S&P 500: 0.62% DOW: -0.06% NASDAQ: 1.50% 10-YR Yield: 4.43%
What Happened?
Markets continued to hit all-time highs this week, with the summer rally showing no signs of slowing down. Despite chatter about a cooling economy, the hard data keeps saying otherwise. Consumers are spending, earnings reports are strong, and inflation remains in check, but not gone.
Retail sales beat expectations, proving that even with market volatility and inflation headlines, consumers are still spending. From restaurants to tech, demand remains strong, bolstering the broader growth picture.
Corporate earnings have also helped steady the ship. With most S&P 500 companies now reported, profits largely beat estimates, highlighting a resilient economy that’s still managing cost pressures and global uncertainty.
Meanwhile, crypto surged after Congress passed the GENIUS Act, setting the stage for regulated stablecoins and giving a green light for corporate-issued digital currencies. It’s a major step toward crypto’s integration into mainstream finance.
On the inflation front, headline CPI rose at its fastest clip since February, but core CPI, which strips out food and energy, cooled slightly, giving markets a reason to stay risk-on and continue pricing in a potential rate cut.
Fed officials remain split on the path forward, adding a dose of uncertainty. But for now, strong earnings, steady spending, and controlled inflation are keeping the rally alive.
House Passes Stablecoin GENIUS Act
- Congress wrapped up “Crypto Week” by passing three major crypto-focused bills:
- 1. The GENIUS Act (for stablecoins),
- 2. The Clarity Act (defining regulatory jurisdiction)
- 3. The Anti‑CBDC Surveillance State Act (blocking a Fed digital dollar)
The key takeaway – Lawmakers on Thursday passed the first major piece of federal crypto legislation in U.S. history, ending months of partisan wrangling and a nine-hour standoff on the House floor.
The GENIUS Act, which stands for Guiding and Establishing National Innovation for U.S. Stablecoins, is the first bill of its kind establishing guidelines for stablecoins, a form of cryptocurrency designed to minimize volatility by pegging its value to the U.S. dollar or other assets. Because of this stability, stablecoins offer a compelling alternative to more volatile cryptocurrencies.
Its passage capped what House Republicans have dubbed “crypto week,” a legislative push aimed at advancing pro-industry bills and preventing the establishment of central bank digital currency (CBDC) efforts.
At its core, the GENIUS Act brings long-sought clarity for banks and fintech firms operating in the stablecoin space. Supporters say it offers the first real framework to protect investors and signal that much needed regulatory oversight is finally catching up to the rapid growth of the industry.
The crypto industry now has a legislative foothold, something it has pursued for years. The bigger battles over securities law, the SEC’s authority, and the structure of digital markets are far from over. But now Washington has finally cleared up some of the long-standing ambiguity surrounding the crypto industry.
CPI rose in June, highest since February
- CPI rose 0.3% month-over-month in June.
- Core inflation rose to 2.9%, just slightly below expectations of 3.0%.
The key takeaway – Analysts are starting to worry that the first real signs of President Trump’s tariff agenda might be trickling down to consumer prices. June’s Consumer Price Index (CPI) report showed inflation rising at its fastest pace since February, fueling speculation that tariffs are finally starting to make their way onto store shelves.
While tariffs can act like a hidden tax on imported goods, passing costs on to consumers, the broader data sent mixed signals. Core CPI, which strips out the often-volatile food and energy categories, came in slightly below analyst expectations. That’s the number the Fed tends to watch more closely, and it didn’t scream panic.
So, was this a good report or a bad one? Depends on your lens. The modest increase in core inflation suggests tariffs haven’t yet sparked a runaway price surge. But the broader uptick may be a warning flare, especially with the larger tariff packages still waiting in the wings, delayed or dangled as leverage in ongoing trade talks. For now, many investors are using these reports to help price in whether or not the chances of rate cut will happen later this year, rather than a full market analysis.
June Retail Sales Beat Expectations As Americans Keep Spending
- From May to June, retails sales data saw a 0.6% uptick in spending.
- Year-over-year spending saw a 3.7% unadjusted increase.
- Gasoline sales dropped 4% reflecting a decline in prices – good news for consumers.
The key takeaway – Despite a backdrop of geopolitical tension, tariff talk, and market chop, American consumers aren’t backing down. June’s retail sales report came in stronger than expected and surprising analysts who anticipated a more cautious consumer.
Historically, volatile markets tend to shake confidence and tighten wallets. But not this time. Instead of conserving cash, consumers kept spending on everything, from restaurants and apparel to electronics and online goods. It’s a signal that consumer sentiment, while jittery in surveys, hasn’t yet translated into real-world restraint.
This matters. In a consumption-driven economy like the U.S., consumer spending makes up nearly 70% of GDP. And when consumers show resilience in the face of economic uncertainty, it buys time for markets and policymakers alike. It also makes the Fed’s job trickier. Strong consumer activity can bolster inflationary pressures, potentially delaying the rate cuts markets are eagerly pricing in as we mentioned above..
From Around the Watercooler
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