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Fixed Income & Equities Markets Week in Review

 
 
July 3, 2025

Fixed Income Update

US Treasury yields fluctuated during the holiday-shortened week but remain near their lowest levels in several months. The market has shown solid rallying momentum recently, eager to react to any signs of labor market weakness or imminent Fed easing. 

Month- and quarter-end flows pushed yields slightly lower to start the week. However, mid-week economic data unwound some of the bond market’s recent bullishness. The May JOLTS report showed an unexpected increase in job openings, pushing the job openings-to-unemployed ratio up to 1.07 from 1.03 in April. This suggested continued labor market resilience. 

Benchmark 10-year Treasury yields touched 4.19% during Tuesday trading, marking their lowest level since April’s tariff-induced flight to safety. Shorter-term Treasury yields continue to price in more than 50 basis points of Fed rate cuts this year. 

Fed Chair Powell was back in the spotlight this week, participating in a central banker panel in Portugal. When asked about the July meeting, Powell stated he “wouldn’t take any meeting off the table or put it directly on the table.” While his comments were measured, markets interpreted them as increasing the plausibility of a July rate cut compared to two weeks ago at the Fed’s last policy meeting. However, for the Fed to cut rates this month, the labor market would likely need to show considerable weakness and inflation data would need to show further progress. June CPI data will be released on July 15. 

Employment data released this week painted a mixed picture. Alongside the JOLTS report, ADP’s June data showed payrolls unexpectedly fell by 33,000, compared to expectations for an increase of 98,000. However, Thursday’s highly anticipated nonfarm payrolls report showed stronger results, with the US economy adding 147,000 jobs in June versus expectations of 106,000. The unemployment rate also fell from 4.2% to 4.1%. 

Following Thursday’s data, the market tempered its expectations for a July rate cut, now pricing in roughly two cuts this year, with the first expected in September. 

From all of us at Washington Trust Bank, we wish you a joyful and safe Independence Day. 

As of July 3, 2025

Index 

Current 

Last Week 

Wk Chg 

Last Year 

Yr Chg 

Tax-exempt MMF 

2.48% 

2.68% 

-.20% 

3.72% 

-1.24% 

Taxable MMF 

4.30% 

4.28% 

.02% 

5.33% 

-1.03% 

 

 

 

 

 

 

2-Year Treasury 

3.87% 

3.72% 

.15% 

4.71% 

-.84% 

5-Year Treasury 

3.94% 

3.80% 

.15% 

4.33% 

-.38% 

10-Year Treasury 

4.34% 

4.24% 

.09% 

4.36% 

-.02% 

30-Year Treasury 

4.85% 

4.80% 

.05% 

4.53% 

.32% 

5-Year Exp. Inflation 

2.37% 

2.31% 

.06% 

2.24% 

.13% 

 

 

 

 

 

 

2-Year Corporate* 

4.17% 

4.17% 

.00% 

5.08% 

-.90% 

5-Year Corporate* 

4.43% 

4.42% 

.01% 

4.92% 

-.49% 

10-Year Corporate* 

5.04% 

5.05% 

-.02% 

5.24% 

-.20% 

30-Year Corporate* 

5.68% 

5.73% 

-.05% 

5.53% 

.14% 

 

 

 

 

 

 

2-Year Municipal** 

2.56% 

2.68% 

-.13% 

3.17% 

-.61% 

5-Year Municipal** 

2.68% 

2.84% 

-.15% 

3.03% 

-.35% 

10-Year Municipal** 

3.29% 

3.42% 

-.13% 

3.02% 

.27% 

30-Year Municipal** 

4.88% 

4.91% 

-.03% 

4.03% 

.85% 

 

 

 

 

 

 

10-Year German Govt Bond 

2.61% 

2.57% 

.05% 

2.58% 

.03% 

10-Year U.K. Govt Bond 

4.56% 

4.47% 

.09% 

4.17% 

.39% 

10-Year Japanese Govt Bond 

1.43% 

1.41% 

.02% 

1.09% 

.34% 

10-Year Spanish Govt Bond 

3.26% 

3.21% 

.05% 

3.37% 

-.11% 

10-Year Italian Govt Bond 

3.49% 

3.45% 

.04% 

3.98% 

-.49% 

 

 

 

 

 

 

Fed Funds 

4.50% 

4.50% 

.00% 

5.50% 

-1.00% 

Prime Rate 

7.50% 

7.50% 

.00% 

8.50% 

-1.00% 

Dollar*** 

$97.15 

$97.15 

$0.00 

$105.40 

-$8.25 

CRB 

$300.71 

$298.22 

$2.49 

$294.02 

$6.69 

Gold 

$3,348.50 

$3,333.50 

$15.00 

$2,369.40 

$979.10 

Crude Oil 

$67.33 

$65.24 

$2.09 

$83.88 

-$16.55 

Unleaded Gasoline**** 

$2.12 

$2.08 

$0.04 

$2.36 

-$0.24 

Note: Municipal yields are as of the previous business day.

* Composite A
** General Obligation AA+
*** Int'l value of the U.S. dollar (Avg. exchange rate between the dollar and 6 major world currencies).
**** Futures price per gallon

Callen Young
Callen Young
VP / Portfolio Manager
 
Callen is the bank’s primary fixed-income strategist and oversees the strategy, implementation, and trading of all fixed-income securities for both private and institutional capital. Read Callen's bio >

Stock Market Update

Stocks continued to deliver healthy gains during this holiday-shortened week, as the 2nd quarter and 1st half came to a close on Monday. Notably, the Russell 2000 (small-cap oriented index) provided leadership during the week, and finally came positive for year-to-date performance. In addition, the S&P 500 and Nasdaq Composite both set new record high closes. As of Wednesday’s market close, the major indices are all in positive territory on a year-to-date basis: Dow Jones Industrial Average (Dow) +5.47%, S&P 500 +6.59%, Nasdaq Composite +5.98%, Russell Mid Cap +6.16%, and Russell 2000 +0.54%.

Trade policy news and headlines ramped up this week, ahead of the July 9th expiration of the 90-day pause for reciprocal tariffs. The European Union (EU) is reportedly close to accepting the 10% universal tariff but wants the US to agree to lower rates, quotas or exemptions on sectors such as pharmaceuticals, alcohol, semiconductors, commercial aircraft, automobiles, car parts, steel, and aluminum. Meanwhile, President Trump announced a trade agreement with Vietnam involving a 20% tariff on Vietnam exports to the US and a 40% tariff on goods deemed to be trans-shipped through the country. Vietnam agreed to drop all levies on US imports. Although numerous trade deals remain unsettled, there is speculation that more agreements may be inked as the July 9th deadline draws near. President Trump has not indicated whether there could be an extension of the deadline. However, he has suggested that multiple countries are likely to receive a letter setting out tariff levels if deals are not made by the end of the pause. Treasury Secretary Bessent also warned that “recalcitrant” countries could see tariffs revert to April 2nd levels and cautioned them to not drag out talks.

President Trump’s reconciliation bill (aka the “Big, Beautiful Bill” or BBB) made notable forward progress in Congress this week. The Senate debated the bill on Monday and then conducted a “vote-a-rama” on proposed amendments. The Senate passed its version of the $3.3 trillion bill on Tuesday after Republican leaders successfully persuaded enough remaining holdouts. The vote was 51-50, with Vice President Vance casting the tiebreaking vote. The package then moved back to the House. The bill seemed set to pass on Thursday, after House Speaker Johnson overcame resistance from conservative holdouts on Wednesday night. There has been much debate over several areas of the bill, including how much to increase of the debt ceiling, the Section 899 “revenge tax,” Medicaid spending cuts, the size of state and local tax (SALT) deductions, and the pace of phase-outs for clean-energy tax incentives, among other things. Assuming the House is able to pass the package, it will proceed to President Trump’s desk for his signature into law. He has been pressing for a target of July 4th. The equities market views the extension of the 2017 tax cuts in the package as a positive for stocks in the near term. However, there are longer-term concerns around debt and deficits as a potential overhang.

Due to the July 4th market closure on Friday, the all-important employment report came out a day early this month. On Thursday morning, the US Bureau of Labor Statistics reported the nation added 147,000 jobs in June, which beat the consensus expectation of 115,000. In addition, the prior two months were revised up by a combined 16,000. The unemployment rate ticked down 0.1 percentage points, to 4.1%. There were some mixed takeaways in the data underneath the headline metrics, but the equities market viewed the news as a positive and moved higher on the news. Nevertheless, this solid report reduces the odds of the Federal Reserve (Fed) cutting interest rates when it meets at the end of July.

As of July 2, 2025

Index

Current Week

Month of Jul.

YTD

Dow Jones Industrial Avg.

1.52%

0.88%

5.47%

S&P 500

0.89%

0.37%

6.59%

Nasdaq

0.60%

0.12%

5.98%

MSCI EAFE

0.09%

0.04%

19.97%

Russell Mid Cap

1.78%

1.27%

6.16%

Russell 2000

2.54%

2.37%

0.54%

Gayle Sprute
Gayle Sprute
VP / Senior Portfolio Manager
 
Gayle is the primary equity strategist for Washington Trust, providing custom investment and risk management strategies for clients with complex financial needs. Read Gayle's bio >