Data and opinions as of May 31st, 2025
May 2025 saw global markets navigate a complex landscape of extended tariff truces, shifting bond yield dynamics, and the unveiling of President Trump’s tax plan. The 90-day tariff pause with China, announced May 9, sustained an equity rally, though markets showed muted responses to Trump’s tariff rhetoric on the EU. Corporate earnings remained robust, particularly in AI-driven sectors, but tariff uncertainty restrained forward guidance. In bond markets, surging Japanese yields and a potential yen carry trade unwind challenged U.S. Treasuries’ dominance as a safe-haven. Meanwhile, Trump’s tax plan, with its focus on corporate tax cuts, stirred debate over fiscal sustainability. Central banks, including the U.S. Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BoE), and Bank of Canada (BoC), grappled with balancing inflation and growth amid divergent regional pressures.
Equity rebound: tactical relief amid persistent risks: The 90-day tariff truce with China, announced May 9, spurred a global equity rally, with markets pricing in temporary pauses to President Trump’s tariff strategy. Strong corporate earnings, particularly in AI, support optimism, but tariff uncertainty tempers guidance. Bottom line: The rally offers tactical opportunities, but diversified portfolios remain essential to navigate lingering trade risks.
Bond markets: U.S. exceptionalism questioned: Surging Japanese bond yields, reaching 1.57% for 10-year JGBs, and a potential yen carry trade unwind are prompting investors to reassess U.S. Treasuries as the sole safe-haven. Bottom line: Diversifying into non-U.S. safe-havens like gold or yen-denominated assets can hedge against shifting global yield dynamics.
Trump’s tax plan: growth vs. fiscal concerns: Trump’s tax proposal, reducing corporate rates to 15% and offering manufacturing credits funded by tariffs, has mixed reactions. Growth proponents see benefits, while fiscal deficit hawks warn of a $2 trillion debt increase over a decade. Bottom line: Investors should monitor fiscal policy impacts on inflation and yields, favoring flexible asset allocation to balance risks and opportunities.
‒ NEI Asset Allocation team
Bottom line: The equity rally reflects tactical relief, but sustained trade uncertainty warrants diversified portfolios with exposure to resilient sectors like AI and technology.
Source: FactSet https://insight.factset.com/few-sp-500-companies-have-withdrawn-eps-guidance-for-2025, Bloomberg. Source: Bloomberg.
The U.S. Treasury market faced scrutiny in May as investors explored non-U.S. safe-haven options amid surging Japanese bond yields. U.S. 10-year Treasury yields stabilized at elevated levels, but Japan’s 10-year JGB yields spiked to 1.57%, a decade high, driven by Bank of Japan (BoJ) signals of tighter policy and reduced bond purchases. This shift fueled speculation of a continued yen carry trade unwind, as investors who borrowed in low-yield yen to invest in higher-yield assets faced rising costs.
Non-U.S. treasury markets, including Germany’s bunds and Canada’s bonds, lack the liquidity and depth to supplant U.S. Treasuries as the global safe-haven. However, gold rose to $3,600/oz, and safe-haven currencies like the Japanese yen and Swiss franc gained 1.5% and 1.2% against the U.S. dollar, respectively, reflecting diversification away from U.S. assets. The DXY index dipped 0.8%, pressured by tariff pauses and U.S. fiscal deficit concerns. The ECB’s dovish stance, with rates at 2.25%, supported the euro, while the BoJ’s hawkish tilt bolstered the yen.
The potential unwind of the yen carry trade poses risks to global bond markets, as repatriated capital could further elevate Japanese yields and reduce demand for higher yielding U.S. assets. Investors are increasingly hedging against U.S. policy uncertainty, including fears of Fed independence erosion following Trump’s ongoing criticism of Fed Chair Powell.
Bottom line: Diversifying into gold, yen, or other safe-haven assets can mitigate risks from shifting yield dynamics and U.S.-centric uncertainties.
Source: Bloomberg.
Source Bloomberg.
Markets reacted cautiously, with U.S. equity sectors like manufacturing and energy gaining 1-2%, while bond yields ticked higher on inflation fears. The plan’s reliance on tariff revenue to fund tax cuts raised concerns about cost pass-throughs to consumers, potentially pushing U.S. inflation above the Fed’s 2% target. In Canada, the BoC noted risks to export-driven sectors, given 75% of Canadian exports go to the U.S.
Source: Bloomberg, Congressional Budget Office.
Bottom line: The tax plan offers selective opportunities in U.S. equities but requires vigilance on inflation and fiscal risks. Flexible asset allocation remains critical.
Source: Bloomberg, Congressional Budget Office.
Source: Bloomberg
Data and opinions as of May 31, 2025.
Aviso Wealth Inc. (“Aviso”) is the parent company of Aviso Financial Inc. (“AFI”) and Northwest & Ethical Investments L.P. (“NEI”). Aviso and Aviso Wealth are registered trademarks owned by Aviso Wealth Inc. NEI Investments is a registered trademark of NEI. Any use by AFI or NEI of an Aviso trade name or trademark is made with the consent and/or license of Aviso Wealth Inc. Aviso is a wholly-owned subsidiary of Aviso Wealth LP, which in turn is owned 50% by Desjardins Financial Holding Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and The CUMIS Group Limited
This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters. This document is published by AFI and unless indicated otherwise, all views expressed in this document are those of AFI. The views expressed herein are subject to change without notice as markets change over time. Views expressed regarding a particular industry or market sector should not be considered an indication of trading intent of any funds managed by NEI Investments. Forward-looking statements are not guaranteed of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Do not place undue reliance on forward-looking information. Mutual funds and other securities are offered through Aviso Financial Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed, their values change frequently and past performance may not be repeated.
The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to computing, computing or creating any MCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages.
©2025 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar Research Services LLC, Morningstar, Inc. and/or their content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar Research Services, Morningstar nor their content providers are responsible for any damages or losses arising from any use of this information. Access to or use of the information contained herein does not establish an advisory or fiduciary relationship with Morningstar Research Services, Morningstar, Inc. or their content providers. Past performance is no guarantee of future results.
Absolutely not, anyone can benefit from solid investment advice! Even if you are just starting out, speaking with a Wealth Advisor about your unique goals and situation is a great way to get started. Having an investment plan in place can help you reach your life goals, like retirement or buying a home, while giving you peace of mind about your investment choices. We can’t all be experts, right? So why not benefit from a little advice and guidance from those that are!
You don’t need to be an expert to know that the Canadian economy has been unpredictable and has a lot of people on edge right now – but why is that, and what exactly does it mean for you? Well, we are here to help you find out! Think of this article as your own personal cheat sheet to help you better understand some of the terms you’ve heard recently, why this is such a hot topic right now and what impact it may have on you.
Money Mindset is a collection of bite size easy to understand articles, tips and resources where we delve into the world of finance, promote financial literacy, and empower individuals to gain a better understanding of their money and how it works.
At Tandia we have a range of investment products that can help you reach your financial goals. We have a full complement of traditional investment products that can be held within or outside of a registered plan.
No matter what stage of life you are in or how much money you have to invest - we are here to work with you and help your savings grow.
Listen to our weekly Podcast that answers all your burning questions about money. We’re here to make money more relatable, with take-action tips to help you create the life you want.
We will help you tackle those financial problems, look at your goals and help you define your financial journey. Start listening!
Get in touch with us at any time, whether it’s a question about our services or a comment on how we can do things better. Your voice is number one at Tandia.
To report a lost or stolen MEMBER CARD® debit card during regular business hours, call 1-800-598-2891 after hours please call 1-888-277-1043.
Copyright © 2025 Tandia Financial Credit Union Limited. All rights reserved.
