Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The first half of 2025 saw a volatile market, but equity markets rebounded significantly after April 2, with the S&P 500 returning 6.2%, MSCI Europe returning 23.7%, and KOSPI leading with a return of 40.9% [2] - The US dollar experienced its worst first half since 1973, while Brent crude oil prices rallied by 9.4% [5][2] - Credit markets showed resilience, with US high yield (HY) total returns at 4.6% and EUR HY at 2.7% [2] Performance Summary - Global equities saw significant returns, with the S&P 500 at 6.2%, MSCI Europe at 23.7%, and KOSPI at 40.9% [12] - Fixed income performance included US IG total returns at 4.2% and US HY at 4.6% [12] - The US dollar depreciated, with notable currency appreciation against it, including EUR by 13.9% and JPY by 11.1% [12] Technicals - Gross issuance in developed markets (DM) for high yield (HY) and investment grade (IG) fell by 8% and 10% respectively compared to the 2024 run rate [3] - There were outflows from US equities and inflows into fixed income assets, indicating a shift in investor sentiment [3] Sentiment Analysis - The Market Sentiment Indicator (MSI) signaled a risk-off approach in mid-June but returned to neutral by the end of the month [4] - Volatility, as measured by the VIX, decreased to four-month lows after a spike due to geopolitical tensions [4] Market Review & Trends - The report highlights a mixed performance across sectors, with technology leading global equity sectors while consumer staples lagged [2] - The report also notes a significant decline in US equity demand, benefiting European stocks [14] Valuations - Current P/E ratios for major indices include S&P 500 at 24.4 and MSCI Europe at 15.9, indicating varying levels of valuation across regions [24] - The report provides insights into forward P/E ratios, with communication services at 20.1 for ACWI and 20.6 for the US [26] Fixed Income Markets - US 10Y yields are at 4.23%, with high yield spreads at 290 basis points, reflecting the current credit market conditions [29] - The report indicates that US HY total returns are at 4.6%, while EUR HY is at 2.7% [29] FX & Commodity Markets - The report notes significant appreciation of various currencies against the USD, with EUR up 13.9% and JPY up 11.1% [32] - Commodity performance includes Brent crude oil rising by 9.4% and gold prices showing a notable increase [32]

Investment Rating - The report indicates an overall positive sentiment towards US equities and core fixed income, suggesting an overweight (OW) position in these areas [12]. Core Insights - Equity markets experienced a rally in May, with the S&P 500 gaining 6.3% and the TOPIX increasing by 5.0%. Technology and communication services sectors led the gains, while healthcare lagged with a decline of 3.7% [2][11]. - The Market Sentiment Indicator (MSI) shifted to a neutral stance after initially signaling risk-off, with the VIX index reaching three-month lows [4][11]. - Gross issuance in the investment-grade (IG) and high-yield (HY) markets decreased by 12% and 28% respectively compared to the 2024 run rate, indicating a shift in market dynamics [3][11]. Market Review & Trends - **Equities**: The S&P 500 had its best May performance since 1990, with total returns of 6.3%. The technology sector outperformed with a 10.3% increase [5][11]. - **Fixed Income**: The UST 10Y yield was reported at 4.4%, with a total return of -1.1% for the month [11][32]. - **FX**: The US dollar depreciated against most developed market currencies, with the DXY index down 0.1% [2][34]. - **Commodities**: WTI Crude oil saw a notable increase of 5.3% in May [2][34]. Valuations - The report highlights that the current P/E ratio for the S&P 500 stands at 23.3, indicating a relatively high valuation compared to historical averages [27][30]. - The forward P/E for various sectors shows that communication services and consumer discretionary sectors are at 90% and 88% percentile respectively, suggesting high valuations [31][30]. Technicals - The report notes a significant decrease in gross issuance for both IG and HY markets, with a year-over-year decline of 12% for DM IG and 28% for DM HY [3][11]. - The cumulative change in the Fed rate over the next 12 months is projected to be -84 basis points, indicating expectations of rate cuts [11][12].