On a holiday-shortened week, economic data included a slight upgrade to Q1 U.S. GDP growth, and improvement in personal income, spending, and consumer sentiment, while durable orders fell back.
U.S. stocks saw a positive week, outperforming the rest of the world, due to variety of trade-related news items. Bonds fared positively as interest rates fell back in the U.S. Commodities fell across the board, with crude oil prices remaining range-bound.
U.S. stocks ended positively, after having started off strongly on Monday following the announced one-month reprieve of the 50% EU tariff, in addition to an improvement in consumer sentiment (which has been hard to come by as of late). The Wed. U.S. trade court ruling against the administration’s tariffs resulted in a rally early Thurs., although the gain was tempered, considering that appeals are likely, and it is unknown how other tariffs might be reconfigured to fall under other legal authority. Again, optimism is present, but uncertainty remains. Over the past few weeks, markets have already appeared to discount the worst of the tariffs, celebrating the pauses, and assuming deals will be made in coming months to lower the overall punitive rate. By Fri., trade tensions with China had again ramped up with the President’s claim that agreements were violated and Treasury Secretary Bessent noting that U.S.-China trade talks were “a bit stalled.”
Most sectors ended in the positive for the week, led by technology and communications; energy was the sole exception, losing some ground along with oil prices. Real estate actually fared best of all, gaining nearly 3% as long-term interest rates fell back. A closely-watched market highlight was Nvidia’s quarterly results, which were positive, although operating margins had fallen back a bit from highs to ‘just’ 50% (those for the broader S&P 500 are just under 13%, per FactSet).
Foreign stocks lagged U.S. stocks for the most part, with only Japan coming close, followed by gains in Europe and the U.K. European results were driven by mixed economic and inflation data but helped by the U.S.-EU tariff news. Emerging markets were pulled down by a -3% decline in China, along with a re-emergence of U.S. trade frictions later in the week.
Bonds gained, along with the court decision on tariffs, some pushback against the Congressional tax bill, and continued slowing in PCE inflation, which helped ease long-term U.S. Treasury rates. A strong auction for 7-year Treasury notes also helped sentiment, in contrast to the weaker 20-year auction the prior week. Investment-grade corporates fared best, and floating rate bank loans lagged, despite all falling in a narrow band of returns. Foreign bonds were largely positive as well, despite the U.S. dollar ending up slightly.
Foreign yields have been making their own headlines, particularly in Japan, as a rise in long-term yields the prior week continuing. Despite the government hinting at a pared back issuance (to reduce market supply fears), the unique 40-year part of the curve saw a tick up to 3.33% at auction, as these were met with lower demand. As with much of the developed world, rising debt-to-GDP ratios (250% in Japan) have been pushing on a need for more risk premium at the longer end of the curve, in addition to higher inflation readings, and their long-term quantitative easing policies unwinding. For the first time in many years, the 30-year Japan yield has risen significantly above the 30-year China yield, thought unthinkable just a few years ago when the latter was priced at a 2.00% spread over the former. However, much of Japan’s debt remains domestically held (much of which by the central bank), which reduces supply/demand spillovers to some degree, but the debt level remains very high compared to other nations.
Commodities were down across the board, with declines of over a percent in industrial metals all the way to several percent for the other groups. Crude oil fell over a percent last week to $61/barrel, with prices bouncing around between a narrow band of $61-62 for most of the week. Energy markets remain stuck with concerns over still-lackluster demand along with high OPEC+ production.
|
Period ending 5/30/2025 |
1 Week % |
YTD % |
|
DJIA |
1.67 |
0.08 |
|
S&P 500 |
1.90 |
1.06 |
|
NASDAQ |
2.02 |
-0.74 |
|
Russell 2000 |
1.32 |
-6.85 |
|
MSCI-EAFE |
0.89 |
16.87 |
|
MSCI-EM |
-1.12 |
8.73 |
|
Bloomberg U.S. Aggregate |
0.88 |
2.45 |
|
U.S. Treasury Yields |
3 Mo. |
2 Yr. |
5 Yr. |
10 Yr. |
30 Yr. |
|
12/31/2024 |
4.37 |
4.25 |
4.38 |
4.58 |
4.78 |
|
5/23/2025 |
4.36 |
4.00 |
4.08 |
4.51 |
5.04 |
|
5/30/2025 |
4.36 |
3.89 |
3.96 |
4.41 |
4.92 |
Sources: LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
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.