Mid-Year Market Outlook:
As we reach the halfway point of 2025, markets have weathered a series of global events that have shaped the investment landscape. One of the most notable developments has been the conflict between Iran and Israel. This caused a short-lived spike in oil prices and a rise in market volatility as investors reacted to the uncertainty. While tensions have since eased and oil prices have retreated, the situation remains fluid and could still influence global markets. Combined with ongoing shifts in trade policy, currency movements, and economic signals from abroad, these events have made 2025 a year of heightened global awareness for investors.
 Stocks Rebound Following Early-Year Selloff
After a sharp downturn early in the year, stocks have staged a strong recovery. Easing trade tensions played a key role in fueling a broad-based rally, with major indexes like the S&P 500 rebounding close to record highs after a decline of roughly 20% from mid-February to early April.
International equities have been standout performers, reinforcing the value of global diversification. The MSCI EAFE Index (representing developed markets outside the U.S.) is up about 16% year-to-date as of 6/23/25, compared to about a 2% gain in the S&P 500. This performance gap is being driven by several factors, including a weaker U.S. dollar, improving economic conditions in Europe, and attractive relative valuations overseas.
 Market Leadership Broadens Beyond Tech
A notable shift in 2025 has been the broadening of stock market returns. For the past two years, gains were heavily concentrated in a small group of large technology companies—often referred to as the “Magnificent Seven.” This year, however, market leadership has become more widespread. By mid-June, roughly half of the companies in the S&P 500 had year-to-date returns exceeding the overall index, a positive sign that markets are returning to more typical historical behavior.
 Bond Markets Remain Steady
Despite concerns over the growing U.S. deficit, bond markets have held up well in 2025. Core bonds, as measured by the Bloomberg U.S. Aggregate Bond Index, are up approximately 3% year-to-date. Bond yields remain attractive compared to previous years, and while the Federal Reserve has held interest rates steady so far, analysts are projecting one or two rate cuts before year-end. If that occurs, yields on money market funds and CDs may start to decline.
The Dollar, Diversification, and Global Opportunity
The U.S. dollar has been weaker this year against a basket of major global currencies. This trend has benefited U.S. investors with international holdings, as currency movements have enhanced returns from non-U.S. markets. Factors contributing to the dollar’s decline include trade uncertainty, a projected slowdown in U.S. growth, and concerns surrounding the federal deficit.
Meanwhile, many global economies—particularly in Europe—have been ramping up spending on defense and infrastructure, supporting growth and investment potential abroad. These developments have strengthened the case for international exposure within diversified portfolios.
 Looking Ahead
While the U.S. economy remains on solid footing overall, there are signs of a potential slowdown ahead. Recession risks, which spiked earlier this year, have eased somewhat but haven’t disappeared entirely. Ongoing trade negotiations and geopolitical headlines could continue to cause occasional market swings in the second half of the year.
What 2025 has made clear so far is the importance of staying disciplined and globally diversified. A mix of U.S. and international investments, along with the appropriate balance of stocks and bonds, remains a key foundation for long-term financial success—especially in uncertain times.
 Portfolio Positioning
As part of our routine portfolio management, we will soon be rebalancing client accounts as needed to ensure alignment with strategic targets. In select portfolios, we also plan to slightly increase international allocations to take advantage of current opportunities and further enhance global diversification.
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