June Market Commentary

June is here! Who’s excited for summer?!

My team and I are excited to share a bit more detailed information about the market and status of the U.S. Economy.

Market Update

Equities posted strong returns in May as global trade tensions eased.

Global stocks posted solid gains during the month as the U.S. and China agreed to a 90-day tariff reduction. After declining to its 2025 low on April 8^th, the S&P 500 Index rallied +18.9% through the end of May. Against this backdrop, risk assets performed well as U.S. job growth remained steady, and inflation continued to decline.

• U.S. stocks rebounded during the month as trade tension de-escalated: Large cap stocks (S&P 500 Index) rose +6.3% and outperformed small caps (Russell 2000 Index) which gained +5.3%. In addition to easing trade tensions, U.S. firms posted first quarter financial results and provided forward guidance that were largely more positive than expected.

• Longer-term rates rose more than short-term: Demand for government bonds was soft in May as Treasury auctions had low volume. This may be due to concerns about the U.S. fiscal outlook, as investors demand higher yields to compensate for rising credit risk.

• Moody’s rating still represents a low default probability for the U.S.: The U.S. national debt is approaching $37 trillion and is expected to expand by nearly $2 trillion per year. Moody’s recognizes that the U.S. remains a dependable borrower but no longer believed it was worthy of the top rating.

• Tariffs to remain in effect following court ruling: Several U.S. businesses filed petitions recently to halt tariffs. On May 28^th , the U.S. Court of International Trade ruled President Trump exceeded his authority on many of the new tariffs levied on U.S. trading partners. However, the administration appealed, and a federal court temporarily reinstated tariffs the next day. The levies will remain in place while judges weigh the underlying legal justification.

• The House passed the President’s new tax bill, which is now headed to the Senate: The bill would extend Trump’s first-term tax cuts, provide certain individuals with new tax relief, and incentivize small businesses to create jobs and expand operations. However, the bill is also expected to increase the U.S. debt burden, and some economists believe it has the potential to worsen economic inequality² .

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