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The latest from the Fed

Market Update

17.06.2025

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What happened last week?

Global

  • The World Bank cut its 2025 global growth outlook to an especially gloomy 2.3%, from a previously projected of 2.7%. The organisation lowered the forecasts for nearly 70% of economies, with growth outside of Asia slowing sharply. If the projections are right, this could end up being the slowest decade in 60 years – putting pressure on governments to reform, diversify trade, and shore up their budgets.

  • The US and China hit pause on its trade dispute this week, tentatively pledging to leave rates where they are for now (55% US, 10% China), and with China agreeing to resume rare earth exports. But most existing tariffs and sanctions – including tech export controls – are still in place. It’s no breakthrough – more of a breather – and nothing’s signed yet.

The US

  • Apple’s WWDC this week was all polish, no punch. The company unveiled a slick new “liquid glass” interface and some AI tweaks – like on-device generative Ai emojis (yep, Genmojis) and smarter notifications – but the much-hyped Siri overhaul was pushed to 2026, leaving investors unimpressed overall. Apple’s stock is now down about 20% this year, with markets growing impatient for signs the company is ready to lead – not just follow – in the AI era.

Europe

  • Blackstone unveiled plans to invest $500 billion in Europe over the next ten years, betting that economic reforms, falling interest rates, and more attractive valuations will spark a rally. Other private capital giants like Apollo and Thoma Bravo are making similar moves – suggesting big money is starting to migrate back into Europe after years of giving it the cold shoulder.

Gibraltar

  • The European Commission has removed Gibraltar from its list of high-risk jurisdictions

  • A new agreement was reached between the United Kingdom and the European Union on post-Brexit Gibraltar

Why It Matters

The World Bank cut its 2025 global growth outlook to an especially gloomy 2.3%, from a previously projected of 2.7%. The organization lowered the forecasts for nearly 70% of economies, with growth outside of Asia slowing sharply. If the projections are right, this could end up being the slowest decade in 60 years – putting pressure on governments to reform, diversify trade, and shore up their budgets.

The US and China hit pause on its trade dispute this week, tentatively pledging to leave rates where they are for now (55% US, 10% China), and with China agreeing to resume rare earth exports. But most existing tariffs and sanctions – including tech export controls – are still in place. It’s no breakthrough – more of a breather – and nothing’s signed yet.

Apple’s WWDC this week was all polish, no punch. The company unveiled a slick new “liquid glass” interface and some AI tweaks – like on-device generative Ai emojis (yep, Genmojis) and smarter notifications – but the much-hyped Siri overhaul was pushed to 2026, leaving investors unimpressed overall. 

Apple’s stock is now down about 20% this year, with markets growing impatient for signs the company is ready to lead – not just follow – in the AI era.

Blackstone unveiled plans to invest $500 billion in Europe over the next ten years, betting that economic reforms, falling interest rates, and more attractive valuations will spark a rally. Other private capital giants like Apollo and Thoma Bravo are making similar moves – suggesting big money is starting to migrate back into Europe after years of giving it the cold shoulder.

The European Commission has removed Gibraltar from its list of high-risk jurisdictions. Whilst it’s welcome news, the decision still needs go to via the European Parliament, where it was thought to be stalled last year by pressure for Spanish right-wing MEPs. The news was quickly overshadowed by the announcement of a post-brexit agreement between the United Kingdom and the European Union. The details remain to seen but it represents the end of years of uncertainty over the jurisdiction’s future outside of the EU.

The Focus This Week: The Latest From The Fed

Almost no one expects an interest rate cut when the Federal Reserve (Fed) meets this week, but that doesn’t mean it’s going to be a humdrum event. The central bank is set to deliver its updated economic forecasts and its popular “dot plot” projections – the best glimpse the market gets into how policymakers see inflation, growth, and borrowing rates moving over the next few years. Plus, with political pressures rising, investors can’t help but be curious: will the Fed stick to the data, or blink if things heat up?

The problem lately is, the data’s not giving clear answers. Headline inflation has been easing – CPI came in at 2.4% in May – but the “core” measure (which strips out energy and food prices) has been stuck way above target at 2.8%. And both figures could soon shoot higher: new US tariffs are set to hit consumer goods in July, and a massive $2.4 trillion tax cut could heat things up even more. And in the bigger picture, economic growth has been losing steam and is expected to slow from last year’s levels. The labor market has appeared solid on the surface, but the details suggest weakness. Still, this economy’s dodged a downturn more than once – and if political risks ease, sentiment could rebound fast.

That leaves the Fed stuck in a kind of glitch. Inflation and growth could swing in either direction. And that’s why the Fed’s been striking a cautious tone, staying data-dependent, and not promising much. Traders still expect one interest rate cut this year (probably in September). But a hotter economy could delay that and lift bond yields, while weaker data could pull the whole timeline forward and boost bonds, defensive stocks, and anything rate-sensitive.

Meanwhile, the Bank of England and the Bank of Japan will also make rate announcements this week, and both are expected to stand pat this time around. That said, they’re likely to highlight an interesting divergence: the UK’s central bank has been lowering its key rate, while Japan’s has been gently picking its rate off the floor – treading carefully to avoid knocking over the country’s fragile recovery. And these global gaps in interest rates matter: the disparities drive investment flow – and that shapes currencies, bond yields, and which markets get the love.

The Week Ahead

  • Monday: China industrial production (May), China retail sales (May)
  • Tuesday: Japan interest rate decision, US retail sales (May), Germany economic sentiment (June)
  • Wednesday: US interest rate decision, UK inflation (May)
  • Thursday: UK interest rate decision
  • Friday: Japan inflation (May), UK retail sales (May). Earnings: Accenture

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