“Positively Inclined” – Wax Tailor, 2007.

June 2025 has delivered a market performance worthy of Wax Tailor’s “Positively Inclined” (thanks Mr Aznavour for the beat…): uplifting, resilient, and forward-looking. Trade progress, central bank support, and AI-driven innovation provide a strong backbeat, but inflation, fiscal concerns, and geopolitical risks keep a lid on the upside. June has been full of headlines triggering both optimism and pessimism; as tariffs risk stabilized, entered the short-lived war between Israel and Iran that could have seriously derailed the forward march markets tried to maintain after a very good month of May, while European Nato members bended to Mr Trump’s demands for higher military spending across the Old Continent.

Equity markets shrug off the threats and focused on the positives; the MSCI World added 4.2%, the S&P 500 5%, Emerging Markets 5.6% but Europe stalled (-1.3%) in the context of a pretty strong euro (or a very weak dollar); in a quite unusual mode, currency markets did not react as one could have expected when Israel started to bomb Iran, in other words the dollar stayed unscathed, and even ended the month down 3.7% versus the euro (and now down 13.7% year to date!).

If yields differential can sometimes provide clues about currencies moves, it doesn’t seem to play out this year as US 10 year at 4.24% offer roughly 170 basis points more yield than the German 10 year Bund. Yet this spread has narrowed year to date (60 bps), but does that justify the dismal performance of the dollar? Probably not. Sticky twin deficits, huge debt and Trump’s aggressive stance towards the Fed probably had their toll, more than anything else, on the dollar.

Middle-East tensions boosted Oil, which rose 7.1% in June, but Gold barely reacted (+0.4%), while risk-prone attitude from investors was reflected in the outperformance from Growth versus Value (+4.9% vs +3.5%) and a new bout of Mag-7 dominance, the very good month for credit (+1.2% for the Itraxx Crossover) and the Bitcoin, which rose 2.6%; the latter has also been buoyed by the Genius Act (17th of June: bipartisan bill poised to create the first comprehensive federal framework for stablecoin regulation).

 

 

 

 

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

“If you don’t give a doggone about it” – James Brown, 1977.

As is often the case, the market tried to frustrate the majority and please the minority. After a turbulent April and amid the Q1 earnings season, it would have been tempting to reduce risk and heed the old adage, “Sell in May and go away”. What a mistake that would have been! At the beginning of May, the right decision for risk assets was to “not give a doggone about it”, as James Brown would say. These assets performed strongly (more on this later). This reversal was triggered by the satisfactory results reported by most companies so far, but also by recurring jitters around tariffs and hopes for a less radical stance from the White House.

In this context, the MSCI World added 5.69% in May, the tech-heavy Nasdaq leading the charge with a whopping 9.04% return; the European Stoxx 600 fared well (+4.02%), like the MSCI Emerging Markets and the Japanese Topix respectively up 4.00% and 5.03%. Interestingly, all major indices are now in positive territory on a year to date basis (S&P, Stoxx, Nasdaq 100, Emerging Markets, Topix), barring the Chinese CSI300 (down 2.41%). This spectacular rally in equities logically favoured Growth versus Value: the MSCI World Growth soared by 8.58%, versus “only” +2.71% for the MSCI World Value. Even more interesting, if you didn’t give a doggone about tariffs when the mess started, you would be up 18.7% since the 8th of April by simply holding the MSCI World!

In fixed income, fates diverged between Government and credit: the former had a so-so month with yields on the rise, 24 basis points for the 10 year US and 6 basis points for the 10 year Bund, but the latter performed extremely well, in line with risk assets in general, highlighted by the Itraxx Crossover adding 2.80%, just for the month of May.
Finally, another sign that investors embraced a risk-on attitude is the very strong returns recorded by both Oil (+4.43%) and the Bitcoin (+10.84%).

How things play out from now on remains a big question mark: US markets are still expensive, and the economy has little chances to shoot up to the upside, while geopolitics remain shaky.

 

 

 

 

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group