Market Commentary Q2 | 2025
In Review
The 2nd quarter brought significant volatility across global markets as investors grappled with tariff policy uncertainty and war in the Middle East. In both cases, investors’ worst fears ultimately didn’t materialize and in the absence of a meaningful weakening in economic data, most asset classes delivered positive returns over the quarter. The tariffs announced on Liberation Day were larger than expected and both stock and bond markets reacted quickly. The S&P 500 fell 12% over the following week, while U.S. 10-year Treasury yields rose 50 basis points. The Trump administration responded by softening its trade policy stance, pausing reciprocal tariffs for 90 days and agreeing to the principles of a trade deal with China. Risk assets quickly recovered, with developed market equities delivering total returns of nearly 12% over the quarter. U.S. policy remains the key source of volatility after the initial tariff shock. Hard economic data has remained resilient thus far, but the full impact of tariffs and other facets of U.S. policy may become more apparent as we move through the rest of the year.