1. The U.S. and China tariff negotiations continue to advance with the U.S. administration hinting a framework for a deal has been established.
2. Recent tensions in the Middle East led to rising oil prices, which in turn led to increases in energy sector stock prices.
3. Inflation figures for the month of May increased slightly when compared to April’s, indicating the possibility of increasing tariffs’ impact on overall prices.
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The U.S. Treasury Yield Curve shows higher yields for longer-term bonds, suggesting steady economic growth. Compared to six months and a year ago, yields have increased across all maturities. This may be a good opportunity to consider longer-term bonds, while keeping an eye on economic trends and diversifying your portfolio for stability.
Source: Bloomberg via Wilshire Weekly Market Report - June 13, 2025, Page 7
The Fed’s decision to leave interest rates unchanged due to the continued but diminishing uncertainty in financial markets and trade policy concerns was as expected by investors in the latest meeting held on June 18, 2025. As a result, markets were somewhat muted in their reaction to the news. While the Fed held rates steady, markets are now pricing in a potential rate cut later in 2025 should inflation continue to moderate and growth slow further.
On the other hand, geopolitical tensions in the Middle East and Eastern Europe continued to exacerbate volatility in oil prices and energy sectors in the near term. Technology and consumer discretionary sectors have shown resilience, supported by steady consumer spending and ongoing AI-driven investment trends. Trade negotiations between the U.S. and its counterparties in the global stage are ongoing and could affect overall market sentiment potentially driving volatility, especially in the commodities and equity sectors.
GDP in the U.S. is projected to grow at a rate of 1.4% in 2025, compared to a growth of 2.4% in 2024. That is a full percentage point decrease in the overall growth of the economy expected this year. We will keep a close eye on the employment numbers due to be published for the month of June as well as the Inflation figures (Consumer Price Index). This will give us another clue, on a macroeconomic scale, whether the GDP growth slowdown could have significant effects on financial markets. For now, the Unemployment Rate remains low at 4.2% and Inflation only inched up slightly in the month of May to 2.4%, indicating stability in those 2 macroeconomic indicators.
Sources: CNBC - Fed holds key rate steady, still sees two more cuts this year, Federal Reserve - Federal Reserve issues FOMC statement, Philadelphia Fed - Second Quarter 2025 Survey of Professional Forecasters
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Commentary offered in this blog is for informational and educational purposes only. Opinions and forecasts regarding markets, securities, products, portfolios, or holdings are given as of the date provided and are subject to change at any time. No offer to sell, solicitation, or recommendation of any security or investment product is intended. Any expressions or opinions reflect the views of the author and are not necessarily those of TPFG or its affiliates. TPFG does not provide tax or legal advice. Investors should consult their financial, tax or legal professionals before investing. Past performance is not a guarantee of future results. Certain information and data may be supplied by unaffiliated third parties as sourced. Although the author believes the information is reliable, we cannot warrant the accuracy, timeliness or suitability of the information or materials offered by third party sources.
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