Daily Newsletter 7/7/25

Current market positioning remains broadly neutral, with no significant signs of excessive selling pressure or overextended bullishness. U.S. equities have recently reached record highs, driven by resilient economic data, strong corporate earnings, and optimism surrounding global trade negotiations. Despite this positive momentum, we continue to anticipate a period of slow economic growth rather than an outright recession, as the underlying fundamentals suggest moderation rather than contraction.

However, the market faces potential headwinds from renewed tariff threats by the Trump administration. The expiration of the 90-day tariff moratorium and the prospect of higher import levies could prompt a pullback, particularly in an overbought and extended market environment. Additionally, the combination of new tariffs and a weaker U.S. dollar is likely to result in a temporary uptick in inflation, which could influence both market sentiment and Federal Reserve policy.

While the recent passage of the budget bill provides short-term fiscal clarity, it also increases the national debt burden—a factor that may weigh on markets over the longer term.

Although market positioning is presently balanced and the broader outlook remains positive, it is advisable for investors to keep a close watch on evolving trade policies and inflation dynamics. Changes in these areas could reintroduce volatility and significantly impact market trends in the months ahead.