Podcast
Trump vs. Powell
Will Simpson and Greg Wise
July 25, 2025
The standoff between President Trump and Fed Chair Powell is reshaping market expectations for interest rates, inflation and the US dollar.
Markets marched higher again this week, with Japan stealing the spotlight, posting a 4.7% gain in CAD terms and leading global equity returns. The S&P 500 was up 1.5%, the Dow added 1.2%, and the Nasdaq climbed 1.0%. Canada underperformed a bit, with the TSX eking out a 0.7% gain.
A surprise trade deal with the U.S. and Japan gave the market a boost, marking the first agreement struck with a top five trading partner under this administration. Despite shaky negotiations and political pressure at home, Japan secured a 15% auto tariff (lower than the 25% others face) in exchange for a massive pledge of foreign direct investment.
A big data week ahead as attention shifts back to central banks. Both the Fed and Bank of Canada meet Wednesday, but no rate moves are expected. The bigger story will be in the messaging, especially from Powell, with markets leaning toward another cut in September. In Canada, the bar for more easing is higher, but weaker GDP and rising trade risks could tilt things in a dovish direction.
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