The latest GDP data shows strong growth and falling prices for imported goods. The Federal Reserve is closely monitoring the data and maintaining its independence while evaluating monetary policy. Tariff revenue plays a vital role in reducing the deficit. There is hope that India will open its markets, as a deal with India could greatly change the global economy. Agreements with the EU and Japan are expected to increase capital spending, supporting a 4% growth forecast for Q3.

Trade Matters with China

President Trump will receive an update on trade matters with China, with possible adjustments expected before any agreement is final. The situation looks promising for U.S.-China trade relations. Today’s GDP figures exceeded expectations, buoyed by strong employment data from ADP. This positive economic backdrop comes just before the Federal Open Market Committee’s decision, which is likely to keep interest rates steady. On this day, July 30, 2025, we look back to earlier predictions of 4% growth. Currently, the economy has expanded at a 2.1% annual rate in the second quarter, indicating that recent rate hikes have begun to cool things down. The previous belief that the Fed needed to catch up has materialized, with the target rate now at 4.75%. With inflation around 3% as of June, the market is split between anticipating one more rate hike or possible cuts later this year. This uncertainty may create opportunities in SOFR futures, where traders can speculate on the timing of the Fed’s next significant policy change.

Deal with India

The “game-changing” deal with India we once expected hasn’t fully materialized. Instead, we’ve experienced steady, though not transformative, growth in bilateral trade, which has topped $190 billion annually in recent years. Traders should now focus on smaller, sector-specific trade news instead of waiting for one major event. Options on the Nifty 50 or the rupee can be utilized to trade the resulting volatility. The anticipated boom in capital spending from EU and Japan deals has been less than expected. Although new orders for nondefense capital goods rose by 0.3% last month, businesses are still cautious due to high borrowing costs. Therefore, trading strategies in the industrial or capital goods sectors may work better as range-bound plays, like iron condors, rather than outright bullish strategies. Concerns about falling import prices seem outdated, especially after the inflation surge of 2022-2023. Today, the stronger U.S. dollar is the main story, with the Dollar Index (DXY) steady around 105 due to higher interest rates. This currency strength is a challenge for S&P 500 companies with significant international sales, making bearish options strategies on those stocks potentially profitable. Create your live VT Markets account and start trading now.

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