04.08.25 - Macro data - first signs of tariff impact?

A batch of US macro data released on Friday came in weaker than expected:

• Labor market: Job data missed forecasts, and previously published figures were revised downward.

• Consumer sentiment: Confidence levels deteriorated.

• Inflation expectations: Both short- and medium-term outlooks surprised to the downside.

Markets: US markets with strong rebound after equity indices slumped on Friday

• Nasdaq Index +1.7%

• S&P 500 Index +1.3%

• US yields sideways (10-year Treasury at 4.2%

• Gold +0.4%

• US dollar weaker

My View: After Friday’s dip, markets have once again shrugged off negative news, starting the new week with a rebound — a now familiar pattern of buying into weakness.

While the data is backward-looking, it could mark the first meaningful signs of the economic drag from the newly imposed tariffs, even flashing some warning signs.
The employment report released Friday painted a much weaker picture of the labor market than previously reported. Inflation-adjusted consumer spending, which accounts for nearly two-thirds of US economic activity, declined in the first half of the year. While the Fed’s preferred inflation gauge rose again in June and came in higher than expected.
This data mix signals a potential loss of economic momentum.

So far, the market continues to discount these risks. But that complacency may not last if the weakness broadens. The notion of a resilient labor market is increasingly being challenged — and with consumers starting to pull back, the foundations of recent economic optimism are looking less solid.

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