Summary of Key Points from the Conference Call Industry Overview - The report covers the global financial markets, focusing on equity, fixed income, and commodities performance in 2025. Core Insights and Arguments - **Equity Performance**: Global equities showed strong gains, with the ACWI closing at +22.9%. Notably, MSCI EU led developed market returns at +36.3%, while MSCI Korea led emerging markets with a remarkable +100.8% return [3][6]. - **Fixed Income Performance**: Emerging Market $ Sovereign bonds performed well, returning +13.1%. However, US dollar bonds underperformed, with the US dollar declining by -9.4% against G10 currencies [3][4]. - **Gold Performance**: Gold had its best year on record, with a return of +64.4% [3]. - **Market Sentiment**: The VIX index spiked to five-year highs but recovered to cycle lows by year-end, indicating fluctuating market confidence [5]. - **Issuance Trends**: Developed Market Investment Grade (DM IG) gross issuance increased by 10% compared to the previous year, with flows into US IG funds outpacing those into high-yield funds [4][13]. Important but Overlooked Content - **Real Returns Ranking**: In 2025, MSCI EU and MSCI EM were ranked highest for real returns, with +33% and +31% respectively, while MSCI CN followed with +28% [6][20]. - **Sector Performance**: The report highlights sector performance, with significant variations across different sectors and regions, indicating potential areas for investment [28][29]. - **Valuation Insights**: The report discusses cross-asset valuations and the expected returns over the long run, suggesting a cautious approach to asset allocation given stretched valuations [16][19]. Conclusion - The financial markets in 2025 experienced significant volatility and performance disparities across different asset classes. Investors are advised to consider these trends and the underlying economic indicators when making investment decisions.

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].