Closing Recap

U.S. stocks reached new closing highs for the S&P 500 and Nasdaq on Friday, capping a volatile week influenced by an in-line inflation report, shifting trade headlines, and a Middle East ceasefire that eased geopolitical tensions early in the week. 

Key Takeaways 

• New All-Time Highs: The S&P 500 and Nasdaq posted new all-time closing highs on Friday, rallying from intraday lows to cap a strong week for equities. 
• Trade Headline Whiplash: Markets were whipsawed Friday by positive headlines on a potential US-EU tariff resolution, followed by negative news that President Trump was terminating trade discussions with Canada. 
• Ceasefire & Dollar Weakness: An Israel-Iran ceasefire announced early in the week reduced safe-haven demand for the US dollar, which underperformed its major peers for most of the week. 
• Fed Independence Concerns: Renewed pressure from President Trump on the Federal Reserve, including reports of considering a replacement for Chair Powell, weighed on the dollar and fueled rate cut speculation (~65bps now priced for 2025). 
• In-Line PCE Data: The key US Core PCE inflation report came in largely as expected, causing only minor market fluctuations. 
• Commodities & Treasuries: Gold slipped Friday on diminished safe-haven demand, while WTI crude ended slightly higher. The 10-year Treasury yield finished the week lower around 4.28%. 
• Week Ahead Focus – Key Risk Events: The crucial US Jobs Report (Fri), key US ISM PMIs (Mon/Wed), and Eurozone Flash CPI (Tue) are the main events to watch. 

Looking Ahead

Looking ahead, the market’s focus shifts decisively to the health of the US economy, with a particular emphasis on the labor market. The week culminates with the Nonfarm Payrolls report for June (released Thursday due to the US holiday on Friday). This report will be a critical determinant of Federal Reserve rate cut expectations. Supporting this will be the influential ISM Manufacturing PMI (Monday) and Services PMI (Wednesday), which will provide timely insights into business activity and, importantly, price pressures linked to tariffs. 

Internationally, preliminary Eurozone CPI data for June (Tuesday) will be closely monitored by traders ahead of the upcoming ECB Forum on Central Banking. Also on the radar are China’s official PMIs and Japan’s Tankan survey (both Tuesday/Wednesday), which will offer a glimpse into how Asia’s largest economies are faring amidst the ongoing trade uncertainties. A key central bank decision from the Bank of Canada (Wednesday) will also be watched, with expectations finely balanced following recent conflicting data points.

Market Overview 

The US dollar came under significant pressure for most of the week, initially weakened by the announcement of a ceasefire between Israel and Iran, which dampened safe-haven demand. This was compounded by renewed pressure from President Trump on the Federal Reserve and reports that he is considering a replacement for Chair Powell, raising concerns about the central bank’s independence and fueling market bets for more aggressive rate cuts (~65bps by year-end). This risk-on environment allowed equities to rally, with both the S&P 500 and Nasdaq touching new all-time highs intraday on Friday. 

Index	Last Closing Level	Friday’s Change	Friday’s Change (%)
DJ Industrials	43818	431.26	0.0099
S&P 500	6173	31.95	0.0052
Nasdaq	20273	105.54	0.0052
Russell 2000	2169	-2.89	-0.0013

Friday’s session was particularly volatile. An in-line Core PCE inflation report, the Fed’s preferred measure, initially caused little stir. Early gains in equities were fueled by optimistic headlines suggesting the US and EU were on track to resolve their tariff dispute by the July 9th deadline. However, this strength was more than erased mid-afternoon by reports that President Trump was terminating all trade discussions with Canada, sending indices into the red. In a display of resilience, a late-session push brought the S&P 500 and Nasdaq back into positive territory to notch new all-time closing highs, a 28% rally off the April lows for the S&P 500.

Economic Data Calendar (Week of June 30th) 

MON (Jul 1): 

• German Prelim CPI (Jun), Swiss GDP (Q1): Inflation from Europe’s largest economy and Swiss growth data. 
• China Official & Caixin PMIs (Jun), Japan Tankan Survey (Q2): Key activity and sentiment data from Asia. 
• US ISM Manufacturing PMI (Jun): Key US factory activity gauge; prices paid sub-index watched for tariff effects. 
• ECB Forum on Central Banking Begins (Sintra, Portugal): Speeches from policymakers, including a policy panel with Fed Chair Powell. 

TUE (Jul 2): 

• Eurozone Prelim CPI (Jun): Headline CPI for May was 1.9% Y/Y; watched closely by ECB. 
• US JOLTS Job Openings (May), Durable Goods Orders (May – Final): Labor demand and business investment data. 

WED (Jul 3): 

• Bank of Canada (BoC) Rate Decision: Highly anticipated decision with market bets split on a cut vs. a hold. 
• US ADP Employment Report (Jun): Private payrolls data, a precursor to NFP. 
• US ISM Services PMI (Jun): Key US service sector gauge; prices paid component also in focus. 

THU (Jul 4): 

• US Nonfarm Payrolls (NFP) Report (Jun): Released Thursday due to US holiday. Critical report for Fed outlook. 
• Swiss CPI (Jun): Watched for signs of persistent deflation which could prompt more aggressive SNB cuts. 
• US Independence Day Holiday: US markets closed. 

FRI (Jul 5): 

• German Trade Balance (May): Trade data for Germany. 
• Canadian Jobs Report (May): Key labor market data for Canada. 

Commodities, Currencies, and Treasuries 

Gold futures slipped on Friday, settling at $3,302.30/oz, as diminished safe-haven demand and profit-taking took hold following the Israel-Iran ceasefire and tame PCE data. Oil prices were volatile, with WTI crude extending recent gains overnight before easing on reports that OPEC+ was considering another “super-sized” output hike. A late-day rally brought WTI back into positive territory to settle slightly up at $65.52/bbl. The U.S. dollar was under pressure for most of the week due to easing geopolitical tensions and concerns over Fed independence, though it saw some stabilization on Friday. The 10-year U.S. Treasury yield finished the week lower around 4.28%.

Asset	Last Level	Friday’s Change	Unit / % Change
WTI Crude	65.52	0.28	USD/bbl
Brent Crude	67.77	0.04	USD/bbl
Gold (Aug Fut.)	3302.3	-60.5	USD/oz
EUR/USD	1.17	0.0014	Rate
USD/JPY	144.7	0.34	Rate
10-Year Note Yield	0.04283	0.0003	Yield (%)