Key Takeaways
- Stocks approach record highs
- U.S. jobless claims dip
- “Revenge tax” dropped from U.S. bill
On the latest edition of Market Week in Review, Global Chief Investment Strategist Paul Eitelman explored key drivers behind the strong performance in markets. He also provided an update on a proposed U.S. tax measure.
Strength in Numbers
Eitelman started by noting financial markets have had an outstanding week, with both U.S. and global stocks up about 3%. On Thursday, the S&P 500 closed just shy of an all-time high, while the MSCI All-Country World Index—which tracks global stocks—logged a new record high.
He said the positive performance wasn’t limited to just stocks. “On the fixed income side, government bond yields declined notably, with the 10-year U.S. Treasury yield falling by 0.13%,” Eitelman noted.
Comments from U.S. Federal Reserve (Fed) officials helped power markets higher, he said. Earlier in the week, two Fed governors suggested they’re open to a rate cut as soon as July, catching investors by surprise. While Jerome Powell’s remarks to Congress later in the week were more measured—with the Fed chair saying he wants to see two more good inflation reports first—the overall message from central bank leaders was that they’re leaning toward future rate cuts.
“Our baseline expectation is for the Fed to lower rates in September,” Eitelman stated.
Slow But Steady
He said another factor lifting markets this week was more evidence of resilience in the U.S. labor market. In an encouraging sign, initial jobless claims declined for the first time in a few weeks. In addition, the layoff rate in the corporate sector remained relatively unchanged.
“Both of these numbers are great news for consumers, who are the bedrock of the U.S. economy,” Eitelman noted. Overall, he expects the U.S. to grow at a slower, but still-positive pace over the next 12 months.
Tax Axed
Eitelman finished with a look at the latest developments in U.S. policy. He said the “One Big Beautiful Bill” is still working its way through Congress, with President Donald Trump hoping to sign the legislation early next month.
One part of the bill that’s received plenty of attention is Section 899, also known as the “revenge tax” because it would raise withholding taxes on some foreign investors. On Thursday, Treasury Secretary Scott Bessent asked Congressional leaders to remove this provision from the bill following discussions with global peers.
“Global investors are likely to breathe a sigh of relief at this development,” Eitelman said, noting the proposed rule had unnerved some investors outside of the United States.