Market Commentary - July 2025

At the end of 2024, we communicated that markets would likely be driven by the scope, scale, and sequence of fiscal and economic policies. This year began with several painful measures such as the initial tariff rates and fiscal austerity measures (i.e., DOGE). These initiatives led to a traditional growth scare during the second half of Q1.

While reflecting on these economic events and market movements over the last three months, it is important to note that US equity markets have experienced yet another V-shaped recovery (See Figure 1). This highlights and reaffirms the importance of reviewing and maintaining your investment strategy, especially during periods of extreme volatility.

Figure 1 – SPX – S&P Large Cap Index YTD Chart

Source: StockCharts.com

There were a few catalysts driving the turnaround in markets during the beginning of April. Extreme bearish sentiment started to build in the beginning of Q2, which tends to be a contrarian indicator. Volatility in the bond markets began catching the attention of the administration – particularly Treasury Secretary Scott Bessent. Authorities subsequently pared back both the tariff implementation and the fiscal austerity efforts.  These actions were a significant tailwind for global markets.

As the aforementioned fears of tariff implementation and austerity efforts have subsided, the markets have turned to evaluating deregulation efforts and the pending tax legislation. The expected tax bill should act as a stimulant to the economy and further loosen financial conditions.

Risks have not completely subsided, and we expect periods of volatility through the second half of the year. While much less jarring than originally anticipated, effective tariff rates remain at their highest levels in over 100 years.

There has been a clear transition from attempted austerity measures to even greater fiscal stimulus. The economy has experienced a short-term easing of inflation data.  Additionally, global monetary easing (which correlates very closely with risk assets on a short lag) has been on an upward trajectory over the past few months (See Figure 2).

Figure 2 – Global Liquidity Index

Source: TradingView, Global Liquidity Index by Quantitative Alpha, StashAway

We expect the combination of these factors to provide continued tailwinds to markets over the coming quarters, albeit not without the expected intermittent bouts of volatility.

We continue to help clients with a wide array of financial planning topics.  We look forward to assisting you with planning items throughout the year, including (but not limited to) the following:

  • Annual gifting program

  • Charitable giving

  • Tax planning and loss harvesting

  • Estate planning and updating documents

  • Liquidity planning / cash flow analysis

  • Asset titling

Addressing these planning topics during the year can avoid the year-end rush to tackle these matters.  We look forward to continuing to work with you on the important elements of your financial plan.

We appreciate your trust and look forward to connecting during the second half of the year.

-        Jason, Micah, Tim, & Victoria

(Link to PDF)