Market Perspectives Q2 2025

Insights from Q2 2025

Uncertainty associated with trade policy has dominated the start of the year, with stock markets moving lower, then higher, primarily a function of tariff developments. While stocks have rallied off lows after the tail risk of a U.S.-China trade embargo appears to have been removed, uncertainty remains. We have also witnessed significant divergence in performance across asset classes year-to-date, underscoring the importance of portfolio diversification and disciplined rebalancing. After falling earlier in the year, bond yields have since trended higher, with heightened inflation expectations and an improving economic outlook.

The outlook for the economy remains uncertain, though based on recent developments, we expect growth to be revised marginally higher. While the chances of a recession are elevated, it is not currently our base case, and the outlook for growth has recently improved following more favorable U.S.-China trade developments.

Inflation expectations are elevated and are anticipated to remain above the Fed’s long-term target of 2% over the near term. Given the continued uncertainty, the Fed will likely remain in “wait and see” mode, and we expect a higher-for-longer interest rate environment, albeit with a downward bias.

We are positive about the long-term outlook for stocks, particularly given our base case that a recession will be avoided. We do, however, anticipate ongoing volatility given the uncertain backdrop. We believe taking a long-term view, maintaining broad diversification, remaining disciplined with investment decision-making, and staying fully invested is critical. Bond yields are currently attractive, with many of our preferred bond funds yielding mid- to high-single digits. Moving forward, we believe alternative strategies may offer attractive risk-adjusted return potential.

To learn more, please download our Quarterly Market Perspectives.

Managing Your Investments at Mission Wealth

Encouraging progress on trade relations has helped ease some uncertainty, and while inflation and global dynamics remain in focus, these conditions also create opportunities for well-diversified portfolios. We remain confident that investors can successfully navigate short-term volatility and stay on track toward their financial goals with a steady, long-term approach and thoughtful guidance. As we progress through 2025, maintaining a globally diversified, tax-efficient portfolio aligned with your long-term goals remains essential. At Mission Wealth, we build portfolios tailored to your financial plan and designed to stand the test of time.

To explore how we can support your financial journey, connect with our team today.