Tariffs are a Go; Russia to Negotiate

Market Recap: 28 July – 1 August 2025

Financial Markets

US Stock Market

This week the markets continued a slow climb towards the previous all-time-high. The S&P500 and the NASDAQ 100 gained 2.4% and 3.7%, respectively. The small cap index (Russel 2000) recovered 2.7% and still sits above the 200-day moving average, a short-term support. Trading volumes were average.

COMMODITIES

Precious metals continue holding their levels. Gold and silver were up by 1.1% and 3.5%, respectively. Gold is still close to the previous all-time high and has been in the range 3100-3500$. Silver has been strong lately and should remain in the 34-40$/oz range.

WTI crude oil closed the week at 63$/bbl. If it continues falling, the next support levels are 61$ and 55$.

Bitcoin is at 188k$ and holding very close to the historic maximum. It has been surprisingly strong.

US DOLLAR, MONEY SUPPLY

The relative strength of the US dollar (DXY) fell slightly to ~98.2. The EUR/USD is around 1.164$, the GBP/USD is at 1.345$, and the USD/JPY is at 147.72 JPY.

US M2 money supply at the date of 30th June 2025 was up by 0.6%, showing a continuous increase in the money supply since December 2023. Banks didn’t stop lending so far – if the money supply was going down, it would be a warning sign for the economy and equities.

The national financial conditions index (NFCI) released on 28th July 2025 loosened by 1.1%. Note that this indicator is delayed by two weeks. Positive numbers in the NFCI mean tighter financial conditions, while negative numbers indicate looser financial conditions.

BONDS AND OPTIONS

US bond yields increased slightly this week. Yields now sit at 3.762% for the 2-year and 4.285% for the 10-year. The yield curve has uninverted since a year ago, and lower yields are expected in the next few years, likely as a consequence of low growth, low inflation, and short-term interest rate cuts. Long-term growth and inflation expectations remain at ~4.8%.

The VIX has fallen all the way down to ~15, a complacency level that shows investors are not scared. The overall market remains quite expensive and the risks of a recession mount. Options premiums are not particularly attractive

Comment Section

The US equity markets will soon test the all-time-highs and we will see how strong the bulls are. As you know, we are on the side of a sideways market for the rest of the year, as most companies are not being able to increase their profit margins.

On the geopolitical front, Trump is set to meet with Russian President Vladimir Putin in Alaska next Friday to discuss a potential ceasefire in Ukraine.

This week, US President Donald Trump’s sweeping new tariffs on more than 90 countries around the world have come into effect. Trump is using tariffs to encourage jobs and manufacturing industries to return to America, among other political goals. Separately on Wednesday, he threatened to raise the tariff on imports from India to 50%, unless that country stopped buying Russian oil. He also threatened a 100% tariff on foreign-made computer chips, to push tech firms to invest more in the US.

Have a nice weekend, and good luck!!!