Global markets rallied on July 21–22, 2025, buoyed by a combination of Japanese political steadiness, dovish signals from the U.S. Federal Reserve, corporate leadership shifts, and improving trade relations. These factors collectively boosted investor sentiment and supported gains across currencies, equities, and commodity sectors.
On July 21, the Japanese yen strengthened by roughly 1% against the dollar, climbing to around ¥147–148 per dollar. The pullback from weaker levels was triggered after Prime Minister Shigeru Ishiba announced he would remain in office despite his ruling coalition losing its majority in the upper house elections. This clarification reduced investor uncertainty that had swelled during the campaign, as the Liberal Democratic–Komeito alliance lost its grip in the upper chamber for the first time since 1955.
By vowing to stay on, Ishiba projected a message of continuity at a pivotal moment, particularly as global trade negotiations and fiscal policy discussions loom. While the yen later eased somewhat, markets welcomed the resumption of political stability, helping prompt a temporary slide in 10‑year Japanese government bond yields after a brief sell-off.
As a result, Asian markets responded positively. India’s rupee opened marginally stronger, supported by the dollar’s weakness following the yen rally. Elsewhere in the region, the MSCI Asia‑Pacific index (excluding Japan) traded near a four‑year high amid the risk‑on tone.
Concurrent with Japan’s volatility easing, U.S. Treasury yields fell after Federal Reserve Governor Christopher Waller reinforced market bets on upcoming rate cuts. Speaking in early July and again on July 21, Waller suggested the Fed should cut its policy rate as soon as the July meeting, pointing to slowing labor indicators and transitory inflation from tariffs.
Markets responded accordingly. The 10‑year U.S. Treasury yield dropped to approximately 4.32–4.38%, and Treasury futures priced in about a 58% probability of a rate cut by September. These moves buoyed broader sentiment, fueling optimism around easing monetary conditions even as other Fed members remained divided. Notably, Governor Michelle Bowman leaned toward cuts if inflation stayed under control.
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In corporate news, BP named Albert Manifold as its new chairman, signaling a strategic pivot amid the energy giant’s evolving transition plans. Manifold, who co-led financing for BP’s North Sea assets and served as CEO of Drax, is expected to help steer the company through its low-carbon pivot. His appointment was widely interpreted as an effort to reinforce investor confidence and stabilize governance during a period of industry transformation.
BP shares experienced a mild increase following the announcement, with analysts noting that his track record in navigating energy and sustainability strategies aligns with BP’s long‑term goals.
Trade data showed a dramatic rebound in China’s rare-earth magnet exports to the U.S. in June, climbing 660% month-on-month to 353 metric tons, though still trailing year‑ago levels. This surge follows a partial easing of U.S. trade restrictions in a broader deal struck in mid‑June between Washington and Beijing.
China’s permission for exporters to resume shipments helped relieve global supply pressures, especially in industries like electric vehicles and wind energy. The surge, while substantial, was tempered by the fact that overall volumes remained around 38% below June 2024.
This development signals a thaw in Sino‑American trade relations and underscores China’s strategic dominance in critical minerals. Analysts will be watching whether exports continue rising in July as additional licensing approvals come through.
Taken together, these developments bolster a cautiously optimistic market narrative. The yen’s bounce eases dollar strength; Asian currencies, including the rupee, benefit. Price action in Treasuries now discounts rate cuts, with bond investors digesting Fed signals. Risk assets are supported by easing monetary and trade tensions, while major indices trend upward. The rare-earth recovery marks a thaw in geopolitics, and energy stocks are buoyed by leadership clarity at BP.
Despite these positive vibes, a few caveats remain. Japan faces election strain, with opposition parties and far-right groups gaining traction—which could challenge Ishiba’s agenda. U.S. Fed policy uncertainty persists, with Powell’s position under scrutiny and split views within the board. Trade negotiations, especially ahead of the August 1 tariff deadline, still hang in balance. The EU and Japan appear unlikely to secure full deals in time.
Markets appear to be responding positively to a trifecta of stability, stimulus cues, and trade truce. Japan’s steadier political outlook supports global currency and bond markets. Potential U.S. rate cuts are easing financial conditions and underpinning asset prices. Improved China‑U.S. trade dynamics, especially around rare‑earth exports, are reviving stricken supply chains and fostering investor confidence.
Taken together, these themes mark a subtle but meaningful shift toward a more optimistic global financial backdrop—so long as upcoming political decisions, trade outcomes, and central bank actions align with current expectations.
