%2520(20).png&w=3840&q=75)
The Federal Reserve is expected to keep rates unchanged at 4.25%–4.50% as it wraps up its July policy meeting. Inflation remains elevated at 2.9% year-over-year, with trade and tariff pressures adding upward risk. Two top Fed officials, Waller and Bowman, are reportedly pushing for a rate cut now, which would mark a rare internal split. However, Chair Jerome Powell is likely to emphasize a wait-and-see stance in his press conference. He is expected to reiterate the Fed’s data-dependent approach and avoid committing to a cut timeline. Markets are pricing in a possible policy shift in September or December, depending on economic trends.
The advance Q2 U.S. GDP report is expected today, with forecasts ranging from 2.4% to over 4%, but economists warn the surge is largely due to a reversal of Q1’s trade deficit, not actual strength in consumer demand. Final sales to private domestic purchasers—considered a better measure of underlying growth—are projected to rise by just 1.0% to 1.5%. This suggests weaker real demand from households and businesses. Despite the strong headline figure, consumer spending and business investment are seen slowing. The economy may look resilient on paper, but key drivers remain fragile. Investors remain cautious ahead of the Fed’s policy message later in the day.
The July ADP private payrolls report is still pending, but the June release showed a surprise loss of 33,000 jobs, the first monthly decline in over two years. That was well below forecasts for a gain of nearly 100,000, and it raised concerns about the labor market’s underlying momentum. The slowdown was attributed to hiring freezes and increased hesitancy to backfill departures rather than mass layoffs. Economists see the trend as a sign that employers are growing more cautious amid economic uncertainty. July’s data will be closely watched ahead of the official U.S. jobs report. A second weak print could shift Fed expectations further.
The Bank of Canada is widely expected to hold its benchmark interest rate steady at 2.75% today. Though inflation has eased toward the 2% target, underlying pressures remain persistent, and growth has slowed significantly. Canada’s economy is expected to have contracted in Q2, heightening concerns about a potential recession. Policymakers are navigating a tricky balance between taming inflation and avoiding a deeper downturn. Economists anticipate two rate cuts before the end of 2025, possibly beginning in September. Today’s decision is likely to maintain a cautious tone, awaiting more clarity on inflation and employment data.
Asian markets edged higher even though U.S.–China trade talks in Stockholm ended without an agreement, as both sides floated the idea of extending the August 12 tariff deadline—giving markets some reprieve.
The MSCI Asia‑Pacific index jumped about 0.3%, with gains in Taiwan and Australia, while Hong Kong’s Hang Seng fell roughly 0.4% and Japan’s Nikkei held steady amid exporter caution. Safe‑haven demand lifted government bonds, dragging yields lower as investors anticipated dovish signals from the Fed amid ongoing trade uncertainty. Overall sentiment remains fragile: optimism over possible tariff extensions is tempered by stalled progress on concrete trade outcomes
U.S. President Trump signaled that India could face tariffs of 20–25%, down slightly from the 26% rate floated earlier this year. Trade talks are ongoing ahead of the August 1 deadline, but little progress has been made. India had hoped for better terms, citing the 19% deal given to Indonesia and the Philippines. Trump’s comments sparked fresh uncertainty in Indian markets already grappling with slower tech and auto sectors. The Sensex held flat, with investors awaiting final word on the tariffs. Any hike above 20% would likely trigger retaliatory measures.
Discover more market insights and analysis
