Market Update: June 16, 2025
Economic data included consumer and producer price inflation coming in a bit cooler than expected, although both remain above long-term trend. Consumer confidence also improved, in keeping with paused tariff policies. However, continuing jobless claims kept rising, which could be due to some seasonal effects and/or labor markets softening further.
After starting positively, equities reversed course and fell in the U.S. and foreign developed markets, largely in response to escalation of the Israel-Iran military conflict. Bonds gained as yields fell back, especially abroad with a weaker dollar. Commodities gained as crude oil prices spiked, due to the same Middle East escalation concerns.
U.S. stocks were positive for most of the week, with a mix of influences, but ended down on net. Early in the week, investors reacted positively to a short London meeting between the U.S. and China, which resulted in no real breakthroughs, but getting the “negativity out,” as Commerce Secretary Lutnick put it, perhaps providing a restart point for further talks. The Chinese have been increasingly using exports of rare earth minerals as leverage (they aren’t really rare insofar as finding them in the earth’s crust goes, but the processing of them is, and they’re critical for modern technological devices like computers and phones). The Administration also indicated that an extension of the current 90-day tariff pause was possible for countries negotiating in “good faith.” Markets reacted positively to some extent on Wed. to the cooler CPI report; however, this was seen as making the Fed’s job a bit tougher as to the push-and-pull between higher and lower rate policy. However, all was undone as stocks fell back by Fri. morning in response to Israel’s strikes on Iran, which raised geopolitical concerns.
By sector, energy led, up nearly 6% along with a rise in oil prices, along with smaller gains for traditional safe havens health care and utilities. On the other hand, financial and industrials fell by several percent each. Real estate was little-changed for the week.
Foreign stocks were mixed, along with a weaker U.S. dollar broadly. Gains in the U.K. (despite a negative April GDP report) and emerging markets were offset by declines in Europe and Japan. ECB officials continued to hint that rate cuts may be close to complete, which disappointed markets to some extent. Emerging market results were mixed, led by strength in Taiwan, South Korea, and Brazil, along with weaker results in Turkey and India.
Bonds gained as U.S. Treasury interest rates fell back steadily during the week, helped by encouraging inflation data and a strong 10-year auction mid-week. Investment-grade corporate bonds outperformed governments slightly, both of which outperformed minimal change in high yield and floating rate bank loans. Foreign bonds fared positively, led by unhedged developed market government bonds as the U.S. dollar fell by around a percent, providing a substantial tailwind.
Commodities gained overall for the week, led by a sharp rise in energy, and precious metals to a lesser degree, while agriculture declined. Crude oil prices rose a dramatic 13%% last week (and 8% on Friday alone) to over $73/barrel, following Israel’s attack on Iran, as discussed in more detail above.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.