The economy

• Major U.S. equity market indexes moved modestly lower during the week ending July 11, amid investors’ concerns about the Trump administration’s proposed assessment of new tariffs on Canadian imports. Both the Nasdaq Composite and the S&P 500 closed at record highs on Thursday.
• Late Thursday evening, President Donald Trump announced the assessment of a 35% tariff on goods imported from Canada starting August 1. Goods compliant with the U.S.-Mexico-Canada Agreement (USMCA) are exempt. Trump commented that the Canadian government has not made a sufficient effort to curb the flow of fentanyl into the U.S. Canadian Prime Minister Mark Carney stated that his government will work with the U.S. to secure a trade deal by the deadline.
• At the beginning of the week, Trump extended the deadline for trade deals with several nations from July 9 to August 1, and threatened tariffs ranging from 25% to 40% on countries that do not reach trade deals with the U.S. by the new deadline. The following day, Trump imposed a 50% levy on global imports of copper beginning August 1. Copper prices subsequently rose to record highs, increasing costs for numerus industries, including semiconductor and aircraft manufacturers, and data centers. On Wednesday, Trump announced a 50% tariff on imported goods from Brazil starting August 1 in response to the Brazilian government’s legal actions against former President Jair Bolsonaro and U.S. technology firms. Bolsonaro has been charged with plotting to overturn Brazil’s 2022 presidential election, which Trump characterized as “an attack on a political opponent.”
• Minutes from the Federal Open Market Committee’s (FOMC) meeting on June 17-18 indicated that a majority of members favored a reduction in the federal funds rate as soon as the next meeting on July 29-30. However, several members expressed concerns that inflation remains above the central bank’s 2% target—even before the impact of tariffs—and has not eased sufficiently to warrant rate cuts. “Some participants noted that geopolitical developments in the Middle East posed an upside risk to energy prices,” according to the meeting minutes. Additionally, the FOMC members discussed the tariffs’ possible impact on the U.S. economy. Several meeting participants commented that “it might take some time for the effect of higher tariffs to be reflected in the prices of final goods because firms might choose not to raise prices on affected goods and services until they had run down inventories of products imported before the increase in tariffs or because it would take some time for tariffs on intermediate goods to work through the supply chain.”
• The Mortgage Bankers Association (MBA) reported that mortgage applications in the U.S. rose 9.4% during the week ending July 4, compared to the previous seven-day period. The MBA’s Refinance Index decreased 6.0% for the week but surged 56.0% over the previous 12-month period. The Purchase Index advanced 9.0% and 25.0% for the week and year-over-year, respectively.
• The Federal Reserve reported that U.S. household debt rose 1.2% year-over-year in May (the most recent reporting period)—down from the 4.0% annual rise in April. Revolving credit, which includes credit cards, decreased at an annual rate of 3.2% in May. Nonrevolving credit, which includes auto and student loans, increased at an annual rate of 2.8%. Outstanding student loans totaled $1.8 trillion as of the end of the first quarter of this year—up 2.9% compared to the first quarter of 2024. An upturn in household debt could result in more delinquencies in credit payments and personal bankruptcy filings should the U.S. economy slip into recession.

Stocks

• Global equities eked out gains during the week. Developed markets outperformed emerging markets.
• U.S. equities recorded slightly negative returns. Energy and utilities were the top-performing sectors, while and consumer staples and financials were the primary market laggards.
• Growth stocks outperformed value, while large caps outpaced small caps.

Bonds

• The 10-year U.S. Treasury note yield rose to 4.42% during the week.
• Global bond markets lost ground during the week.
   

Important information 

Index returns are for illustrative purposes only and do not represent actual investment performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged, and one cannot invest directly in an index. Past performance does not guarantee future results.

This material is provided by SEI Investments Management Corporation (SIMC) for educational purposes only and is not meant to be investment advice. The reader should consult with his/her financial advisor for more information. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. There are risks involved with investing, including possible loss of principal. SIMC is a wholly owned subsidiary of SEI Investments Company.