Market Review 4th August 2025
- Simplicity News Desk
- 3 days ago
- 4 min read
Everything you need to know, Simplified!
Summary
A weak US jobs report and sharp downward revisions to previous months dragged equities lower, with global markets finishing down -1.2% in sterling terms - sentiment remains high
July payrolls rose just 73k, while May and June were revised down by a combined 258k, pulling the three-month average to its lowest since the pandemic
The US Federal Reserve (Fed) held rates steady for a fifth meeting, but pressure is building after two Federal Open Market Committee (FOMC) members dissented and called for cuts. Market pricing now implies a 90% chance of a rate cut in September
Bond yields fell sharply following the data, with the 2-year treasury yield down 0.24% on the week to 3.68% as expectations for Fed easing accelerated
The Bank of England (BoE)is almost certain to cut rates this week, continuing down the cautious and gradual path of easing.
Market Review
Shooting the messenger
A particularly weak July jobs report on Friday knocked global equities off their highs. It was a measured repricing, not distressed selling, and although sentiment remains high the move was enough to unwind earlier gains. Global equity markets ended the week down -1.2% in sterling terms, a stronger US dollar helped cushion losses.
The US economy added just 73k jobs in July, well below expectations - but it was the revisions to previous months that turned a soft report into a clear deterioration in trend. Payrolls for May and June were revised down by a combined 258k, dragging the three-month average from 150k to 35k - the weakest reading since the pandemic.
Revisions are nothing new, but their scale has increased - particularly since COVID-19. That points to a broader issue: declining response rates. With fewer firms responding to the initial survey, later submissions can significantly shift the picture. Budget and staffing constraints have also hampered statistical agencies. The Bureau of Economic Analysis, which produces Gross Domestic Product (GDP) data, has faced similar issues to the Bureau of Labour Statistics (BLS) - not least in trying to process increasingly volatile inputs in recent months.
President Trump’s response was swift: he fired the Biden-appointed head of the BLS, claiming the agency manipulated data for political purposes. The White House has pointed to suspicious timing and the scale of revisions around the election. So far, though, little concrete evidence has been provided to support the claim.
The President wants people he trusts at the BLS to ensure the data is ‘fair’ which, at minimum, seems to exclude any Democrat appointees. Impartiality is the foundation of trust in economic data and is imperative for the proper functioning of markets. Replacing officials on political grounds sets a precedent that risks undermining the BLS’s reputation as the gold standard for accurate, nonpartisan statistics.
‘Too late’ Powell is indeed late
The Fed left rates unchanged at Wednesday’s meeting and has now held steady for five consecutive meetings, despite increasing pressure from the White House. There were two dissenting votes on the FOMC (both for a cut); the first time two Fed Governors have dissented since 1993.
Both dissenters, Christopher Waller and Michelle Bowman, expressed concerns that the Fed’s hesitance to lower rates risked damaging the labour market. Waller specifically identified “expected data revisions” as a reason for his dissent.
The US economy grew at a real annualised rate of 3% in the second quarter, above expectations, but the reading was distorted by tariffs: trade contributed 5%, while inventories subtracted -3.2%. The volatility masks an economy losing momentum.
Last week’s data vindicated Waller (and Trump) a potential successor to Powell as Fed Chair. With the Fed now behind the curve a rate cut at the September meeting looks highly likely. Powell may also shift more dovish at the Jackson Hole policy symposium later this month.
Bond yields fell sharply on Friday, particularly at the short end of the curve, as markets priced in rate cuts. The 2-year yield fell 0.24% over the week to close at 3.68%. Fed funds futures are now pricing in a nearly 90% probability of a September cut - up from effectively 0% just a week ago.
The week ahead
Thursday: BoE rate decision
Our thoughts: The BoE is almost certain to cut rates this week, lowering the bank rate to 4.0%. With annual inflation still running at 3.6%, the Monetary Policy Committee is expected to remain cautious as it continues on a gradual path of easing. Markets are pricing in one further cut by year-end and another in the first half of 2026.
Thursday: China exports
Our thoughts: Economists expect Chinese exports to have held up reasonably well in July despite renewed trade tensions with the US. While shipments to the US have declined, China appears to be offsetting losses by expanding into other markets. One emerging risk: transshipments - goods routed through third countries to circumvent tariffs - have drawn growing scrutiny from US officials and are becoming a flashpoint in trade talks.
Your weekly market review was powered by Canaccord Genuity Wealth Management (CGWM)
Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. The information provided is not to be treated as specific advice. It has no regard for the specific investment objectives, financial situation or needs of any specific person or entity. Where investment is made in currencies other than the investor’s base currency, the value of those investments, and any income from them, will be affected by movements in exchange rates. This effect may be unfavourable as well as favourable. Past performance and future forecasts figures are not a reliable indicator of future results.
