Favorite Fifteen – July 2025

By Vigilant Wealth Management on July 28, 2025

The Investment Policy Committee has finalized this month’s Favorite Fifteen chart pack. Below, you will find the link to the slides for July 2025.

Here are a few important observations:

Global Economic Activity: (Chart #2) Global activity remains resilient, with both the manufacturing and services sectors expanding in June. (Chart #1) Economic data has been exceeding expectations across both Developed and Emerging Markets, signaling stronger-than-anticipated momentum.

U.S. Growth: (Chart #3) The Weekly Economic Index indicates steady U.S. GDP growth at approximately 2.4%. (Chart #4) The GDP NowCast supports this view, projecting a rebound from Q1’s contraction as import levels normalize.

Consumer Spending: (Chart #6) Spending accelerated in June and remains a key support for growth. (Chart #7) Consumer confidence rebounded modestly but remains subdued despite solid spending behavior, highlighting a disconnect between sentiment and activity.

Inflation: (Chart #6) CPI remained elevated in June but did not spike, suggesting that the early effects of new tariffs have been more muted than initially feared.

Bond Market: (Chart #10 & #11) The yield curve remains largely unchanged from last month. The Federal Reserve continues to hold the federal funds rate at 4.5%, citing ongoing policy uncertainty and inflation risks associated with potential tariff implementation. At the long end of the curve (10–30 years), yields remain elevated due to growing concerns over the federal deficit. Meanwhile, the short end (1–3 years) is under pressure from mounting near-term growth concerns. Bond spreads have narrowed from the highs reached after the initial tariff announcements, reflecting increased investor confidence that the final tariff measures will be less severe than originally anticipated, easing fears of a significant hit to corporate profitability.

Corporate Profits: (Chart #13) Earnings expectations have stabilized following the downward revisions in May caused by policy uncertainty and a weakening growth outlook. Consensus estimates project 9% year-over-year profit growth for the S&P 500 in 2025, strong, but below the 15% forecast from January.

Stock Market: (Chart #12 & #14) The stock market accelerated to all-time highs as investors have looked past lingering uncertainty. The forward P/E ratio has jumped back to recent highs as well, breaking through 22x forward earnings expectations, well above the 20-year average of 16x. This suggests the market has priced in a notably optimistic outlook.

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