Market Update 06/2025 | Cautious Optimism Amid Trade Uncertainty and Yield Volatility
June: Cautious Optimism Amid Trade Uncertainty and Yield Volatility
US Equities Downgraded to Neutral as Tariff Risks Persist; Long-Term Bond Yields Climb on Debt Concerns
In June 2025, T&T International maintains a Neutral view on global equities and downgrades US equities to Neutral amid heightened trade tensions and stretched valuations. Regional preferences include Taiwan, India, and select sectors in China’s tech landscape. AI-related industries, healthcare, and high-quality dividend stocks remain key thematic areas. Equity markets are expected to see low-to-mid single-digit earnings growth in 2025, reaccelerating in 2026.
Within fixed income, high-grade and investment-grade bonds are rated Attractive, while high-yield and emerging market bonds remain Neutral. Central banks globally are navigating inflation and policy uncertainty, leading to uneven performance across bond segments. Long-term yields are rising, driven by concerns over US fiscal sustainability and increasing demand for term premium.
In currencies, the EUR, JPY, AUD, NOK, and MXN are seen as Attractive, while the USD is now considered Unattractive after a short rebound. CNY returns to Neutral after a trade truce. Gold continues to be favored among commodities.
The “Topic of the Month” focuses on rising global yields, noting that the pandemic-era complacency toward sovereign debt risk is fading. Investors are demanding higher compensation for holding long-term bonds, especially in the US. Eurozone and Japanese government bonds are preferred due to less correlation with US Treasuries and room for monetary easing.
