Barclays Warns of “Negative Seasonality” in Coming Months

International investment bank Barclays has urged caution for the months of August and September, citing a seasonal uptick in market volatility tied to increased monetary policy uncertainty in the U.S., as well as political friction stirred by President Donald Trump’s ongoing criticism of the Federal Reserve and unresolved trade disputes.

In a report titled “Summer Anxiety,” Barclays analysts noted that markets tend to experience turbulence during the late summer period. “Political uncertainty is keeping markets on edge,” the report stated, adding that “hedging appears prudent,” particularly with equity markets hovering near all-time highs amid what it described as a “noisy” macroeconomic backdrop.

Tariff Threats Remain a Key Risk

A primary concern is the lack of progress in U.S. trade negotiations. While a deal with Indonesia was recently reported, Barclays warned that “uncertainty lingers for the European Union” ahead of the August 1 deadline.

Although market reactions have been relatively muted so far, the bank cautioned that this “likely reflects a degree of investor complacency,” with a 30% tariff on EU goods still looming as a credible risk.

“A full implementation of 30% tariffs on the EU would almost certainly trigger a deeper economic slowdown and severely undermine the prevailing TACO (‘Trump Always Chickens Out’) trade,” the analysts wrote, referring to a strategy used by some investors who assume Trump’s threats won’t be enforced.

Additional Market Pressures

Beyond trade tensions, markets are also being pressured by a recent rise in U.S. Treasury yields, driven by stronger-than-expected retail inflation.

Barclays also cited “growing concerns about the expanding fiscal deficit and the Fed’s positioning under Jerome Powell” as factors contributing to investor unease. While President Trump has denied reports that he plans to fire Powell, initial headlines around the possibility caused market jitters earlier in the week.

Mixed Outlook for the Rest of 2025

Despite the near-term caution, Barclays maintained a constructive longer-term view: “Growth and earnings fundamentals continue to support equity markets,” the bank said, highlighting that U.S. economic surprises have turned positive and Q2 earnings have shown “corporate resilience.”

Regionally, Barclays expressed confidence in European equities: “We continue to see a path for European stocks to break out to new highs by year-end,” though the firm warned the road to recovery “may not be a smooth one.”

Cryptocurrencies Surge Up to 23% This Week

Bitcoin (BTC) remained stable at the close of the week, trading against the trend of altcoins, which extended their strong weekly gains. Ripple (XRP) led the rally, while Ethereum (ETH) held firmly above $3,500.

The leading cryptocurrency traded at $117,588, down 1.7% in the past 24 hours but flat (0.0%) over the last seven days. ETH jumped 4.5% to $3,591.69, bringing its weekly gain to 20.0%, while XRP surged 2.9% on the day and 23.4% for the week to $3.46, according to FXLeaders data.

[[BTC/USD-graph]]

On Thursday, the U.S. House of Representatives passed the GENIUS Act, making it the first comprehensive legislation to regulate stablecoins—crypto assets pegged to real-world assets, typically the U.S. dollar. The bill now awaits the signature of President Donald Trump, who has already expressed his support.

Other major altcoins also posted notable weekly gains: BNB rose 6.3% to $738.34; Solana (SOL) climbed 8.8% to $178.43; Dogecoin (DOGE) jumped 11.8% to $0.2353; and Tron (TRX) advanced 8.1% to $0.3257.

Ethereum and Ripple Reach New Highs in Price and Institutional Inflows

The broader crypto market remains in bullish territory, with BTC consolidating below its recent all-time high, and both ETH and XRP setting new records in price and institutional capital inflows, according to Buenbit.

BlackRock’s Ethereum ETF (ETHA) led inflows with more than $546 million in a single day. Meanwhile, Nasdaq formally requested SEC approval to allow staking rewards within the ETF—potentially marking the first time a traditional financial product would enable investors to earn passive income on Ethereum while remaining within a regulated framework.

Donald Trump Again Calls Jerome Powell an “Idiot,” Pressures Fed

U.S. President Donald Trump lashed out at Federal Reserve Chairman Jerome Powell and the central bank’s board, accusing them of “strangling” the housing market with high interest rates, which he argued should be cut to 1% instead of remaining at the current 4.25%.

Trump has been criticizing Powell since Taking Office.

“‘Slowpoke’ and the Fed are suffocating the housing market with their high rates, making it harder for people—especially young people—to buy a home,” Trump wrote on TruthSocial.

He went on to say that Powell was one of the worst appointments he ever made, adding, “Sleepy Joe [Biden] saw how bad he was and reappointed him anyway.”

“And the Fed board hasn’t done anything to stop this ‘idiot’ from hurting so many people. In many ways, the board is just as guilty!” he added.

Trump insisted that U.S. inflation is now “VERY LOW,” arguing that the country deserves a 1% rate, which would “save $1 trillion a year in interest.” “Cut the rates, Slowpoke!” he concluded.

Fed Holds Ground on Rates Despite Trump Pressure

The Federal Reserve has kept interest rates steady since last December, holding them in a target range of 4.25% to 4.50%.

In remarks made earlier this month, Powell defended the current stance, stating that the tariffs recently imposed by Trump had complicated the Fed’s ability to lower rates by putting upward pressure on inflation projections. The central bank has opted to hold off on any rate cuts until the full effects of the trade measures become clearer.

Mexican Peso Weakens as Dollar Gains Strength; Closes at 18.75 per Dollar

The Mexican peso depreciated against the U.S. dollar on Thursday, following the release of stronger-than-expected U.S. retail sales data and a decline in jobless claims, which boosted the greenback.

The exchange rate closed the session at 18.7569 pesos per dollar, compared to 18.7274 on Wednesday, according to official data from the Bank of Mexico (Banxico). This represented a loss of 2.95 centavos, or 0.16%, for the Mexican currency.

The dollar traded in a range between a high of 18.8455 and a low of 18.7217 pesos. Meanwhile, the U.S. Dollar Index (DXY) — which measures the greenback against a basket of six major currencies — rose 0.36% to 98.64 points.

[[USD/MXN-graph]]

Strong U.S. Economic Data

U.S. retail sales increased 0.6% month-over-month in June, beating expectations of 0.2%, and rose 3.5% year-over-year. Excluding autos, retail sales rose 0.5%, also exceeding the forecast of 0.3%.

While these figures are positive for the U.S. economy, they may complicate the outlook for President Donald Trump, as a strong economy and a firmer dollar support arguments for holding interest rates steady.

Labor Market Supports Rate Pause

On the labor front, jobless claims fell to 221,000 in the week ending July 12 — down 7,000 from the prior week and below the consensus estimate of 234,000 — pointing to continued strength in the labor market.

Federal Reserve Governor Adriana Kugler added to the sentiment by saying the central bank should hold off on rate cuts “for some time” as tariffs begin to show up in inflation data.

Short-Term Outlook

Given current trends, analysts expect the peso to trade between 18.76 and 18.83 through the end of the day. In overnight trading, the expected range is 18.72 to 18.83.

Euro Bets Rise as Markets Debate Whether the Dollar Has Bottomed

Retail inflation in the European Union (EU) reached 2% in June, yet the European Central Bank (ECB) indicated it is unlikely to cut interest rates again until trade tensions with the United States are resolved. In this context, the euro has appreciated nearly 12% so far this year, fueled by global uncertainty stemming from President Donald Trump’s tariff policies.

stock markets plunge after trump tariffs

The headline consumer price index matched the midpoint of the ECB’s inflation target, accelerating slightly from May’s 1.9% and in line with analysts’ expectations. Core inflation — which excludes volatile components like food and energy — held steady at 2.3%, unchanged from the previous month.
EU’s Standoff with Trump

Despite the uptick in inflation, the ECB signaled it would likely pause rate cuts at its upcoming meeting later this month, citing the uncertain outlook created by renewed trade tensions with the U.S. Over the weekend, Trump threatened to impose a 30% tariff on EU imports.

[[EUR/USD-graph]]

“A firm hand is needed to deal with the uncertainty unleashed by the latest tariff threat from the U.S. president,” said one ECB official earlier this week. The impact of geopolitical swings and trade tensions with the U.S. on prices remains “highly unpredictable,” he added.

Although the current trade climate is complicating monetary policy decisions, it is unlikely to derail the ECB’s plan to hold rates steady next week, according to five central bank policymakers who spoke with Reuters.

Market Projection – Euro Bets

While Trump appears open to deals that could reduce tariffs, his latest comments make clear he’s not interested in drawn-out negotiations. This reintroduces uncertainty at a time when countries like the EU are trying to secure agreements to avoid another escalation.

Compounding the uncertainty are Trump’s renewed efforts to remove Federal Reserve Chair Jerome Powell, primarily due to Powell’s reluctance to cut interest rates despite inflationary pressures tied to tariffs. On Thursday, the president said it was “unlikely” he would fire Powell — a sharp contrast to reports earlier in the week suggesting otherwise.
Euro Strengthens

Financial markets seem to be interpreting Trump’s tariff threat as a negotiating tactic. Strategists at Morgan Stanley told Bloomberg that a move beyond $1.30 for the euro “should not be underestimated.”

The investment bank joins Deutsche Bank, BNP Paribas SA, and Barclays in forecasting further euro strength. Year to date, the euro has gained 11.8% against the U.S. dollar.

U.S. Retail Sales Beat Expectations, Signaling Stronger Consumer Demand

Retail sales in the U.S. rose 0.6% in June, surpassing the 0.1% increase forecast by a Reuters poll of economists, according to data released Thursday by the Census Bureau of the Department of Commerce. The rebound follows an unrevised 0.9% decline in May.

However, analysts warn that the stronger-than-expected data may reflect higher prices for goods affected by import tariffs, rather than a true increase in sales volume. This week’s inflation data revealed sharp price hikes in tariff-sensitive categories such as sporting goods, appliances, furniture, and toys.

While household consumption remains resilient, there are signs of a slowdown in discretionary spending. Core retail sales — which exclude automobiles, gasoline, building materials, and food services — rose 0.5% in June, following a downward revision to 0.2% in May. These core figures feed directly into the GDP’s consumer spending component, which had increased by 0.4% in May.

Jobless Claims Fall Below Expectations, Suggesting Labor Market Resilience

Initial claims for state unemployment benefits came in lower than expected last week, totaling 221,000, according to the U.S. Department of Labor. The figure was revised upward for the prior week to 228,000, from an earlier estimate of 227,000. Economists polled by Reuters had forecast 235,000 new claims.

The four-week moving average, a more stable indicator that smooths out short-term volatility, dropped to 229,500. Meanwhile, continuing claims — the number of people receiving benefits beyond their first week — rose slightly to 1.956 million.

Alphabet, Meta, Nvidia, and Microsoft Face the Challenge of High Valuations

Shares of major U.S. tech companies have surged in recent months, driven by the explosive growth of artificial intelligence, pushing many stocks to record highs and raising valuation concerns among Wall Street analysts and investors.

A new record of $4 trillion made history for Nvidia.
A new record of $4 trillion made history for Nvidia.

Over the past three months, Alphabet, Meta Platforms, Nvidia, and Microsoft have posted an average gain of 35%. Among them, Nvidia and Meta stood out as market favorites, soaring 52% and 41%, respectively.

As a result, these four tech giants now trade at an average forward price-to-earnings (P/E) ratio of 30x — well above the S&P 500’s 22x multiple. Meta, Nvidia, and Microsoft are currently trading at forward P/E ratios above their three-year averages, while Alphabet sits just slightly below its historical norm.

[[NVDA/USD-graph]]

Beyond the “Magnificent Seven”

The rally extended beyond the most iconic names. Broadcom, for instance, jumped 57% in the last quarter, reaching its highest valuation in five years, while Uber climbed 25%.

“We believe the recent surge in large-cap tech and AI stocks has been primarily driven by P/E multiple expansion,” UBS Financial Services noted. “While we maintain a structurally positive outlook on AI, we would prefer to see gains underpinned by upward earnings-per-share revisions rather than pure valuation expansion.”

Given the lofty valuations, ongoing geopolitical uncertainty, and the upcoming Q2 earnings season, UBS highlighted the importance of a balanced and selective approach.

“We recommend investors seek diversified exposure across semiconductors, software, and internet platforms, rather than concentrating risk in a single segment or individual stock,” the report concluded.

Mexican Peso Closes Higher After Three-Day Losing Streak Against the Dollar

The Mexican peso appreciated against the U.S. dollar in midweek trading, snapping a three-session losing streak, as markets digested unchanged U.S. producer price data for June.

The exchange rate closed the day at 18.7274 pesos per dollar. Compared to Tuesday’s official close of 18.8188 pesos, the local currency gained 9.14 centavos, equivalent to a 0.49% appreciation, according to data from Mexico’s central bank (Banxico).

During the session, the dollar traded in a range between a high of 18.8484 pesos and a low of 18.6833 pesos. The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, dropped 0.35% to 98.29 points.

[[USD/MXN-graph]]

The peso’s rebound was supported by a modest technical correction following the previous day’s weakness, as well as positive external momentum after investors assessed a softer-than-expected U.S. producer inflation report.

The U.S. Producer Price Index (PPI) remained flat in June compared to the previous month, beating analyst expectations of a 0.2% increase. This followed a 0.3% rise in May.

While the Federal Reserve has signaled openness to cutting interest rates this year, the recent uptick in consumer inflation—published a day earlier—has kept expectations steady for now, with markets betting against a move before September.

Market Outlook

The session was also marked by volatility after reports surfaced suggesting President Donald Trump was considering removing Federal Reserve Chair Jerome Powell—a rumor later denied by the administration.

Investors should expect the peso’s recovery to continue. From a technical perspective, the currency has consolidated below the psychologically important 19-per-dollar level.

Fed’s Beige Book: Economic Outlook Has ‘Improved Slightly’

The U.S. economy saw a slight improvement in outlook, despite ongoing uncertainty and rising cost pressures driven by President Donald Trump’s tariffs and stricter immigration policies, according to the Federal Reserve’s Beige Book published Wednesday.

FOMC Minutes
US Federal Reserve

The report noted that “economic activity increased slightly from late May through early July,” based on anecdotal information collected by the Fed’s 12 regional banks through July 8. It added that uncertainty remained “elevated, contributing to continued business caution.”

Labor Market Remains Cautious

Employment “rose only slightly overall,” with hiring described as “generally cautious.” Many business contacts cited “continued uncertainty about the economic and monetary policy outlook.”

Several districts also reported “a decline in the availability of foreign-born workers,” attributed to recent changes in immigration policy.

Pricing Pressures Pick Up

On inflation, prices “increased across all districts,” with seven describing the pace as moderate and five as modest, showing little change from the previous report.

Businesses in all 12 districts reported “moderate to pronounced input cost pressures related to tariffs,” particularly for raw materials used in manufacturing and construction.

Firms also faced “rising insurance costs,” and while many passed on at least some of the increases to consumers through price hikes or surcharges, others refrained “due to growing price sensitivity among customers,” which in turn compressed profit margins.

The Fed added that contacts across a wide range of industries “expect cost pressures to remain elevated in the coming months,” raising the likelihood that consumer prices could begin rising more noticeably by late summer.

White House Suggests Trump May Oust Jerome Powell Soon from Fed Chairmanship

Financial markets reacted negatively to growing speculation that President Donald Trump may remove Federal Reserve Chair Jerome Powell.

Could Fed Chairman Powell be out soon?
Could Fed Chairman Powell be out soon?

The possibility was raised during a closed-door meeting with Republican lawmakers on Tuesday night, according to a senior White House official cited by Bloomberg.

While many GOP legislators reportedly expressed support for the move, they also acknowledged that ousting Powell before the end of his term could spark significant market volatility and a legal showdown. No final decision has been made yet, but the matter is said to be under serious consideration.

Kevin Hassett, director of the National Economic Council and a close Trump advisor, is widely seen as the leading candidate to replace Powell when his term expires in May next year. Other names reportedly under discussion include former Fed Governor Kevin Warsh and current Treasury Secretary Scott Bessent.

Concerns Over Fed Credibility

While the Federal Reserve is formally an independent institution, analysts note that its autonomy has always existed within the boundaries of political realities. Even central banks with strong legal safeguards have historically faced political pressure. And that pressure—whether or not it leads to rate cuts—can erode institutional credibility.

A loss of confidence in the central bank is often tied to rising inflation expectations, which can result in real economic consequences.

In this case, the most troubling signal is not a formal policy shift but rather the erosion of the informal norms that have traditionally shielded the Fed from political interference.