The August Peak and the Alaska Summit

Market Recap: 11 – 15 August 2025

Financial Markets

US Stock Market

This week the markets continued a slow climb towards new all-time-highs. The S&P500 and the NASDAQ 100 gained 0.9% and 0.4%, respectively. The small cap index (Russel 2000) climbed 2.5% 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 fell by 1.9% and 0.9%, 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 remains close to 118k$ 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 ~97.8. The EUR/USD is around 1.170$, the GBP/USD is at 1.356$, and the USD/JPY is at 147.17 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 4th August 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 3.755% for the 2-year and 4.322% 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 ~4.9%.

The VIX remains at a low level of ~15, showing investor complacency. The overall market remains quite expensive and the risks of a recession are mounting. Options premiums are not very attractive at this moment – sellers need to be patient and particularly selective regarding which contracts to sell.

Comment Section

The US equity market as measured by the market cap-weighted indices (S&P500 and NASDAQ) is at an all-time high. However, the geometric index VALUG is not, which shows that the market median is not at record levels. 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. The tariff headwinds and the labor market softness may soon arise, prompting short-term interest rates to fall.

On the geopolitical front, the US-Russia summit was mysterious. With no ceasefire and an invitation to Moscow, the meeting has yielded more questions than answers. However, it seems to us that at least the US and Russia are on the path to improve their bilateral relationships.

Have a nice weekend, and good luck!!!