The U.S. market resumed trading after the long weekend on July 4th and quickly announced a slight concession regarding the upcoming tariff deadline. Secretary of Commerce Lutnick stated that tariffs on various countries will be postponed until August 1, effectively giving trade partners the final negotiation period to strive for an agreement at the last moment.

Meanwhile, the non-farm employment data again performed surprisingly strong (at least on the surface), and the risk markets remained robust last week.

  • The non-farm employment population increased by 147,000, far exceeding the expected 106,000, and the data for the previous two months was also revised up by 16,000 (previously -95,000).

  • The unemployment rate is 4.12%, lower than the expected 4.3% and the previous value of 4.2%.

  • Average hourly wages increased by 0.2% month-on-month (3.7% year-on-year), slightly below the expected 0.3% (3.8%) and the previous value of 0.4% (3.8%).

Although economists pointed out that the growth in employment mainly concentrated in the service sectors such as dining and hospitality, resulting in an unbalanced employment structure, the market still tends to interpret the surface data optimistically, maintaining the narrative of ideal prosperity.

In terms of market reaction, strong employment data has reduced the interest rate cut expectations for 2025 by about 15 basis points, with the likelihood of a rate cut at the July FOMC meeting now only around 5%, down from about 24% a week ago. The terminal interest rate forecast for the end of 2025 is approximately 3.8% (a downward adjustment of 50 basis points from the current 4.3%), while the rate is expected to be around 3.15% by the end of 2026 (a reduction of 85 basis points).

The U.S. dollar has rebounded against major currencies (the dollar against the yen has risen to about 145), while U.S. stocks closed flat after hitting new highs last week. BTC has also approached recent highs again (>> 109,000) driven by stable inflows, and the ETH ETF recorded the largest single-day inflow in the past quarter. Fundstrat's Tom Lee has recently become the focus of discussion, as his ETH asset reserve operation entity BMNR saw its stock price soar more than 30 times after announcing a $250 million raise for significant ETH purchases.

Fortunately, stocks are 'regulated' securities; otherwise, investors might mistakenly think this is some kind of highly volatile altcoin. As always, TradFi always manages to enjoy the most fun.

Currently, the correlation between cryptocurrencies and stocks remains close to cyclical highs, and during this seemingly calm summer period, BTC is expected to continue following the SPX index's trend.

At the same time, setting aside tariff threats, geopolitical tensions, and policy uncertainty, the U.S. has indeed made some significant progress over the past month. Specifically, from the U.S. government side:

  • A significant tax reform bill was passed, bringing substantial fiscal infusion and greatly reducing the risk of economic recession.

  • NATO and other trade allies have agreed to increase defense spending as a global driving force.

  • The U.S. economy continues to grow steadily, and corporate profits have successfully climbed amid concerns.

  • Although concerns about uncontrolled fiscal deficits had previously intensified, fixed income market yields have stabilized.

  • The worst period of geopolitical conflict seems to be over.

Against this backdrop, the SPX index reached an all-time high after the tax reform bill was passed and the non-farm employment data was released, gaining further momentum this morning due to the latest tariff extension news. Last week, 36 stocks in the SPX constituents closed at 52-week highs, and the sentiment in the U.S. stock market remains in the 'extremely optimistic' range.

Seasonal trends typically perform well in the summer months, with July historically being one of the strongest months—don't miss good opportunities!

Finally, this week will enter earnings season, with many companies expected to announce earnings. It is anticipated that tariff-related disruptions should be milder than in Q2, and the overall financial guidance is expected to be relatively positive.

This summer looks set to be hot and calm. Wishing everyone smooth operations and enjoy this wave of market activity!