Wall Street’s H1 Peak Sets the Stage
(But Can the Momentum Last?)
The first half of 2025 just wrapped up, and if there’s one word to describe it, it is “resilient.” Despite recession fears, geopolitical noise, tariff spats, and relentless pressure on the Fed, Wall Street has powered through, with the S&P 500 and Nasdaq closing out June at record highs. Even the Dow is flirting with historic territory, just 2% shy of its all-time peak.
How did we get here? A combination of weaker dollar tailwinds, rising bets on interest rate cuts, and a trade narrative that continues to stir market momentum. Monday’s gain was the cherry on top, with all three major indexes building on Friday’s record-breaking close.
Behind the scenes, trade tensions remained front and center. The U.S. and Canada narrowly avoided a digital services tax blowout, reopening trade talks after Ottawa hit pause just before implementation. But the real pressure point is the looming July 9 tariff deadline. Treasury Secretary Scott Bessent made it clear that countries negotiating in good faith might still not get exemptions. In other words: brace for impact.
The U.S. dollar continues its six-month losing streak, a trend that’s boosting gold, now enjoying one of its strongest half-year performances in recent memory. Meanwhile, Treasury yields are falling, with the 10-year around 4.23%, as markets increasingly price in three Fed rate cuts before year’s end.
And yes, the Powell-Trump saga took another twist. The President reportedly sent the Fed Chair a handwritten note urging rate cuts. It’s the latest in a long line of political pressure points influencing monetary sentiment. Whether Powell bites remains to be seen, but markets are certainly leaning dovish.
Looking ahead, this week could stir the pot further. Keep your eye on the June U.S. ISM manufacturing PMI, Eurozone CPI, a heavyweight panel featuring Powell, Lagarde, and other central bankers, and Thursday’s (July 3, 2025) all-important U.S. jobs report.
The first half was strong, but the second half hinges on policy clarity, macro data, and whether this rate-cut optimism becomes reality. Buckle up, H2 is already heating up.
