Global and Philippine Market Update

July 10 to July 16, 2025

Global Markets 

Global Stocks rattled with President Trump’s threat to fire Powell.

• President Trump rattled Wall Street after revealing he had “talked about the concept of firing” Federal Reserve Chair Jerome Powell, which triggered volatility in U.S. markets before he later downplayed the possibility. The S&P 500 initially dropped about 0.7% before recovering to close up 0.3%; the Dow rose 231 points; and the Nasdaq added 0.3%, buoyed by continued strength in inflation data and sentiment. The pullback reflected investor concern that replacing Powell could threaten the Fed’s independence and compromise its ability to manage inflation, especially as some see this as a mechanism to push for faster interest rate cuts. Major financial stocks showed mixed performance following earnings, and bond markets fluctuated with the 10-year Treasury yield dipping near 4.45%. Markets in Asia and Europe responded modestly, with regional variances tied to trade developments and external sentiment.

• In June, U.S. consumer inflation rose to 2.7% year-over-year, marking the highest level since February and exceeding May’s 2.4% pace, with prices climbing 0.3% month-over-month, the largest monthly increase since January. Core inflation, which excludes volatile food and energy, climbed 2.9% YoY, reflecting broad price increases in sectors like apparel, appliances, and personal care. Analysts attributed much of this uptick to President Trump’s tariffs, which began filtering into consumer prices, though some companies have delayed passing costs. Despite this, discretionary items such as airfare and used-car prices fell. With inflation trending upward, the Federal Reserve is expected to hold rates steady at its upcoming July meeting, as it monitors the tariff impact, even amid political pressure to cut interest rates. The report underscored the complex interplay between trade policy and monetary strategy, noting that continued tariff-driven price pressures could limit the Fed’s ability to reduce rates soon.

Philippine Stocks

Philippine Stocks  declined as investor sentiment dampened US inflation.

• The PSEI declined to 6,337.48 on July 16, marking its lowest level in three weeks, as investor sentiment soured following a hotter-than-expected U.S. inflation report. The broader all shares index also declined by 1.55% to 3,748.25, with all sectoral indices ending in the red with mining and oil leading the losses. U.S. consumer prices rose 0.3% in June, the largest monthly gain since January, driven by higher rental and goods costs, raising concerns that the Federal Reserve may delay further rate cuts. This uncertainty prompted profit-taking among investors and intensified net foreign selling, which surged to P3.47 billion.

• The World Bank’s newly released Country Growth and Jobs Report for the Philippines projects that comprehensive reforms in job creation, productivity, capital markets, and labor force participation could boost the country’s annual GDP growth to 6.8% by 2040, create over 5.1 million jobs, and raise real wages by 12.9%. These reforms—spanning infrastructure investment, inter-island transport liberalization, SME support, and improved local government service delivery—are seen as essential for achieving the national goal of becoming a middle-class society free of poverty. The report also highlights the need to address weak productivity growth and job quality, and notes that while AI poses displacement risks, it also presents opportunities for innovation and foreign investment if the Philippines strengthens its labor market institutions and upskills its workforce.

Philippine Bonds

Philippine Bond yields declined on US tariff jitters.

• Investor demand for safer assets amid inflation risks linked to global tariff tensions drove down the average yield of 10-year Philippine Treasury bonds to 6.285 percent in the July 15 auction, a 14.3-basis-point drop from the previous auction. The auction was 2.5 times oversubscribed, with tenders reaching ₱63.546 billion, reflecting strong appetite for long-term government securities. Economists cited rate cut expectations and global factors as key drivers of demand. Inflation rose slightly to 1.4 percent in June, bringing the year-to-date average to 1.8 percent, while the BSP signaled potential for two more rate cuts this year.

• President Marcos has approved a record Php 793 trillion national budget for 2026, representing a 7.4% increase from the previous year and equivalent to 22% of the country’s GDP. The proposed budget, which will be submitted to Congress later this month, prioritizes education, defense, agriculture, and inclusive economic growth. The Department of Budget and Management (DBM) trimmed initial agency proposals totaling ₱10.101 trillion due to limited fiscal space and a fiscal consolidation strategy. Key allocations include P2.639 trillion for maintenance and operating expenses, P1.908 trillion for personnel services, and P1.296 trillion for capital outlays. National government agencies will receive 63.4% of the budget, while local government units and government-owned corporations will get 20% and P188.3 billion, respectively. The DBM emphasized alignment with the Philippine Development Plan, absorptive capacity, and sustainability in evaluating proposals, while economic managers aim to reduce the fiscal deficit to 4.3% of GDP by 2028.

WD Guidance: Uncertainty leads to downside risks, but diversification and a long-term investment horizon still provide the best chance for financial success.

Sources:(1) https://www.bworldonline.com/top-stories/2025/07/16/685458/world-bank-says-job-reforms-to-drive-phl-growth-to-nearly-7/ (2) https://businessmirror.com.ph/2025/07/15/t-bond-yields-fall-on-safe-assets-lure/ (3) https://apnews.com/article/stocks-markets-rates-bonds-nvidia-916c6569c6e486c82ca82acfc49fe552 (4) https://www.bworldonline.com/stock-market/2025/07/17/685654/psei-slides-to-6300-level-after-us-inflation-report/  (5) https://www.bworldonline.com/top-stories/2025/07/16/685456/marcos-greenlights-record-p6-8-t-2026-budget/ (6) https://www.pbs.org/newshour/amp/economy/u-s-inflation-accelerated-last-month-to-2-7-highest-level-since-february

Disclaimer: The purpose of this article is to inform and should not be taken as an advice or offer to purchase securities. Seek professional advice before making a decision based on this presentation. Information given does not represent the views of FWD and its agents and employees.