Market Musings 7/8/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Are #LaborMarkets showing impact from #Tariffs yet?
There’s been a steady stream of #Tariffs updates this week, but markets are mostly ignoring them. Over the last few months, at least to investors, the White House’s #Tariffs threats haven’t been that credible. The current assumption is that any harsh rhetoric is just going to be walked back－aka the “taco” trade.
So, what are markets focused on? Well, the economy…
However, rather than daily #Tariffs headlines, investors are focused on actual economic impact. Basically, are we actually seeing an increase to #Inflation, a decline in #LaborMarkets, a slowdown in #ConsumerConfidence spending or lowered company outlooks? We’ll go through each in separately, but we’ll start with the #LaborMarkets.
Why are #LaborMarkets important to markets?
First, healthy #LaborMarkets are crucial to a healthy economy. Consumers needs wages to spend and businesses in investment mode hire to expand.
#LaborMarkets are also one of the two Fed mandates (along with #Inflation) that influence monetary policy aka #RateCuts.
How are #LaborMarkets doing?
We just got the monthly jobs data last week and #LaborMarkets have been pretty resilient. The latest job openings data surged in May, nonfarm payrolls added in June topped expectations and unemployment fell to 4.1%. However, there were some mixed signals with private employment declining as corporate hiring slows.
Overall, while #LaborMarkets were bit stronger than investors may have preferred, it was still ultimately what markets wanted. They want to see that the current #Tariffs aren’t causing mass unemployment, but, at the same time, they want to see #LaborMarkets slow to pressure the Fed for #RatesCuts. Markets have cheered minimal impact so far, but we still see #Tariffs as headwinds with the impact still to be felt more gradually.
Outside of weekly jobless claims, the next catalyst will likely be the next batch of #LaborMarkets data in the first week of August. Again, markets continue to look for stable #LaborMarkets to confirm the #Tariffs uncertainty isn’t deteriorating business outlooks and hiring plans.
We remain a little skeptical of the reported #LaborMarkets resilience. For the past 3 months, the private employment data continues to weaken and bifurcates further and further from the strength of the jobs report. It could be a number of factors from industry sectors to current immigration policies to estimate methodology.
It’s something we’ll continue to monitor as we expect the jobs report and private employment data to eventually regress back to showing a similar labor trend－one way or the other.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by Pixabay.