Market index returns

Week to date since June 18, 2025 as of June 25, 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:

Energy prices and risk premiums retreated as a ceasefire was reached between Israel and Iran. There were fears of a widening conflict as the United States joined Israel’s airstrikes on Iran’s nuclear facilities. There were conflicting reports regarding the extent of the damage inflicted on the sites but, either way, these military actions represented a significant risk event that threatened to disrupt energy production and supply routes and likely set back Iran’s progress on its nuclear program and possible bomb aspirations. Despite breaches from both sides, the truce appeared to stay largely intact and limited further escalation. On the trade front, negotiations between the U.S. and other nations have stalled as governments are hesitant to sign a deal without knowing about the potential impact of expected Section 232 levies on exports including steel, copper, timber and lumber, pharmaceutical drugs, and computer chips. The U.S. Commerce Department is finalizing investigations into industries deemed vital to national security, which can result in levies being applied under Section 232 of the Trade Expansion Act.^[1]

The Real Asset Index lagged broader Global Equities by posting negative returns as Commodity Futures and Natural Resource Equities weighed on performance. Investors went full FOMO (fear of missing out) in broader global equities, driving strength in the Technology and Financial sectors, as well as more speculative stocks. Energy companies lagged the most as commodities turned negative in performance. There was divergence in Real Assets as U.S. Treasury Inflation-Protected Securities (TIPS) and Global Infrastructure securities posted positive returns, while Global Real Estate Securities landed in negative territory. Among other indicators we track, the VIX, an index that measures the expected volatility of U.S. stocks, ended the period lower by 17% at 16.8, reversing the prior week’s rise. Credit spreads were stable for investment grade corporates while high yield spreads tightened 10 bps. Gold prices were slightly negative, retracing $37 to end at $3,332/ounce, while the U.S. dollar weakened 1%, as measured by the DXY Index, a measure of the dollar against major trading partners. Oil prices settled 12% lower, down to roughly $65/barrel as tensions in the Middle East cooled. Breakeven spreads fell 5 basis points (bps) for the 5-year segment and 3 bps for 10-year. Nominal Treasury yields were also lower in the period, with the most movement in in the 2–5-year space.^[1]

Why it matters: We continue to monitor economic data, where tariff-related inflation has yet to be realized while employment data has continued to soften. We cannot help but wonder whether the Fed has been so focused on its inflation mandate that it is underappreciating the nascent weakness in employment.

This week we will review the latest U.S. data, Fed speak, and expectations for Europe.

• U.S. Data: There was a mix of data during the week. S&P Global U.S. Manufacturing (flat at 52.0), Services (53.1, down from 53.7), and Composite PMI (52.8, down from 53.0) data weakened for June. The Conference Board released expectations for June which showed weakening expectations with Consumer Confidence falling to 93.0, from a prior revised reading of 98.4, Present Situation down to 129.1, from 135.5, and Expectations down to 69.0, down from 73.6. Initial Jobless Claims, as reported by the Dept. of Labor, fell to 236k for the period ending June 21, down from 245k in the previous week. Continuing claims emerged as the problem area as they rose to 1974k, up from the previously revised figure of 1937k. 
• Fed Speak: Susan Collins, the Federal Reserve Bank President for Boston, noted that she expects one rate cut over the next year but indicated that July would likely be too early for such a move. Michelle Bowman and Christopher Waller, two other Fed governors, indicated they could back a move to lower rates as early as July. The non-voting Fed President for Minneapolis, Neel Kashkari, sees the potential for two cuts in 2025 but with a September start. The median Fed forecast is still two rate cuts by year end. Collins indicated she expects to see higher inflation over the summer as tariff impacts materialize.[[Source: Bloomberg, as of June 25, 2025.]]
• On the Continent: Consumer confidence weakened in the Eurozone as the reading fell to -15.3 for June, down from the prior revised reading of -15.1. The HCOB Eurozone PMI readings were mixed as Manufacturing was flat for June at 49.4, matching the prior reading. Services PMI rose a touch to 50.0, up from 49.7, bringing the Composite reading to 50.2. (A reading above 50.0 signals expansion and a reading below signals contraction.) In Germany the IFO Business Climate survey improved to 88.4, up from 87.5, as did the Current Assessment Survey (86.2, up from 86.1), the Expectations survey reading rose to 90.7, up from a prior reading of 88.9.^[1]

Real Assets, Real Insights: This week we look at political impacts on the NYC real estate market, the flexible use of defensive spending designations, and continued disruption in the copper market. 

• Tilting left (Real Estate): New Yorkers voted for leftist Zohran Mamdani over centrist Cuomo in the Democratic mayoral primary. The move initially worried real estate investors, sending shares of New York office REITs down before they began to recover late in the week. Mamdani has proposed a number of actions unfriendly to business, such as freezing rents (residential), raising income taxes on top earners, and shifting spending from police to social services to address the underlying drivers of crime. While Polymarket indicates that Mamdani is a clear favorite, with a 75% chance of winning, some are looking to incumbent Mayor Eric Adams as a potential upset as he runs as an independent.^[1]
• Defensive projects (Infrastructure): The recent NATO meeting was hailed as a success by U.S. President Trump as he secured pledges by European nations to spend 5% of GDP on defense. Infrastructure projects are now being reclassified as defensive measures to meet those goals. A bridge in Italy has been redesignated as vital to NATO troop movements and Britain is including spending on rural broadband and an expansion of Heathrow airport. European leaders want to spend on quality projects and not just quantity to hit targets.[[Source: Bloomberg, as of June 25, 2025.]]
• Copper here, copper there (Commodities): The Commodity space was the weakest area of performance in the period as Energy and wheat weighed on returns. Zinc, Copper, and Aluminum aided the outperformance of Industrial Metals. In the U.S., copper stockpiles have hit their highest levels since 2018. Traders are betting that tariffs will curtail shipments to the U.S., leading to a jump of over +120% in the amount stored versus last year. Stockpiles in London have decreased 80% over the same time frame, highlighting the price and storage distortions caused by tariff fears. Traders drove the London price spread metrics to their highest level in four years, the result of an expected supply squeeze for ex-U.S. supplies.^[1]