Monthly Market Update

The Undoing

• Gross Domestic Product ⁽¹⁾⁽²⁾ (2Q25): The Real gross domestic product (GDP) increased at an annual rate of 3.0% in the second quarter of 2025, according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the first quarter, real GDP decreased 0.5%.
• Employment (July): Total nonfarm payroll employment rose by 73,000 in July, and the unemployment rate was unchanged at 4.2%, the U.S. Bureau of Labor Statistics reported. Employment continued to trend up in health care and in social assistance. Federal government continued to lose jobs. The June payroll figure was revised down substantially.
• Inflation ⁽⁴⁾ (June): The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3% on a seasonally adjusted basis in June, after rising 0.1% in May, the U.S. Bureau of Labor Statistics reported. Over the last 12 months, the all items index increased 2.7% before seasonal adjustment. The index for all items less food and energy rose 0.2% in June, after increasing 0.1% in May. The all items less food and energy index rose 2.9% for the 12 months ending in June, after rising 2.8% over the 12 months ending in May.
• The Producer Price Index (PPI) (June): The Producer Price Index for final demand, seasonally adjusted, remained unchanged in June, after increasing 0.3% in May, the U.S. Bureau of Labor Statistics reported. On an unadjusted basis, the index for final demand rose 2.3% for the 12 months ended June 2025.
• Retail and Food Services Sales ⁽⁶⁾ (June): Advance estimates of U.S. retail and food services sales for June 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $720.1 billion, up 0.6% (±0.5%) from the previous month, and up 3.9% (±0.5%) from June 2024.
• Personal Income and PCE ⁽⁹⁾ (June): Personal incomeincreased $71.4 billion (0.3% at a monthly rate) in June, according to estimates released by the U.S. Bureau of Economic Analysis. From the preceding month, the PCE price index for June increased 0.3%. Excluding food and energy, the PCE price index also increased 0.3%. From the same month one year ago, the PCE price index for June increased 2.6%. Excluding food and energy, the PCE price index increased 2.8% from one year ago.

Balancing Act

The most recent Fed meeting took place on July 30, 2025. The FOMC decided to hold federal funds to the target range of 4.25% to 4.50%. As of this writing, markets are pricing an 80.8% chance of lowering rates by -25 bps at the September 17^th 2025 meeting, with a 19.2% chance of keeping rates steady. ⁽⁷⁾⁽⁸⁾

Highlights of Chair Powell’s Press Conference:

• Despite Two Dissents, FOMC Holds Rates Steady: “The majority of the Committee was of the view that inflation is a bit above target, maximum employment is at target, that calls for modestly restrictive — in my way of thinking, a modestly restrictive stance of policy for now. But we had two dissenters who I think, you want that clear thinking and expression of your thinking and we certainly had that today I think all around the table.
• Economic Activity Started to Dwindle: “GDP rose at a 1.2% pace in the first half of the year, down from 2.5% last year. Although the increase in the second quarter was stronger at 3%, focusing on the first half of the year helps smooth through the volatility in the quarterly figures related to the unusual swings in net exports. The moderation in growth largely reflects a slowdown in consumer spending. In contrast, business investment in equipment and intangibles picked up from last year’s pace. Activity in the housing sector remains weak.”
• FOMC Remains Cautious on Tariff Impacts: “Changes to government policies continue to evolve, and their effects on the economy remain uncertain. Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen. A reasonable base case is that the effects on inflation could be short-lived—reflecting a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed.”

IMF Revises GDP Forecast

The IMF provided updated global growth forecasts and revised its 2025 global growth projection to 3.0%, an upward revision from the 2.8% forecast in April. The revised outlook reflects front-loading ahead of tariffs, lower effective tariff rates, better financial conditions, and fiscal expansion in some major jurisdictions. The IMF also expects global inflation to fall, and US inflation to stay above target. They maintain their views on downside risks from higher tariffs, elevated uncertainty, and geopolitical tensions.

International Monetary Fund (IMF) 2025 World Economic Outlook Growth Projections:

Source: IMF, World Economic Outlook 2025

Monthly and YTD returns

Source: Morningstar asset class screening total return 1 month USD and total return YTD as of July 31^st 2025 ⁽¹¹⁾

• This content is being published by Amerant Investments, Inc (Amerant Investments) a dually registered broker-dealer and investment adviser registered with the Securities and Exchange Commission and member of FINRA/SIPC. Registration does not imply a certain level of skill, endorsement, or approval. Amerant Investments is an affiliate of Amerant Bank

  Definitions:

  • ⁽¹⁾ Gross Domestic Product (GDP): A comprehensive measure of U.S. economic activity. GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most popular indicator of the nation’s overall economic health. Source: Bureau of Economic Analysis (BEA).
  • ⁽²⁾ GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 and social mobility beyond their impact on GDP source data and relevant economic reports that have already been released. It does not anticipate their impact on forthcoming economic reports beyond the standard internal dynamics of the model.
  • ⁽³⁾ The Current Employment Statistics (CES) program produces detailed industry estimates of nonfarm employment, hours, and earningsof workers on payrolls. CES National Estimates produces data for the nation, and CES State and Metro Area produces estimates for all 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and about 450 metropolitan areas and divisions. Each month, CES surveys approximately 142,000 businesses and government agencies, representing approximately 689,000 individual worksites. Source: Bureau of Labor Statistics (BLS).
  • Initial Claims: An initial claim is a claim filed by an unemployed individual after a separation from an employer. The claimant requests a determination of basic eligibility for the UI program. When an initial claim is filed with a state, certain programmatic activities take place and these result in activity counts including the count of initial claims. The count of U.S. initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country. However, these are weekly administrative data which are difficult to seasonally adjust, making the series subject to some volatility. Source: US Department of Labor (DOL).
  • ⁽⁴⁾ The Consumer Price Index (CPI):Is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. Source: Bureau of Labor Statistics (BLS).
  • ⁽⁵⁾ The national unemployment rate: Perhaps the most widely known labor market indicator, this statistic reflects the number of unemployed people as a %age of the labor force. Source: Bureau of Labor Statistics (BLS).
  • The number of people in the labor force. This measure is the sum of the employed and the unemployed. In other words, the labor force level is the number of people who are either working or actively seeking work. Source: Bureau of Labor Statistics (BLS).
  • ⁽⁶⁾ Advance Monthly Sales for Retail and Food Services:Estimated monthly sales for retail and food services, adjusted and unadjusted for seasonal variations. Source: United States Census Bureau.
  • ⁽⁷⁾ Federal Open Market Committee (FOMC): Responsible for implementing Open market Operations (OMOs)–the purchase and sale of securities in the open market by a central bank—which are a key tool used by the US Federal Reserve in the implementation of monetary policy. Source: Federal Reserve.
  • ⁽⁸⁾ The Federal Funds Rate: Is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. In simpler terms, a bank with excess cash, which is often referred to as liquidity, will lend to another bank that needs to quickly raise liquidity. Source: Federal Reserve Bank of St. Louis.
  • ⁽⁹⁾ The “core” PCE price index: Is defined as personal consumption expenditures (PCE) prices excluding food and energy prices. The core PCE price index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices to reveal underlying inflation trends. Source: Bureau of Economic Analysis (BEA).

  Sources: U.S. Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), U.S. Department of Labor (DOL), Federal Reserve, Federal Reserve Economic Database (FRED), Federal Reserve Bank of Atlanta, U.S. Census Bureau, Department of Housing and Human Development (HUD), U.S. Department of Agriculture, U.S. Energy Information Administration (EIA), U..S Department of the Treasury, Office of the United States Trade Representative (USTR), U.S. Department of Commerce, data.gov, investor.gov, usa.gov, congress.gov, whitehouse.gov, U.S. Securities and Exchange Commission (SEC), Morningstar, The International Monetary Funds (IMF), The World Bank (WB), European Central bank (ECB), Bank of Japan (BOJ), European Parliament, Eurostats, Organization for Economic Co-operation and Development (OECD), National Bureau of Statistics of the People’s Republic of China, Organization of the Petroleum Exporting Countries (OPEC), World health organization (WHO). The White House, Tariff FactSheet.

  ⁽¹¹⁾ Financial Markets – Monthly and YTD returns (Table): Asset class performance is in USD and refers to the following indices: Equities: US Large Caps (S&P 500), Emerging Markets (MSCI EM), Europe (MSCI Europe), Japan (MSCI Japan). Fixed Income: 10-Yr. US Treasuries (BofAML US Treasury Current 10-Yr.), Emerging Markets Sovereign (USD) (JPM EMBI Global), US High Yield (BofAML US HY Master II), US Investment Grade (BarCap US Aggregate Bond), and Developed Markets Sovereign (excl. US) (JPM GBI Global Ex US). Source: Morningstar.

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