July marked another month of strong performances, with a rise of 3,95% for the global equity index. US equities made a solid comeback, delivering gains of more than 5% in euro terms, while the European indices rose by less than 1%.
On the interest rate front, movements were volatile, with the US 10-year rate rising from 4,23% at the beginning of the month to over 4,48%, before ending the month at 4,37%. Similarly, in Germany, the 10-year yield rose from 2,60% to 2,70%, although movements were more controlled.
At the global level, equities continue to hover near historic highs, posting record valuations. Once again, it is the artificial intelligence theme that is driving markets to these highs. For now, these movements remain supported by strong fundamentals.
That said, economic indicators are beginning to send early warning signs. While inflation remains below 3%, it is starting to rise again in the categories of goods affected by tariffs.
Moreover, some economic figures are starting to show signs of weakness, particularly in consumer spending and employment.
For example, in the US, real consumption levels in mid-2025 are the same as they were in December 2024, indicating that there has been no growth in this area so far this year.
In terms of employment, we are also seeing job creation stagnate, despite a persistently stable unemployment rate.
Many investors have bet on the resilience of the US economy despite the tariffs, largely because these have not yet had a noticeable impact on the economic data. However, this gamble is becoming increasingly risky as stock market indices reach new highs and the first signs of a slowing economy begin to emerge.
On the European front, the signing of a trade agreement with the US was received rather negatively. Indeed, a 15% tariff rate will now be applied to European exports to the United States, impacting—though only marginally— projected growth in Europe. Nonetheless, the European continent continues to ride a wave of optimism, driven by anticipated government spending plans combined with a stable inflation environment.
In this environment, it is advisable to adopt an underweight position in equities (particularly US equities given the heightened risk of a correction), and to favour European and emerging market equities, which appear more attractive. From a sector perspective, the preference for European Communication Services and Basic Materials remains unchanged.
In the bond segment, the expected rate cuts in the US should be moderate as inflation is likely to rise again. This calls for favouring a shorter duration on US bonds. In Europe, with the European Central Bank nearing the end of its rate-cutting cycle, a market-neutral duration appears appropriate. As for corporate debt, despite narrow spreads, yields remain attractive in the investment-grade segment.
The recommendations contained in this document are, unless otherwise expressly stated, those of Spuerkeess Asset Management and are produced by Carlo Stronck, Managing Director & Conducting Officer, Aykut Efe, Economist & Strategist, Amina Touaibia, Portfolio Manager and Martin Gallienne, Portfolio Manager, acting under an employment contract with Spuerkeess Asset Management.
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