Market Returns – June 2025

S&P 500: +5.0% 

S&P 500 Equal-Weight: +3.2% 

Dow Jones:  +4.3% 

Nasdaq: +6.4% 

MSCI EAFE: + 2.2% 

MSCI Emerging Markets: +6.0% 

Bonds (US Aggregate): +1.5% 

 Economic & Policy Highlights 

Interest Rates & Fed Outlook 

• The Federal Reserve continues to hold rates steady at 4.25 – 4.50% 
• The Fed’s dot-plot projects about two rate cuts by year-end, in part due to rising unemployment expectations and, concerns of stagflation. 
• US Treasury yields fell across the curve and credit spreads slightly tightened 
• The Trump Administration continued to call for lower rates and maintained its threat of an early replacement of Fed Chair Powell  

Trade & Tariffs 

• President Trump’s tariffs, both blanket tariffs and sector-specific duties have begun influencing inflation especially in consumer goods, raising costs. 
• Should the US Dollar continue to depreciate, US consumers could face larger pass-through effects from tariffs on prices 
• The administration collected $64 billion in Q2 tariffs, though still below projections 
• Global manufacturers continue to adjust their supply chains and manufacturing plants to minimize tariff impacts 

Employment & Growth 

• Labor markets remained tight but showed some signs of cooling. The U.S. added 140,000 jobs, below trend but still solid. 
• Unemployment edged down to 4.1% in June (from 4.2%)  
• First-quarter US GDP was revised down, showing a small contraction driven by a surge in imports trying to beat the tariffs and a reduction in government spending 
• Global growth was stable, with the eurozone avoiding a technical recession and China showing signs of bottoming out after significant stimulus efforts. 

Consumer spending & sentiment 

• Retail sales rebounded with a 0.6% gain, bouncing back from May’s 0.9% drop; spending was broad-based, excluding autos  
• Consumer sentiment ticked up for the first time in six months, according to the University of Michigan survey.  

Geopolitical Volatility & Energy 

• On June 22, the US launched operation “Midnight Hammer” attacking three Iranian nuclear facilities. 
• The attack spiked oil prices ~7–13%, creating volatility in global markets 
• Iran did not respond immediately which led to oil later pulling back below $70, these events underscore market sensitivity to geopolitical risk. 
• The Houthis quietly continued to threaten commercial shipping in the Red Sea and Gulf of Aden, with a combination of missiles and drones  

Summary Impact 

• Market gains in June reflected a ‘risk-on’ mood driven by tech leadership, perceived easing of tariff pressures and a healthy dose of FOMO. 
• Q2 earnings season kicks off in mid-July, with investor attention on profit margins, forward guidance, and AI-related capital expenditures 
• Given where valuations currently stand, any disappointment will be met with swift downside pressure 
• Markets remain fixated on finding clues to potential changes in central bank policy, especially from the Fed and ECB. 
• Other geopolitical tensions remain; markets are overly complacent with the on-going Ukraine-Russia battle combined with risk related to Taiwan in the South China Sea 

Commentary: 

Markets rebounded in June 2025, with major indices posting gains amid anticipated easing of inflation pressures and renewed optimism around central bank policy. Given valuations and the moves already discounted in the market, we would not be surprised to see a return of market turbulence. It is for this reason that we continue to exercise caution with elevated cash levels and exposure to gold.  

While a rebound rally in the US Dollar is always possible short-term, we see continued weakness medium term as US fiscal imbalances, tariff angst and global liquidity combine to further pressure the dollar. Positions in international equities should benefit from this two-pronged advantage of a weaker dollar and more attractively valued companies. 

Economic data paints a mixed picture, with tariffs fueling price inflation and, GDP showing some signs of strain.  Offsetting this is a nervous but resilient consumer faced with a labor market showing some early small cracks.  Valuations are suggesting that the global economy will execute a soft-landing scenario and avoid recession.  This outcome will require many things to go right and much of it is already likely discounted at today’s prices. 

Markets eventually provide opportunities to deploy capital and increase allocations to risk assets at better prices. We remain vigilant and disciplined in our approach, preparing to act tactically when the risk/return proposition is more in our favor.