Key Highlights for August 2025
- Equities advanced as peak tariff uncertainty appeared to wane. Global ex US stocks outpaced US peers as the artificial intelligence and tech-driven rally showed signs of fatigue against a backdrop of stretched valuations in the United States. Sector rotation allowed global small caps and value to outperform.
- Fixed income performance diverged among major regions as US Treasury yields generally declined whereas global ex US yields mildly rose. However, global ex US investment-grade bonds outpaced US equivalents in US dollar terms due to underlying currency performance.
- The US dollar broadly depreciated as labor market updates and comments by Federal Reserve officials suggested a rate cut as soon as September. Mounting concerns regarding the future of Fed independence and ongoing confusion over trade policy increased pressure on the greenback.
- Real assets mostly advanced, led by strong gains for precious metals amid increasing pressure on the Fed and firming rate cut expectations. REITs also outperformed as US yields fell.