Weekly Macro Minute

GuideStone Reflections

“My sheep hear my voice, I know them, and they follow me. I give them eternal life, and they will never perish. No one will snatch them out of my hand.”
John 10:27-28 (CSB)

With a cursory glance at this passage, we might think it reads, “My sheep hear my voice, they know me, and they follow me.” In our Christian circles, our language tends to center on the importance of our knowing God. We frequently refer to our salvation experience as “coming to know Jesus.”

But it’s also essential to see that Scripture primarily phrases salvation as God knowing us (see 1 Corinthians 8:3 and Galatians 4:9). Jesus even tells us that when he rightfully judges all of humanity, the key to our eternal disposition is not whether we knew him, but whether he knew us (Matthew 7:22-23).

Of course, God, being omniscient, knows everybody. He knows people better than they know themselves. While we have blind spots and misconceptions about ourselves, he sees through it all. But when the New Testament refers to someone being known by God, there is something unique and privileged about it: the concept of belonging to him. This means two things.

First, God knows and regards us for who we are in Christ. We may think God knows us with all our faults and foibles and chooses to love us despite them. But we are in Christ, and just as he knows and loves his Son, he extends that same affection to us. He’s not overlooking our faults so much as he looks at us through his Son.

Second, those whom God knows can never be taken from him. Nothing Satan attempts can pull us out of God’s hands, nor can we do it ourselves. God keeps close to the ones he knows.

God’s knowledge of us matters more than our knowledge of him. We can be thankful that we know him. We can be even more grateful that he knows us.

Across the Markets

U.S. equity indices were mixed in this week’s trading, with the market continuing its notable rotation out of large-cap technology, growth, and momentum and into value, cyclicals, and small caps. The S&P 500^®, down -1.9%, saw its worst week since mid-April. However, the equal-weight version, down -0.1%, held up better as market returns broadened. The information technology sector, down over 5%, was the worst-performing GICS sector for the week. At the same time, the small-cap Russell 2000 Index recorded its fourth gain in the last five weeks. A big five-day rally through Tuesday saw that Index rise 11.5% before pulling back at the end of the week.

Earnings expectations were revised higher in the second week of the 2Q earnings season. Based on initial results and forecasts, analysts on Friday were expecting S&P 500^® companies to post an average second-quarter earnings increase of 9.7% for the quarter versus 9.1% a week ago.

The yield on the benchmark 10-year U.S. Treasury note ended the week at 4.24%, up six basis points week-over-week. The curve remains inverted by 26 basis points, with the 2-year yield at 4.50%, but it moved towards normalization over the last week.

In other major U.S. news, President Biden announced Sunday afternoon his intention to no longer seek reelection. This, less than four months before Election Day and mere weeks before the Democratic National Convention, injects further uncertainty into an election that was already teeing up markets for additional volatility.

The European Central Bank (ECB) kept its key interest rate unchanged after ordering an initial rate cut at a meeting last month. Officials said they would not pre-commit to any rate path and emphasized that economic data would guide its decisions. ECB President Christine Lagarde said a move in September was “wide open,” adding that risks to economic growth were “tilted to the downside” and that inflation would fluctuate at current levels for the rest of the year before declining in the second half of 2025.

China’s gross domestic product expanded at a below-consensus 4.7% rate for 2Q year-over-year. Quarter over quarter, the economy grew at a 0.7% rate, less than half of the first quarter’s revised 1.5% expansion. However, Chinese equities rose as investor sentiment was largely unaffected by weaker-than-expected economic growth.

In the Economy

Economic data prints generally surprised to the upside this week. U.S. retail sales were flat month over month, beating economists’ consensus forecast, who had expected a sales decline of around -0.2%. Building permits rose 3.4% in June, also more than expected, ending three consecutive monthly declines, and industrial production increased 0.6% in June, doubling estimates.

The Labor Department’s weekly jobless claims report was an outlier, with the number of Americans filing for unemployment increasing to 243,000 versus a consensus expectation of 230,000. Continuing claims also increased to the highest level since November 2021.