Stock Rally Pauses, But Investors Scoop up Treasuries, Gold Bars, Volatility Insurance: July 22, 2025

Stocks are taking a break from their recent rally as fading momentum in technology weighs on the major benchmarks. But breadth is strongly positive during a quiet day for economic data releases in the US as every other major sector is advancing on the session. The bifurcation illustrates how significant the performance of the magnificent 7 is for the overall equity market, as their relentless climb has been accompanied by a greater share of index representation. That overreliance is contributing to Wall Street tilting towards a defensive posture today, as participants scoop up Treasuries across the complex with a long-end bias while the yield curve descends in bull flattening fashion. Volatility protection instruments and gold bars are also seeing strong interest today, which is typical for when traders are worried about potential turbulence. The silver and copper metals, bitcoins and forecast contracts are also catching bids, but conversely, natural gas, crude oil and lumber are facing selling pressure. Lighter borrowing costs, meanwhile, are leading to a weaker greenback. On the trade front, Treasury Secretary Bessent announced a meeting with Beijing representatives next week for another set of negotiations while additionally signaling more accords coming up prior to next Friday’s August 1 deadline.

Deregulation To Broaden Out Rally

This year’s equity rally has been driven heavily by the robust performances from the technology and communication services. But efforts to loosen regulations on financial institutions can spark momentum in that sector as well. While less red tape is poised to improve profitability at banks, the lending and capital expenditure implications of reducing regulations are also quite stimulative to the economy because additional funds are opened up for consumption, investment and fixed income purchasing. Indeed, moves in Washington enabling primary dealers to hold more government debt is part of the reason we’re seeing a relaxation in duration, as speculation spreads that there will be strong and sustainable bids at the long end for years to come. Softening interest rates at the culmination of the maturity structure offer tremendous benefits for consumers, businesses and the public sector alike and are set to augment the current economic cycle.

International Roundup

In a Reversal, South Korea Gate Prices Climb

Higher costs of farm goods pushed the South Korea Producer Price Index up 0.1% month over month (m/m) and 0.5% year over year (y/y) last month.

The m/m result was a reversal from April and May, when the metric declined 0.2% and 0.4%. Relative to the year-ago period, inflation accelerated from May’s 0.3% increase. Relative to May, the agricultural, livestock and fishery products category became 0.6% more costly m/m after a price descent of 4.4% in May. Within this group, marine foods declined but livestock and agricultural foods were up 2.4% and 1.5%, respectively. The services category also contributed to the higher headline number with a gain of 0.3%. Its positive momentum was driven by the financial and insurance activities group jumping 2.5%.

Euro Area Demand for Financing Improves

Banks reported an increase in demand for loans, but overall financing volumes remained weak during the second quarter, according to the European Central Bank lending survey. Demand growth was the strongest for housing loans, but requests for business financing limped along. Bank’s also reported improvements in funding from retail sources, money markets and debt securities. During the quarter, financial institutions reported tightening loan requirements for home financing and consumer debt but made no changes to credit standards for businesses.

RBA Inflation Doves Concerned About Job Market

Members of the Royal Bank of Australia (RBA) who voted two weeks ago in favor of maintaining the central banks current interest rate argued that inflation is easing and is likely to reach the organization’s target, according to meeting minutes released today. Those who stumped for a rate cut, however, expressed concern that the country’s job market could weaken and that the impact of US tariffs is highly uncertain. Australia’s unemployment rate last month climbed to 4.3% from 4.1% in May. Members voted six to three at the July 9 meeting to maintain the current 3.85% target interest rate. Following the release of the minutes, RBA Governor Michele Bullock said policymakers are in agreement regarding the need to lower rates, but they have different views regarding the timing of easing the organizations monetary policy.