Market index returns

Week to date since June 4, 2025 as of June 11, 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 continued their ascent in June as May’s non-farm payrolls, reported June 6th, met expectations. Although the internals of the report were relatively weak, the headline was enough to keep market optimism afloat. Additionally, favorable news emerged from U.S. and China trade talks in London as the U.S. made concessions including potentially loosening student visa allowances in order to restart the flow of rare earth exports from China. U.S. treasury bond investors, wary about rising debt loads, cast aside those concerns during successful 10-year and 30-year treasury bond auctions this week, providing a collective sigh of relief in sovereign debt markets. The auctions may have benefited from tensions in the Middle East as chatter circulated that Israel could be planning a strike on Iran’s nuclear facilities, contributing to the rise in risk premium for energy prices.^[1]

Note: After our review period, Israel did indeed launch an attack on Iran dubbed Operation Rising Lion; focused on Iran’s senior military leadership and uranium enrichment capabilities. At the time of writing WTI and Brent have risen +8% and +7.5% percent, respectively. Israel has indicated they will continue this operation over the coming days and therefore the extent and duration of market impact will be dictated by Iran’s response. Iran could attempt to “internationalize” this conflict by attacking energy infrastructure throughout the Middle East, therefore we will provide an update when we have more clarity on probable outcomes.

The Real Asset Index trailed broader Global Equities, which benefitted from strength in the Energy, Healthcare, Communications, and Technology sectors. Within Real Assets, Natural Resource Equities outperformed the most, followed by Global Real Estate and Commodities. Conversely, Global Infrastructure and U.S. TIPS (Treasury Inflation-Protected Securities) underperformed the Real Asset Index by posting negative performance. Oil prices rose 8.4% to $68.15, supporting energy outperformance in the commodity and natural resource equity segments. Among other indicators we track, the VIX, an index that measures the expected volatility of U.S. stocks, ended the period lower by 2% at 17.3. Credit spreads were tighter by three basis points (bps) for investment grade and seven bps for the high yield segment. The U.S. dollar weakened slightly, down to 98.6, as measured by the DXY Index. Gold prices cooled -0.5% to $3,355 per ounce.^[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 can’t 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 data from the U.S. and Europe.

• U.S. Inflation: The latest inflation data prints for the U.S. remained muted in May. The Bureau of Labor Statistics showed that headline CPI (consumer price index) rose 0.1% month-over-month (MoM), and 2.4% year-over-year. Core CPI, which excludes volatile components such as food and energy, showed similar dynamics coming in at 0.1% MoM and 2.8% YoY. These figures were all below expectations. Producer Prices (PPI) also beat expectations to the downside as Final Demand rose 0.1% MoM and 2.6% YoY, and excluding Food, Energy, and Trade prices rose 0.1% MoM and 2.7% YoY. While the first four months of the year have shown relatively tame inflation data in the face of tariffs, economists expect inflationary pressures to build in the second half of the year.^[2]
• U.S. Sentiment & Jobs: The NY Fed 1-Year Inflation Expectations for May registered at 3.2%, which was lower than expectations of 3.5%, and below the prior reading of 3.6%. The NFIB Small Business Optimism survey for May showed improvement and beat expectations, rising to 98.8, up from the prior reading of 95.8. Initial jobless claims were 248k for the week ending June 7, while continuing claims rose to 1956k for the week ending May 31st, which was the highest level since the end of 2021.^[1]
• News from Europe: Eurozone GDP for the first quarter beat expectations as it rose 0.6% quarter-over-quarter and 1.5% year-over-year. While the first quarter was better than expected, economists anticipate a slowdown later in the year given the impact of U.S. tariffs. The European Central Bank ECB recently lowered its growth forecast for 2025 and has been cutting interest rates to offset economic weakness. While not part of the Eurozone, the UK recorded the largest decrease in trade exports (£2 bn) to the U.S. for April, driven by lower exports of cars, chemicals, and metals.^[1]

Real Assets, Real Insights: This week we look at real estate transactions, the potential for the World Bank to fund nuclear projects again, and the spreading of tariffs.

• Cash Flush (Real Estate): Hudson Pacific Properties, Inc. (HPP), a REIT that primarily owns and operates office and studio real estate on the West Coast, announced a public offering of shares and pre-funded warrants totaling $600 million, or $690 million including an over-allotment option. The proceeds are slated to repay the outstanding credit facility and shore up the balance sheet, as well as general corporate purposes, buying extra time for HPP's operations and markets to recover. Despite the capital raise being significantly dilutive to consensus earnings and NAV, the deal experienced strong investor demand and traded well, displaying ample appetite for sensible self-help opportunities even in the still controversial office sector.^[1]
• Shorter half-life? (Infrastructure): This week the World Bank's board agreed to end a longstanding ban on funding nuclear energy projects in developing countries, given rising electricity demand and needs. The World Bank's president, Ajay Banga, also floated the idea of supporting natural gas production.^[3] Britain announced £14.2 billion investment to build the Sizewell C nuclear plant in southeast England. The country is seeking to build new nuclear plants to replace its ageing fleet and to help boost its energy security. The plant is expected to generate enough electricity to power around 6 million homes.^[4]  Across the pond, the U.S. has seen similar interest. Westinghouse is in talks with U.S. officials and industry partners about deploying ten large nuclear reactors. In May, President Trump announced executive orders aimed at unleashing an American atomic energy renaissance.^[5] Nuclear energy can serve as baseload energy resource, meeting constant demand and providing low-carbon power; however, after the events in Fukushima the mood towards nuclear energy has been more cautious.
• Tariff Creep (Commodities): Following U.S. tariffs, which were recently raised to 50% from 25%, to protect domestic steel manufacturing, Canada announced it is looking to increase its own industry protections. The country already implemented levies of 25% on Chinese aluminum and steel to prevent dumping of lower-cost products, aligning closer to the U.S. but has not specifically targeted China for future measures. China responded with a 100% tariff on Canadian canola and lesser rates on other products.^[1]