Bitcoin Pops and EU Tariffs Come Back

Market Recap: 7 – 11 July 2025

Financial Markets

US Stock Market

The week was neutral with the main indices hovering around all-time-highs and developing doji patterns, which show indecision and lack of direction. The S&P500 and the NASDAQ 100 lost 0.3% and 0.4%, respectively. Markets continue above the 200-day moving average and may fall to consolidate. The small cap index (Russel 2000) gained 0.6% and sits slightly above the 200-day moving average, a short-term support. Trading volumes were average.

COMMODITIES

Precious metals continue consolidating and holding their levels. Gold and silver were up by 0.9% and 4.2%, respectively. Gold is still close to the previous all-time high and has been in the range 3100-3500$. Silver has been strong and will likely stay above 35$/oz over the next weeks.

WTI crude oil went up to 68.7$/bbl and the trading range for the near future will likely be 64-71$/bbl.

Bitcoin broke out to a new all-time-high of 119k$. If Bitcoin holds up, the new support level is 112k$.

US DOLLAR, MONEY SUPPLY

The relative strength of the US dollar (DXY) recovered slightly to ~97.9. The EUR/USD is around 1.169$, the GBP/USD is at 1.349$, and the USD/JPY is at 147.45 JPY.

US M2 money supply at the date of 26th May 2025 was up by 0.36%, showing a slow increase over the previous month – credit institutions didn’t stop lending so far. If the money supply was going down, it would be another warning sign for the economy and equities.

The national financial conditions index (NFCI) released on 30th June 2025 loosened by 1.5%. 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 rose slightly this week. Yields now sit at 3.893% for the 2-year and 4.417% 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 a recession and/or interest rate cuts. However, long-term growth and inflation expectations remain at 4.9-5.0%.

The VIX rose during the week, but closed unchanged at ~16, a level that shows some complacency as the overall market is quite expensive and the risks of overvaluation are naturally high. Risk premiums in the options market are less attractive. Similarly to previous weeks, it is our opinion that the overall risk in the stock market (high valuations in the big caps) and uncertainty about the US and worldwide economy is considerable. Thus, any equity purchases must be strategic and opportunistic!

Comment Section

The US equity markets are at new all-time-highs and the probability of any disappointment pushing the market down are increasing.

An example of such a disappointment is the new threat of a 30% tariff on Mexico and the EU starting on August, as announced by Donald Trump.

As we have been saying, some damage to the economic activity was done in April-May 2025 and that will be reflected in the next earnings season (Q3 2025), but by the end of the year we might look back and conclude that it was not very serious. The current middle-east wars may have extra effects that we cannot forecast and are certainly generating a lot of volatility. However, we believe the odds are on the side of an upcoming equity market correction.

Have a nice weekend, and good luck!!!