Weekly Commentary (8/11/25) – It's all about Inflation, Politics and Messaging
Stocks notched another solid week, helped by upbeat earnings and steadier macro data even as bond auctions tested appetite.
For the week, the DJIA rose 1.37% and the S&P 500 gained 2.44%. The Nasdaq advanced 3.88%. International stocks also firmed, with MSCI EAFE up 2.87% and MSCI EM up 2.31%. Small caps (Russell 2000) added 2.41%. Core bonds (Bloomberg Aggregate) slipped 0.18%. The 10 Year Treasury yield ended at 4.27% (up 4 bps on the week). Gold rose 2.73% to $3,439.10/oz, while Oil fell 5.12% to $63.88.
Last week’s data were mixed but broadly constructive. ISM Services eased to 50.1 for July, signaling near-stall speed but still above contraction; jobless claims ticked up to 226k. More encouragingly, Q2 productivity rose 2.4% while unit labor costs increased 1.6%, hinting at some relief on wage pressure. Factory orders fell 4.8% in June (aircraft-led), while the trade deficit narrowed sharply to $60.2B.
Earnings season continues to underpin sentiment. With roughly 90% of the S&P 500 reported, blended EPS growth for Q2 is tracking near 11.8% year over year and blended revenue growth near 6.3%, with an unusually high share of positive revenue surprises. Tech, Communication Services and Financials have led the upside, while Energy lags on lower oil prices.
Policy and geopolitics stayed in focus. The White House outlined plans for a 100% tariff on semiconductor imports, with carve-outs for firms investing in U.S. capacity—adding to the broader tariff framework investors have been digesting. Meanwhile, reports point to a potential Trump–Putin meeting on Friday, August 15, in Alaska, with Ukraine’s role a key variable. Markets will watch for headlines but continue to trade earnings and macro first.
Have economists over-estimated tariff damage? The debate is live. Recent Fed staff work suggests pass-through to consumer prices may be lower than during 2018–19 given supply-chain shifts and delayed implementation, while private-sector analysis argues the burden could increasingly land on consumers as 2025 progresses. We’ll learn more as CPI/PPI prints and corporate pricing commentary arrive.
The week ahead: It’s all about inflation and messaging. CPI (Tue) and PPI (Thu) are due, alongside retail sales and production on Friday. Four Fed speakers—Tom Barkin, Austan Goolsbee, Raphael Bostic, and Jeff Schmid—could add color on how officials are weighing tariffs, growth, and the labor market. We’ll also watch for any confirmation or outcomes from the reported Aug. 15 Trump–Putin meeting.
We continue to advise discipline: keeping portfolios aligned with policy, liquidity, and earnings durability rather than trying to time tariff or headline swings…or anything else.
“Plans are worthless, but planning is everything.” – Dwight D. Eisenhower