Co-Mind Morning Pulse — July 3, 2025
Co-Mind Morning Pulse — July 3, 2025
1. Market Mood
Markets are exuberantly bullish on the surface but structurally fragile beneath. The S&P 500 closed at fresh all-time highs, fueled by tech strength and dovish central bank expectations. Vol remains suppressed, suggesting confidence — or complacency. But underneath, a mix of soft data, Trump-driven tariff roulette, and fiscal credibility tremors (especially in the UK) is starting to stress-test assumptions. Risk assets are pricing a soft landing with surgical precision. The more extreme this consensus becomes, the greater the latent asymmetry.
2. Key Cross-Asset Moves
Equities
S&P 500: +0.5%, new ATH on tech + AI tailwinds
Stoxx 50: +0.7%, near cycle highs
FTSE 250: -1.3%, UK fiscal credibility blow-up
Fixed Income
US 10Y: ↑ ~4bps to 4.24%, pre-NFP jitters
UK 10Y Gilt: +22bps, fiscal scare on Reeves U-turn
Bunds: Flat, periphery spreads stable for now
Commodities
Brent Crude: ~$68.50, geopolitical bid offset by soft US demand
Gold: ~$3340/oz (nominal), near highs on Fed cut bets
Currencies
DXY: Stabilized after 3-year lows, Trump tariff clarity helped
GBP: ↓ 1%, hit by political dysfunction
JPY: Weaker, BoJ hawkish talk not yet convincing
EUR: Strongest vs GBP in 2 months
Digital Assets
BTC: Rallied to ~$109k, volume, volatility, and Trump optimism.
3. The Real Driver
The disinflation-fed Fed cut thesis is running the show.
Markets are not just anticipating cuts — they are positioned for a smooth, almost cinematic soft landing. Yesterday's weaker ADP jobs report added to that. But Powell’s “no rush” stance isn’t a guarantee. Throw in a massive fiscal stimulus bill, a volatile president threatening tariffs, and geopolitics flaring — and you have a deeply reflexive setup. Risk assets are climbing a ladder built on faith in central bank accommodation without real cracks forming. That’s rare — and likely temporary.
4. What We’ve Learned
Momentum is peaking, rotation brewing: Dividend and value inflows are hitting multi-year highs. That’s not just tactical — it’s signaling fatigue in the AI-led growth melt-up.
UK fiscal panic is the market's new test: Reeves’ political stumble sparked an outsized gilt rout. Traders clearly don’t trust Labour’s grip on the deficit — and are alert to similar risks in the US and Japan.
Trump’s tariff threats are real this time — maybe: July 9 is the hard line. Markets have priced in “T.A.C.O.” (Trump Always Chickens Out), but real tariffs on Japan or the EU would shock. Investors are overexposed to wishful thinking here.
Iran-Israel tensions moved oil briefly — then fizzled: We learned the geopolitical risk premium remains highly reactive, but short-lived unless flows or inventories confirm.
The bond market is waking up — slowly: U.S. yields ticked up despite soft data, as the fiscal picture worsens. This matters more than CPI in the medium term.
The dollar isn’t collapsing — yet: Despite political drama and fiscal fears, the greenback found footing. That’s a clue that positioning was already heavy against it.
5. Final Thought
Markets are in their Goldilocks era — just soft enough for cuts, just strong enough for earnings. But fairytales end. The real world is warming up: tariffs, fiscal cracks, and geopolitical tremors are all signaling that volatility isn’t dead — it’s just resting. For now, stay long but nimble. The landing might still be soft… but it’s getting bumpier every mile.