Our Monthly Business Commentary
June, 2025
Since the start of June, markets have navigated a complex environment marked by encouraging inflation data, improving consumer sentiment, and renewed geopolitical tensions. U.S. inflation moderated in May, with the Consumer Price Index rising just 0.1% month-over-month and 2.4% year-over-year—its slowest pace in several years¹. This progress toward the Federal Reserve’s 2% target has supported expectations that interest rates may remain steady, with the potential for future cuts if disinflation continues¹.
Consumers are also showing signs of improved confidence, where the University of Michigan’s preliminary consumer sentiment index for June rose meaningfully from last month, reflecting renewed optimism amid steady prices and a temporary pause in new tariffs². Resilient consumer spending remains a key pillar of the current economic environment.
Geopolitical events have added new uncertainties from recent military strikes between Israel and Iran drove a sharp increase in oil prices³. Brent crude surged more than 10% at one point, before settling with a 5.7% gain near $73 per barrel³. Energy markets remain highly sensitive to further developments in the region.
Bond markets reacted to these crosscurrents, with the U.S. 10-year Treasury yield easing to 4.33% as investors sought safe-haven assets⁴. Meanwhile, equities have turned volatile after earlier gains, as rising oil prices and geopolitical risks tempered market optimism.
The bottom line: While the inflation outlook is improving and consumer sentiment is firming, geopolitical risks and the effects of tariffs may create headwinds in the months ahead. The Federal Reserve is likely to remain cautious, with markets now assigning a lower probability to near-term rate cuts.
Sources:
- U.S. Bureau of Labor Statistics, https://www.bls.gov/cpi
- Wall Street Journal, https://www.wsj.com/livecoverage/stock-market-today-trump-tariffs-trade-war-06-13-2025/card/consumer-sentiment-lifts-university-of-michigan-survey-shows-ELNACYWLWGJBdCz0QrHK
- The Guardian, https://www.theguardian.com/business/live/2025/jun/13/oil-surges-stock-markets-dollar-airlines-israel-attack-iran-business-live
- Trading Economics, https://tradingeconomics.com/united-states/government-bond-yield
- Associated Press, https://apnews.com/article/b4160f152508383a6c860d91829c142d
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