when circa 14% of S&P500 companies are due to report, including Alphabet and Tesla. S&P500 EPS annual growth is expected at +5.6% in Q2, from +13% in Q1, while full year 2025 EPS are expected to rise by +9% year-over-year ($263). Having said that, uncertainty remains high ahead of the “reciprocal” tariff deadline (August 1st) and the bilateral US-China tariff deadline (August 12th).
US CPI inflation accelerated in June, with headline inflation rising to +2.7% yoy from +2.4% yoy in May. Core CPI also edged higher by +0.1pp to +2.9% yoy. More importantly, the core CPI excluding shelter and used cars & trucks recorded a +0.3% mom increase (+2.2% yoy), indicating a potential pass-through of higher import costs amid recent tariff adjustments.
At the same time, recent comments (President Trump, Treasury Secretary Bessent) regarding Federal Reserve’s leadership have reignited concerns over central bank independence. Amid US policy unpredictability, 10-year and 30-year US Treasury yields have increased toward their respective April highs of approximately 4.5% and 5.0% (-19 bps and +16 bps year-to-date). Inflation breakeven rates have been at the forefront, with the 10-year breakeven increasing by +13 bps in July, to 2.42%, signalling elevated inflation concerns.
Higher inflation expectations and the end of the negative interest rate regime have driven Japanese long-term government bond yields to multi-year highs (10-Year: 1.5%, 30-Year: 3.1%). Japan’s Upper House election on July 20 resulted in a modest setback for the ruling Liberal Democratic Party–Komeito coalition, which secured 122 seats, falling short of the 125-seat majority threshold.
The Japanese Yen appreciated against the US dollar (+1% on Monday to $/\147.4 and +6% year-to-date) following PM Ishiba’s confirmation that he will remain in office.
The ECB is expected to stand pat on July 24th, with the Deposit Facility Rate (DFR) at +2.0%, following a cumulative reduction of 200 bps since June 2024. The focus will be on the meeting statement and the press conference, for possible hints on the anticipated course of action. Markets, according to overnight index swaps, price-in another cut of -25 bps, in the December meeting, for the DFR to settle at 1.75% in the medium term.
US equity markets reached new all-time highs (6306), supported by solid corporate earnings reports and generally favourable economic data.
Citigroup ($1.96 vs. $1.66), JPMorgan ($5.24 vs. $4.48), Wells Fargo ($1.60 vs. $1.41), and Goldman Sachs ($10.91 vs. $9.65) surpassed consensus earnings expectations. Management teams expressed optimism about the investment banking outlook, albeit remained cautious about the economic environment due to the evolving US tariff policy, evaluating the potential impact of higher prices on consumer saving and spending patterns.
Out of the 59 companies that have reported results so far (12% of the S&P500), 83% have surpassed analyst estimates, above the 10-year average “beat-rate” of 75%. In addition, actual reported earnings are 7.9% above consensus estimates, compared to a 10-year average of 6.9%.
The earnings season will pick up pace this week when circa 14% of S&P500 companies are due to report, including Alphabet and Tesla. S&P500 EPS annual growth is expected at +5.6% in Q2, from +13% in Q1, while full year 2025 EPS are expected to rise by +9% year-over-year ($263). Having said that, uncertainty remains high ahead of the “reciprocal” tariff deadline (August 1st) and the bilateral US-China tariff deadline (August 12th).
US CPI inflation accelerated in June, with headline inflation rising to +2.7% yoy from +2.4% yoy in May. Core CPI also edged higher by +0.1pp to +2.9% yoy. More importantly, the core CPI excluding shelter and used cars & trucks recorded a +0.3% mom increase (+2.2% yoy), indicating a potential pass-through of higher import costs amid recent tariff adjustments.
At the same time, recent comments (President Trump, Treasury Secretary Bessent) regarding Federal Reserve’s leadership have reignited concerns over central bank independence. Amid US policy unpredictability, 10-year and 30-year US Treasury yields have increased toward their respective April highs of approximately 4.5% and 5.0% (-19 bps and +16 bps year-to-date). Inflation breakeven rates have been at the forefront, with the 10-year breakeven increasing by +13 bps in July, to 2.42%, signalling elevated inflation concerns.
Higher inflation expectations and the end of the negative interest rate regime have driven Japanese long-term government bond yields to multi-year highs (10-Year: 1.5%, 30-Year: 3.1%). Japan’s Upper House election on July 20 resulted in a modest setback for the ruling Liberal Democratic Party–Komeito coalition, which secured 122 seats, falling short of the 125-seat majority threshold.
The Japanese Yen appreciated against the US dollar (+1% on Monday to $/\147.4 and +6% year-to-date) following PM Ishiba’s confirmation that he will remain in office.
The ECB is expected to stand pat on July 24th, with the Deposit Facility Rate (DFR) at +2.0%, following a cumulative reduction of 200 bps since June 2024. The focus will be on the meeting statement and the press conference, for possible hints on the anticipated course of action. Markets, according to overnight index swaps, price-in another cut of -25 bps, in the December meeting, for the DFR to settle at 1.75% in the medium term.