Macro conditions show competing inflationary pressures (M2 +5.58% YoY, CPI +3.46% YoY) against weak demand signals (4.2% unemployment, manufacturing softness), with geopolitical fragmentation and fiscal pressure creating duration risk.
Macro & Markets ·
M2 money supply reached $23.05T in May with year-over-year growth of 5.58%, while June unemployment held at 4.2% and inflation measured 3.46% annually despite a 0.42% monthly decline. Geopolitical tensions centered on US-Iran friction and Houthi disruptions to Red Sea shipping are creating fresh inflationary pressures on energy, insurance, and freight costs, complicating the disinflationary narrative as central banks seek confirmation that price increases are under control. Major technology firms are simultaneously committing unprecedented capital expenditure levels, driving up debt issuance and long-end borrowing costs, while new US tariffs on trading partners add further complexity to the global trading system. The S&P 500 fell 0.61% between July 17 and July 24, as markets navigate competing pressures between structural cost inflation and weak underlying demand signals including manufacturing softness.