Market Commentary - June 2025

Monthly Update

After a strong stock market rebound in May after three months of declines, stocks continued higher in June with a 5%¹ gain in the S&P 500 and bringing the year-to-date return back into positive territory.

The NASDAQ was up by a similar amount and the rally broadened beyond the big names to the smaller ones too. The S&P Midcap 400 index was higher by 3.4%² and the small cap Russell 2000 was up by 5.3%³. Globally, stocks also enjoyed the uplift as the MSCI ex US index continued its strong run year to date with a 3.2%⁴ rise in June.

For US markets, I believe the catalyst for the rally was a second wind seen with the AI tech trade along with the continued pause in the tariff trade war as deals got negotiated. As I write this though, the July 9th reciprocal tariff deadline is being enforced for some and pushed out for others with a deal with Vietnam resulting in a 20%⁵ tariff on them. Overall, I expect higher tariffs to be likely north of the baseline 10%⁶ rate. Either way, hopefully we’ll have certainty about these rates, and we can then all run the math on what it will mean for economic growth.

There is also hope that the Federal Reserve will soon be cutting interest rates even though the bond market has already been pricing in about two cuts for a while now. Jay Powell has been pretty clear multiple times that he wants to wait for more inflation and employment data in order to give time for the tariffs to work their way through the supply chains. He specifically said that if it wasn’t for the tariffs, he’d likely be cutting rates sooner than otherwise. Meanwhile the European Central Bank cut rates again in June to 2%⁷, which is essentially the same rate as inflation has been running. Thus, taking the real rate back to zero. The Bank of England though, held its bank rate at 4.25%⁸ because of the stickier inflation situation in the UK.

Regardless of what central banks do though with short-term rates, there still seems to be an aversion on the part of investors to take on too much duration risk. While the US 10 yr yield fell 17 basis points in June to 4.23%⁹, it has since risen back to 4.42%¹⁰ in the early days of July. And the rise in long rates remains a global phenomenon with 30 yr yields in the UK, Germany, France, and Japan, to name a few, all near the highest levels in many years along with the US 30 yr yield back around 5%¹¹. We are coming off an epic bond bull market of 40 years that culminated in $18 Trillion¹² of securities yielding less than zero and the unwind I believe is ongoing and will continue to be with longer term interest rates staying higher for a while. 

A big market story in 2025 has been the US dollar which had its worst first half to a year since the early 1970’s as measured by the DXY index. As of this writing, it is down 10%¹³ year to date and the weakness really picked up steam in March and April I believe in response to the tariff war we started. It caused a major rethink on the part of foreign investors the extent to which they want to own US assets. Whether in US stocks, corporate bonds of all stripes, and other assets, foreigners have loaded up over the past few years. According to Apollo, for equities in particular foreigners own 18%¹⁴ of the US markets, a record high. I believe they are in the process of reducing this exposure, whether by selling outright or at least buying less and is in part a big factor in why international stock markets have well outperformed the US this year after many years of underperformance. 

With respect to US Treasuries, foreigners own about 30%¹⁵ of marketable securities but that is down from 50%¹⁶ more than ten years ago. How foreigners respond now to our Treasury market will also be important to watch with still sizable US debts and deficits. We have data through April in terms of foreign holdings and Canada really stood out as they sold $58 billion¹⁷ worth on a net basis of US notes and bonds, the biggest one-month reduction going back to at least 2000 that I have data on. It was a 14%¹⁸ drop in their holdings, and we can all assume why they did so. 

Elaborating on the US financial condition, as I write this, we are a few days removed from the passage of the President’s bill titled ‘One Big Beautiful Bill’. The biggest thing that came from it was the extension of the 2017 Trump income tax cuts. That was key because the last thing the slow-moving US economy needs is a reversion back to higher tax rates. The other key tax provisions had to do with trying to spur more capital investments. Over the past few years, CapEx spending on Generative AI has been lackluster and mostly flat lining. The bill includes the ability to accelerate the expensing when spending on new factories, equipment and R&D. No tax on tips and overtime ended up being limited as the earnings threshold cap to where it applies was made low. On the spending side, the most notable shift was on Medicaid with the imposition of certain work requirements, but it doesn’t kick in until 2027. 

I want to emphasize my belief that we have a spending problem, not a tax one. Over many decades, tax receipts have averaged about 17%¹⁹ of GDP, give or take, whether tax rates were higher or lower and that is where we currently stand. Spending historically has averaged about 20%²⁰ of GDP but is right now at almost 24%²¹ and hence the almost 7%²² budget deficit relative to GDP. Reducing spending though is easier said than done as about 85%²³ of the $7 Trillion²⁴ the US government spends annually right now goes to Medicare, Medicaid, Social Security, defense, food programs and interest expense. Politically, all hot button things to touch. 

The US economy remains mixed with the same growth drivers being anything touching the massive Generative AI capital spending buildout. Also, higher income spending remains good, particularly on travel and leisure and government spending remains robust relative to the size of the US economy. On the flip side, lower to middle income consumers remain financially challenged and circumspect with their spending. Manufacturing has been in contraction for more than two years now, as it is globally. Home sales remain stuck in the mud, global trade is muted, and capital spending ex AI has been mediocre. Overall, based on the Atlanta Fed’s Q2 GDP estimate of about 2.5%²⁵, the first half GDP growth would average just 1%²⁶ annualized. Growth outside the US is uneven as well.

Conclusion

I feel like we’ve packed in a few years of news in just the first six months of 2025 with a lot of economic, political and geopolitical news flowing through the markets. The major point of clarity the economy and markets are searching for continues to be on tariffs, not just for US households and businesses but the rest of the world that we trade with. The July 9th pause deadline on the reciprocal tariffs are upon us, but it seems that some negotiations will extend to August 1st. The net result will be much higher tariff rates relative to where we started the year. Whatever it is though, it is hugely important to know as soon as possible so businesses and consumers can then adjust and move on. 

We all know the saying ‘markets don’t like uncertainty’ but life is always uncertain, it’s the only given outside of father time and taxes. History is replete with storms, but we’ve seen them before and do our best to power through. We are possibly amidst some major changes, both in the global economy and markets and the investing playbook that has worked so well over the past few years might just be transitioning from just owning the Mag 7, for example, and into owning other things. Not that the Mag 7 stocks can’t do well from here but their ability to carry the broader markets on their shoulders might be waning. 

Whatever comes our way though, it remains vital that investors have adequate short-term liquidity over the next 2-3 years. Knowing that period is covered can help separate the balance of one’s portfolio from the ups and downs of the market. Time horizon is always crucial and is always the best friend of any investor.

- Published on 7/10/25 -

Disclaimer

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Nothing in this material should be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market update is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither Bleakley Financial Group, LLC nor Peter Boockvar guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward-looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

Investment advisory and financial planning services offered through Bleakley Financial Group LLC, an SEC registered investment adviser. Peter Boockvar is solely an investment advisor representative and Chief Investment Officer of Bleakley Financial Group.

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^1-25 Bloomberg

Disclaimer

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

The Stoxx Europe 600 index also called the STOXX 600 is an indicator of the performance of the European stock market. It measures the performance of large mid and small-cap companies across 17 countries in Europe. The number of constituents is fixed at 600.

The Hang Seng Index is a freefloat-adjusted market-capitalization-weighted stock-market index in Hong Kong. It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong. These 82 constituent companies represent about 58% of the capitalization of the Hong Kong Stock Exchange.

Nothing in this material should be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market update is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither Bleakley Financial Group, LLC nor Peter Boockvar guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.

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Approval #719807

[1] Bloomberg

[2] Bloomberg

[3] Bloomberg

[4] Bloomberg

[5] Pew Research