The week began with markets bracing for volatility ahead of the Trump administration’s self-imposed July 9 deadline for U.S. trading partners to agree to bilateral trade deals. However, the deadline passed quietly after President Trump postponed it, setting a new implementation date of August 1 for the broad-scale international tariffs. Trump also announced a 50% tariff on imported copper to go along with his current 50% tariffs on steel and aluminum and a 25% levy on imported cars. On Wednesday, Trump added a 50% tax on all imports from Brazil, a 30% rate for Algeria, Libya, Iraq and Sri Lanka, 25% duties on Brunei and Moldova and a 20% tariff on goods from the Philippines. Trump also announced the possibility of a 200% tariff on imported pharmaceuticals. The litany of tariff moves did little to disrupt markets with equities rising over the course of the week and a measure of Treasury market volatility reaching its lowest level since 2022. 

Minutes from the June FOMC meeting were released this week and showed a growing divide between members on the economic outlook going forward. With respect to future rate cuts, 10 of the 19 officials are still pricing in two cuts by year-end, seven projecting no cuts at all and two members predicting one cut this year. On trade, “Participants judged that uncertainty about the outlook was elevated amid evolving developments in trade policy, other government policies and geopolitical risks, but overall uncertainty had diminished since the previous meeting.” Overall, members agreed that “some reduction” in the Fed Funds rate would likely be appropriate by year-end, but the macro-level stability of the U.S. economy gives them room to be patient. 

KEY INDICATORS THIS WEEK

Housing- A realtor.com report showed home de-listings jumped 47% in May from a year earlier. YTD listings are up 35% from last year, while inventory was up 28% for the same period. De-listings also outpaced new listings with 13 homes de-listed for every 100 new listings, up from 10 per 100 in 2023 and 2024 and six per 100 in 2022. Record levels of home equity appear to have homeowners’ hands tied as they hold out for their preferred prices. 

Next week- Inflation! We’ll get CPI and PPI, as well as retail sales, wage data, the Fed Beige Book and University of Michigan survey data