Monthly Review - July 2025
- 04 August 2025 (5 min read)
In brief
The markets
2.2%
1.4%
3.0%
0.3%
0.7%
2.9%
4.2%
3.6%
3.2%
Source: Bloomberg 31.07.2025, returns in local currency
Top stories
Tariffs 2.0
Major trading partners scrambled to strike tariff deals with the US, after the 90 day postponement period expired. The culmination was the “biggest deal ever” with the European Union (EU), imposing a 15% baseline tariff on EU imports, including cars. Markets initially reacted positively as tariff uncertainty faded. Where is the feared price inflation? Perhaps starting to creep through, as US CPI inflation rose 2.7% in June. Economists anticipate greater price impacts to emerge later in the year. Meanwhile, US custom duty revenues jumped 36% in the second quarter, to a record high of $64 billion.
Still fighting the Fed
The Trump administration continued its assault on the chair of the US Federal Reserve (Fed) Jay Powell. Once again, insults were used by President Trump, aiming to force significant interest rate cuts, or to install a more compliant candidate. The US Treasury Secretary broadened the attack to include “the entire Federal Reserve institution”, with the $2.5 billion refurbishment of the Fed headquarters firmly in his sights. Markets largely took these outbursts in their stride, with equities touching record highs, although the US dollar traded at lower levels. Powell himself appeared undaunted, and interest rates remained on hold.
Pure Genius?
After much lobbying by the cryptocurrency industry, the Genius Act was passed by both parties of US Congress. It aims to provide a framework for regulating stablecoins, or digital currencies pegged to traditional currencies. This smooths the path for privately issued stablecoins, backed by holdings of US dollars and Treasury bonds. Concerns circle around private entities acting as a bank, in the US and elsewhere, without the normal high levels of regulation. One risk being that they might spark bouts of volatility, should they become forced sellers of their vast US Treasury reserves in times of market stress.
BRICS' power sources diverge
The adoption of divergent energy pathways contributed significantly to the struggles of BRICS member states aiming to present a united front during their annual summit. While electro-states such as China are building industrial capacity for green energy and clean technologies, carbon states like Russia remain economically and politically tied to fossil fuels. This growing infrastructural divide could increasingly influence political power dynamics. It could also impact member states’ economic resilience, at this uncertain time for geopolitics in general and US foreign policy in particular. Countries with green industrial bases and supportive domestic political coalitions will likely be more resilient than those clinging to fossil fuel dependent infrastructure.
On the radar
NVIDIA, the AI chip giant, has become the world’s most expensive company, briefly touching a market capitalisation of $4 trillion barely a year after topping the $3 trillion mark. Asia watchers will be monitoring the potential for Huawei to compete, as China’s AI boom gathers pace.
President Trump has recently threatened Brazil and Russia with punishingly high tariffs, not to balance trade but in order to influence domestic and foreign policy. The US President might increasingly use economic tariffs, replacing sanctions, as an instrument to achieve his broader geopolitical objectives.
The euro has risen more than 10% against the US dollar so far in 2025, amid the greenback’s waning safe-haven appeal. However, euro strength makes European exports appear more expensive overseas, prompting speculation about future policy adjustments by the ECB, if the euro’s ascendancy continues unchecked.