Market index returns

Week to date since May 21, 2025 as of May 28, 2025

Index definitions: Global Real Estate = FTSE EPRA/NAREIT Developed Index; Global Infrastructure = Dow Jones Brookfield Global Infrastructure Index; Natural Resource Equities = S&P Global Natural Resources Index; Commodity Futures = Bloomberg Commodity Index; TIPS = Barclays US TIPS Index; Global Equities = MSCI World Index; Real Assets Index = 30% FTSE EPRA/NAREIT Developed Index, 30% Dow Jones Brookfield Global Infrastructure Index; 15% S&P Global Natural Resources Index; 15% Bloomberg Commodity Index, 10% Barclays TIPS Index. Source: Bloomberg, DWS. Past performance is not indicative of future results. It is not possible to invest directly in an index.

Market commentary:

Global equity markets followed trade announcements with their TACO strategy. The acronym, coined by a FT columnist, stands for “Trump Always Chickens Out,” an inflammatory assessment of his unique style of trade negotiations. Traders seem to have followed the pattern of capitalizing on market downturns following presidential tariff threats, to ultimately drive the market higher after the president walks back extreme positions. The latest example was the recent announcement of a 50% levy to be imposed on European goods, which was ultimately delayed to provide time for negotiations. The president’s trade agenda was dealt setbacks by a pair of court rulings that could nullify his tariff declarations. The Court of International Trade blocked the global tariffs enacted under the IEEPA powers (International Emergency Economic Powers Act). A second federal judge also declared some of the tariffs unlawful but was focused on a family-owned business that brought the suit. The administration has appealed both decisions. Rest assured, the Trump administration has other avenues to execute its tariff policy if the appeals are not successful. Section 232, 301, and 122 powers can be used to enact tariffs but can take longer to implement and in the case of Section 122, it would limit the scope and only have a 150-day duration. The administration could also go through Congress to enact tariffs but that approach would divert time and attention away from other legislative priorities such as the tax bill and judicial nominations. Regardless of the tariff flavor investors should continue to include them in their risk management calculus.

The Real Asset Index performance was flat in the week, which trailed broader Global Equities. Within Real Assets, Global Real Estate securities and U.S. TIPS (treasury inflation-protected securities) outperformed and outpaced Global Equities. Conversely, Commodity Futures, Natural Resource Equities, and Global Infrastructure lagged with negative performance. Among other indicators we track, the VIX, an index that measures the expected volatility of U.S. stocks, ended the period lower by 8% at 19.3. Credit spreads were tighter by two basis points (bps) for both the investment grade and high yield segments. The U.S. dollar strengthened slightly, up 0.3%, as measured by the DXY Index. Oil prices were roughly unchanged, moving 0.4% higher than the previous week at $61.84 per barrel. Inflation breakevens were roughly unchanged as both the 5-year and 10-year segments tightened 2 bps. Gold prices cooled -0.8% to $3,287 per ounce.^[1]

Why it matters: We continue to monitor economic data, as well as sentiment indicators, as they could eventually feed through to the hard data. So far, the worst-case outcome for the economy has been avoided as the Trump administration could not endure its short lived “detox period.” Therefore, recent evidence suggests sentiment may have to catch back up to hard data instead of hard data catching down to sentiment.

This week we will review the latest U.S. sentiment and first quarter gross domestic product (GDP) metrics, as well as the latest European data.  

• U.S. Indicators: The Conference Board Consumer Confidence Index level increased to 98.0 for May, up from the previous revised reading of 85.7, and ahead of expectations. While sentiment improved, other indicators still showed weakness. Capital Goods Orders (nondefense ex-air) fell -1.3% in April, contracting from the 0.3% increase in March. The Fed’s Richmond Fed Manufacturing Index and Business Conditions index both worsened in May, falling to -9 and -18, respectively. The Dallas Fed Services Activity index improved on a relative basis as it measured -10.1 for May, versus -19.4 in April.^[1]
• GDP Growth: First quarter U.S. GDP growth registered at -0.2%, quarter-over-quarter annualized. The net exports segment was the largest detractor from GDP, registering the biggest drop on record, and there was a notable build in inventories, presumably to front-run import tariffs. Personal consumption saw a large slowdown, only rising 1.2%, its weakest increase in two years.^[2]
• European Union: Consumer Confidence for May (final) registered at -15.2, which was better than April’s reading of -16.6, but still below the recent high of -12.3 reached in October 2024. The Index for Economic Confidence also rose to 94.8, up from the prior reading of 93.6, and ahead of expectations. Inflation expectations from the European Central Bank rose slightly for the 1-year period, up to 3.1%, from 2.9%, while 3-year expectations remained steady at 2.5%.^[1]

Real Assets, Real Insights: This week we look at Real Estate transactions, green energy developments in Europe, and dynamics in the copper market.

• Let’s make a deal (Real Estate): The InterRent Real Estate Investment Trust (IIP-UN.TO) announced that it agreed to be acquired by GIC and CLV Group. The purchase will be an all-cash transaction of roughly $4 billion, including debt assumption. This represented a 29% premium to its 90-day average price (volume-weighted). The deal will be finalized at a special unitholder meeting in the third quarter and close late in the year or early 2026. This lends support to the “fairly robust” deal assessment highlighted by Tim Bodner, real estate deals leader at PwC, discussed on a recent Nareit podcast.^[3]
• Here comes the sun (Infrastructure):  In its latest report “Summer Outlook 2025,” the European Network for Transmission System Operators for Electricity (ENTSO-E) confirmed there are no general risks to the security of electricity supply in most of the EU for the coming summer. Only a few markets, with limited interconnections to the EU grid, potentially face issues and therefore require monitoring, according to the ENTSO-E. Compared to last summer, the installed renewable capacities, especially solar, have increased significantly (by +90 gigawatts). At the same time, thermal capacities have decreased, primarily coal and lignite usage has declined, whereas gas capacities have increased. This summer, the ENTSO-E expects renewable generation to exceed demand and enable export possibilities during certain periods. These dynamic circumstances may require careful management and strategic planning. The largest blackout in Europe’s history, which happened last month, showcased the vulnerability of the grid and the need for infrastructure investments and reliable electricity sources. The cause for the blackout on the Iberian Peninsula is still under investigation. Regardless of the result, Iberia lags behind the EU’s target for all countries to have 15% of their energy system interconnected to the broader European network by 2030, with its share stuck at only 3%.^[4]
• Polish up that copper (Commodities):  Tariff talk from the U.S. administration in recent months prompted copper traders to direct shipments of the metal to the U.S. to avoid potential duties. This move tightened supplies for the Chinese market, leading to some of the highest premiums over the past five years for the China market, and a backwardation environment where the shortest contracts to deliver were trading higher than those for a future delivery date. This dynamic sent Glencore PLC, and other traders, to the LME (London Metals Exchange) to source copper to deliver to China. Notably, much of the volume is comprised of Russian copper, a less-desirable grade. New deliveries of Russian copper were banned in April of 2024, but existing inventory remains tradable.^[1]