CIO Monthly Observations - July 2025
Markets in Review
The S&P climbed to new all-time highs in June, rising 5.0%, which brought its year-to-date return to 5.5%. The MSCI All Country World index also rose, up 4.4% during the month, which brings its year-to-date gains to 9.1%. The Bloomberg U.S. Aggregate Bond index bounced back as well, up 1.55% in June, increasing its year-to-date return to 4.0%.
For the second month in a row, the S&P rallied 5% or more and in both cases, the cause was the reduction in trade tensions. Ever since the administration backed off on implementing extremely large tariffs, the markets have been rebounding from the market low of April 8th. In addition, the US Congress is in the process of extending the tax cuts that were due to expire this year and investor enthusiasm has returned.
Monthly Highlights
The leaders of the U.S. and China held a phone call to reduce trade tensions Israel and Iran traded rockets and bombs in a 12-day war
The U.S. Senate is still working to pass the ‘Big, Beautiful, Bill’
News in Review
The leaders of the U.S. and China spoke on the phone for an hour and a half in the first week of June and were able to resolve some of their differences over rare earth metals, tariff rates and technology. They also agreed to potentially visit each other during official state visits.
Explaining the Conflict Between Iran and Israel
Israel bombed a number of key nuclear sites in Iran in what they said was an attempt to reduce the threat of Iran developing a nuclear weapon. Iran has said that Israel violated international law and the UN Secretary-General said the strikes were a “dangerous escalation”. Subsequently Iran retaliated against Israel and killed two dozen people and wounded hundreds of others, before a cease-fire was declared.
Senate Scrambles to Advance Trump’s “Big, Beautiful Bill”
The large tax extension and spending bill that passed the House has run into resistance in the Senate, which was opposed to some of the provisions, such as Medicaid cuts, SNAP (food assistance) transfers, and clean energy credits. In addition, given Republicans desire to use reconciliation – a legal procedure requiring only a simple majority of Senators (as opposed to 60 votes) to allow a bill to be voted on – has opened it up to being slimmed down by the Senate parliamentarian, who is in charge of determining which parts are allowed to remain in the bill.
Robots Replace Hotel Check-in Staff
A hotel in Japan has gone so far as to replace all their receptionists with humanoid robots. While this is an extreme example of automation and the use of Artificial Intelligence (AI), not all of the guests were amused, with some of them visibly upset. The video of guests checking into this hotel went viral on social media, but for now the novelty is only in Japan, with no reports of hotels in other countries repeating this experiment.
DISCLOSURES
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