Last Week on Wall Street – July 12th, 2025

S&P 500: -0.32% DOW: -1.03% NASDAQ: -0.08% 10-YR Yield: 4.42%

What Happened?

With no big market data reports this week, markets remained relatively calm, even considering the stir from the White House provoking massive reciprocal tariffs on U.S. trade partners as a consequence to them not making deals in the U.S.’s favor. With the said, markets pushed it aside and aired on the side of ease, with all three indices finishing just slightly lower than last week.

Seems marekts have got used to the tariff plays popping up at random, after 3 trade partners got heavy implants, a small dip according but nothing crazy.

The Fed talked this week, their conversation represented the epitome of what the current market is seeing, division and confusion on what tomorrow holds.

Below we will dive into each of the above stories in more detail as well as talk about the official signing of the Big Beautiful Bill and it its implications on the economy.

Fed Minutes Underscore Divisions Over Pace of Interest Rate Cuts

Fed officials were divided in June, with most preferring to hold rates steady while a few pushed for cuts.
A rate cut in July appears unlikely, though easing later this year remains on the table if data weakens.
Concerns about inflation from new tariffs were noted, but many saw the impact as likely temporary.

The key takeaway – Trump doesn’t like to lose, and he’s once again making that clear through a fresh round of tariffs. This week, the former president levied new reciprocal tariffs: 25% on Japan and South Korea, and a steeper 50% hit on Brazil, the U.S.’s 16th largest trading partner. The justification? What Trump calls “unfair trade practices” toward the U.S.

For many investors, this move was more smoke than fire. The market has learned to discount what’s now a well-understood playbook: Trump applies pressure to extract better trade deals or punishes those who resist. Goal one is straightforward, cut new deals that favor the U.S. either through reduced costs or strategic exchanges. Goal two? Escalate tariffs to bring reluctant partners back to the table.

Markets barely flinched. Why? Because they’ve seen this movie before. Ever since analysts dubbed it TACO, Trump Always Chickens Out, investors have been desensitized to the headlines. Case in point: the latest round was delayed again, now pushed back to August 1st.

That said, the uncertainty is a tax of its own. Tariff threats complicate forecasts for GDP growth and interest rate policy, introducing noise into business planning and asset pricing.

Trump sets 25% tariffs on Japan and South Korea, and new import taxes on 12 other nations

U.S. set to impose 50% tariffs on copper and Brazilian goods, effective August 1
25% tariffs announced on imports from Japan and South Korea, also starting August 1

That said, the uncertainty is a tax of its own. Tariff threats complicate forecasts for GDP growth and interest rate policy, introducing noise into business planning and asset pricing.

Big Beautiful Bill 101: What businesses are favored (or not) in Trump’s new law

Major tax cuts and deregulation are projected to boost economic growth, investment, and job creation, with estimates of up to 5.2% short-term GDP growth and millions of new jobs
The bill includes substantial spending shifts, large investments in defense and Arctic security, but also deep cuts to Medicaid, SNAP, and clean energy programs, which could raise energy costs and reduce social benefits

The key takeaway – This past week, President Trump officially signed the “Big Beautiful Bill” into law, fittingly, on July 4th. At over 800 pages, the legislation is packed with provisions sure to stir debate. But putting politics aside, the macro implications are worth unpacking.

On the positive side: The bill introduces sweeping tax cuts and long-term business incentives, aimed at boosting economic activity. Early estimates suggest it could lift long-term GDP by 1.2% and increase after-tax income for millions, with roughly 62% of taxpayers avoiding a hike.

The tradeoff: Generous fiscal stimulus comes at a cost. With both spending and tax relief ramping up, the deficit is projected to widen by nearly $3.8 trillion over the next decade. This surge in federal borrowing raises the risk of higher interest payments and could potentially crowd out private sector investment.

The long-term view: Analysts caution that while the bill may deliver short-term economic tailwinds, it could also pose headwinds down the line, namely slower national income growth and upward pressure on interest rates as the government tries to manage rising debt.