Monthly Market & Economics Summary – June 2025

Market Returns (May – June 2025)

– S&P 500: +1.66% price return in June; +6.15% in May
– Dow Jones: (–0.75%) for June; +3.93% in May
– Nasdaq: +2.13%% in June; 9.55% in May
– S&P 500 Equal‑Weight (RSP): +.3% in June; +4.15% in May

Economic & Policy Highlights

Interest Rates & Fed Outlook

– Fed held rates steady at 4.25–4.50% on June 18
– Markets now see only 1–2 rate cuts by year-end
– Fed Chair Powell emphasized caution amid trade and geopolitical risks

Trade & Tariffs

– Elevated tariffs remain in place, implementation delays continue
– U.S.-bound Japanese auto exports dropped over 11% in May

Employment & Growth

– May non-farm payrolls showed slowed hiring
– Unemployment: ~4.2%, projected 4.3–4.7% by year-end
– Retail sales down –0.9% in May
– GDP outlook revised down to ~1.3% for 2025

Middle East Conflict & Energy

– June 14–16 Israeli strikes on Iran spiked oil prices ~7–11%
– WTI ~ $77.6/barrel; Brent near $75
– Oil tanker rates rose; supply chain concerns elevated
– Broader inflation risk rising globally
– Iran facing economic crisis: 40%+ inflation, falling exports

Other Global Developments

– UK inflation at 3.4% in May; BoE likely to hold rates
– Australia: oil +8%, consumer costs rising; RBA cautious on cuts

Summary Impact

1. Modest gains early June, pullback mid-month due to geopolitical risks
2. Tariffs and oil prices threaten inflation, delaying rate cuts
3. Economic indicators signal slower growth and rising unemployment
4. Middle East conflict adds to energy and shipping cost volatility

Commentary:

The market has made a nice recovery, one of the quickest on record, but is it sustainable? The market is priced to perfection, despite economic indicators showing signs of slowing down. Initial jobless claims are on the rise, and unemployment is projected to increase by year end and corporations are not hiring at a favorable pace.

The dollar continues to fall, now down more than 10% against the euro, pound and Swiss franc. Fund managers are underweighting the dollar by the most in 20 years, and exporters no longer want to be paid in US dollars, according to the head of currency sales for US Bancorp. The weakening dollar is part of our reasoning in overweighting Gold in our strategies.

Many international markets have outperformed the US to date. Could this trend continue? Possibly, as valuations are attractive, however, if the US entered a recession, odds are the global economy will slow as well. We continue to overweight cash, as the money market is yielding over 4%. Opportunities to re-enter the market will come, in the meantime we continue our cautious outlook.

Have a wonderful and safe Summer!

Your OmniStar Investment team.