Financial Markets Daily Report31 juliol 2025
The Federal Reserve held the federal funds rate at 4,25%-4,50%, citing solid labor market conditions and above-target inflation. Financial markets made a hawkish reading of the Fed's accompanying statement and pushed back expectations of the next cut from September to October. The probability of a second cut in December dropped from 80% to 40%.
The change in monetary policy expectations saw U.S. Treasury yields rise, especially at the shorter end of the curve. U.S. stocks ended mostly flat despite having opened with gains, and the dollar strengthened to its highest level since late May. The euro is now trading around $1.14, well below the $1.18 highs at the beginning of the month.
Euro area financial markets had a muted session, with sovereign yields ending flat and stocks posting only mild gains.
On the data front, euro area 2Q GDP growth slowed to 0.1% qoq, with strength in France and Spain compensating for weakness in Germany and Italy. U.S. 2Q GDP rebounded to 0.7% qoq (3.0% annualized), driven by a sharp drop in imports.
The Financial Markets Daily Report will not be published during August, but will be back on Monday, September 1st. Until then, we wish you a nice Summer holiday.