Market Update: July 29th, 2025

Welcome to the Monthly Market Update from Signature Wealth Management. I’m Brian Ransom, Research Director from Signature Wealth and here’s what happened in the market this month.

Fortunes in the market have completely reversed this summer relative to the spring. At the beginning of the year, the market peaked in February and fell significantly throughout the month of April. Since that April 8th bottom, however, the market is up nearly 28%.

The primary question on everyone’s minds is what is the Federal Reserve and Chairman Powell going to do over the next few months? The situation is fairly binary. They could lower interest rates and risk reigniting inflation risks. Or then could not lower interest rates and increase the odds of an economic slowdown.

And here’s an update on those inputs starting with inflation. Shown here is year-over-year total CPI percentage change. The Federal Reserve successfully reduced inflation relatively quickly from 9% to around 3.5%. But the final mile is always the hardest. While inflation has continued to trend down since the summer of 2023, we have yet to hit that coveted 2% inflation target and inflation has actually started to tick up these last couple of months.

Looking at sticky-price CPI, these are price changes that are almost always permanent and are indicative of systematic, forward-looking inflation, we have seen sticky CPI fall since 2023. But for the first time since the peak, we have seen a 2-month increase in sticky CPI indicating that inflationary conditions remain embedded in the economy.

This has resulted in a small general increase in 5-year breakeven inflation increasing modestly over the last year. Breakeven inflation is the 5-year expected inflation rate given market conditions in the bond market and we currently sit at 2.5%.

On the flip side of that, unemployment has started to rise indicating weakness in the labor market. Likewise, we have seen real GDP growth falter in the first quarter of 2025. While this GDP growth figure is distorted by net exports and is likely to rebound in the second quarter, rising unemployment and falling real GDP are good reasons to lower interest rates.

But as it stands currently, the market is pricing in 2 rate cuts by the Fed meeting on December 10, 2025. And by the time you all watch this video, we will have had our July Fed meeting for which the Fed very likely does NOT cut interest rates.

Thanks for joining for the monthly market update! We have a new podcast called “Business Tales.” You can find Business Tales on all your favorite podcasting apps. Also, our website is full of economic, financial planning, and market content. For those looking for more information please visit our website at signaturewmg.com. And don’t forget to like and subscribe.

Sources:

1. FactSet Research Systems. (n.d.). S&P 500 (Interactive Charts). Retrieved July 29, 2025, from FactSet Database.
2. U.S. Bureau of Labor Statistics. Graphics for Economic News Releases. “12-month percentage change, Consumer Price Index, selected categories”. Updated July 15, 2025. Retrieved from https://www.bls.gov/cpi/
3. Federal Reserve Bank of Atlanta. Inflation Project. “Sticky-Price CPI.” Updated July 15, 2025. Retrieved from https://www.atlantafed.org/research/inflationproject/stickyprice
4. U.S. Bureau of Labor Statistics, Unemployment Rate [UNRATE], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/UNRATE, July 29, 2025.
5. J.P. Morgan Asset Management. “Guide to the Markets.” Slide 18 Components of GDP Growth. Updated June 30, 2025. Retrieved from https://am.jpmorgan.com/us/en/asset-management/protected/adv/insights/market-insights/guide-to-the-markets/
6. Federal Reserve Bank of St. Louis, 5-Year Breakeven Inflation Rate [T5YIE], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/T5YIE, July 29, 2025.
7. FactSet Research Systems. (n.d.). Policy Rate Tracker (Markets). Retrieved July 29, 2025, from FactSet Database.

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