Global and Philippine Market Update

June 19 to June 25, 2025

Global Markets

Global Stocks edged higher as President Trump pressures Iran and Israel towards a ceasefire.

• Markets responded positively to the ceasefire brokered by President Trump, with investor sentiment remaining upbeat as he continued to urge Israel to uphold the agreement. Adding to the optimism, Federal Reserve Chair Jerome Powell signaled that interest rate cuts could be on the horizon if inflation remains contained. While Powell stopped short of offering a specific timeline, his remarks reinforced confidence in potential monetary easing. The Nasdaq 100 reached a new record high, and the S&P 500 edged closer to its all-time peak. Overall, markets are demonstrating resilience and confidence amid ongoing geopolitical tensions and evolving monetary policy expectations.
  
  
• Federal Reserve (Fed) Governor Michelle Bowman expressed support for a potential interest rate cut at the July meeting, provided inflation remains subdued. She noted that President Trump’s tariffs are likely to have a delayed and limited impact on prices. Bowman emphasized the importance of aligning the policy rate with a neutral stance to support the labor market. Her comments echo those of Governor Christopher Waller, who also sees room for a rate cut. Despite Trump’s push for a two-point reduction, neither Bowman nor Waller endorsed such a drastic move. Market expectations currently favor a rate cut in September rather than July.
  
  
• Fed Chair Jerome Powell faced relatively smooth hearings on Capitol Hill but now confronts a bigger challenge as President Trump considers replacing him. Trump harshly criticized Powell during a NATO summit and suggested he may soon name a successor. Speculation about a “shadow chair” has stirred market volatility, with increased bets on rate cuts and falling Treasury yields. Trump mentioned having a shortlist of candidates, including Scott Bessent, Kevin Hassett, Kevin Warsh, and Christopher Waller, though no decision has been announced. The move could politicize the Fed and undermine its independence, especially with Powell’s term as chair ending in 2026. Despite the political tension, Fed officials insist that monetary policy decisions remain data-driven and unaffected by partisan pressures.

Philippine Stocks

Philippine Stocks  held steady as the government revises its 2025 growth target.

• The Philippine economy likely grew by 5.6% in Q2 2025, slightly up from 5.4% in Q1, supported by low inflation, job creation, and increased infrastructure spending, according to the University of Asia and the Pacific (UA&P). Inflation dropped to a five-year low of 1.3% in May, averaging 1.9% for the first five months, below the BSP’s 2–4% target. Despite a slight rise in unemployment, consumer spending likely improved, aided by government infrastructure projects. UA&P expects the Bangko Sentral ng Pilipinas (BSP) to cut rates again in Q3, following a recent 25-basis-point cut to 5.25%. However, diverging rate paths between the BSP and the U.S. Federal Reserve could weaken the peso and trigger capital outflows. Analysts warn that rising oil prices from Middle East tensions could pose further risks to inflation and economic stability.
  
  
• The Philippine government has lowered its 2025 GDP growth target to 5.5–6.5% from 6–8% due to global uncertainties, including Middle East tensions and new U.S. tariffs. The Development Budget Coordination Committee (DBCC) also revised its 2026–2028 growth forecast to 6–7%, reflecting a more cautious outlook. Inflation is expected to remain manageable, with the 2025 forecast narrowed to 2–3%, while oil prices are projected to average $60–$70 per barrel amid easing global demand. Trade projections were downgraded, with exports expected to contract in 2025 and imports to grow slowly due to weaker global demand and tariff impacts. The budget deficit is now projected to widen, reaching 5.5% of GDP in 2025 and remaining elevated through 2028. Despite these challenges, the government plans to increase the 2026 national budget to ₱6.793 trillion, prioritizing education, healthcare, and workforce development.

Philippine Bonds

Philippine Bond yields remained elevated amid uncertainty.

• The Bangko Sentral ng Pilipinas (BSP) signaled the possibility of at least one more rate cut this year to support economic growth amid global uncertainties. BSP Governor Eli Remolona cited moderating inflation and external risks, including U.S. tariffs and Middle East tensions, as key factors influencing the outlook. Inflation dropped to a five-year low in May, prompting the BSP to lower its 2025 forecast, though risks from oil prices and utility adjustments remain. The peso weakened further, raising concerns about inflationary pressures from currency depreciation. Despite diverging from the U.S. Federal Reserve’s policy path, the BSP emphasized its commitment to inflation targeting. Analysts expect further easing later this year, depending on economic data and global developments.
  
  
• The Philippine government is considering reducing fuel excise taxes to help temper inflation amid rising oil prices driven by Middle East tensions. Economists argue that cutting taxes is a more prudent and equitable approach than subsidies, as it avoids burdening public finances while easing consumer costs. Although oil prices have recently dropped, upcoming fuel price hikes are expected due to geopolitical instability. The Department of Transportation is preparing to release ₱2.5 billion in fuel subsidies for public utility vehicle drivers, pending certain conditions. Energy officials clarified that there is currently no threat to the country’s fuel supply, and any disruptions can be offset by other oil-producing nations. Meanwhile, the Department of Energy is exploring alternative supply sources and emphasized that government intervention in fuel pricing would require emergency powers.

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.

Sources:(1) https://www.cnbc.com/2025/06/23/fed-governor-bowman-favors-july-interest-rate-cut-if-inflation-stays-low.html (2) https://www.businessinsider.com/stock-market-today-israel-iran-cease-fire-sp500-oil-prices-2025-6 (3) https://www.cnbc.com/2025/06/26/trumps-war-against-the-powell-fed-has-taken-another-political-turn.html (4) https://www.bworldonline.com/top-stories/2025/06/27/681727/philippines-tempers-growth-goals/ (5) https://www.bworldonline.com/top-stories/2025/06/25/681169/gdp-likely-picked-up-in-2nd-quarter/ (6) https://www.bworldonline.com/top-stories/2025/06/20/680318/bsp-delivers-2nd-straight-rate-cut/ (7) https://www.philstar.com/headlines/2025/06/25/2453100/government-may-reduce-fuel-excise-tax-temper-inflation

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.

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