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Overview

Markets advanced in June, recovering from early volatility tied to renewed tariff tensions and geopolitical instability. Mid-month softness gave way to strength, as firm labor data, easing inflation, and expectations of a steady Federal Reserve helped lift sentiment into quarter-end.

U.S. Market Performance & Policy

Equities posted solid gains, with the S&P 500 surpassing 6,000 mid-month. Mega-cap tech continued to lead, while broader strength emerged in healthcare and industrials. The Federal Reserve kept rates unchanged at 4.25–4.50%, maintaining a data-driven stance. Markets began to price in a higher likelihood of a policy shift later in the year, as inflation indicators cooled and economic growth remained uneven. Key Economic Data (U.S.)

Fed Funds Rate: 4.33% (unchanged in June)

Unemployment: 4.2% (steady from May) M2 Money Supply: $22.0 trillion (rising gradually)

Consumer Confidence: Fell to 93.0

Core PCE Inflation: +0.2% month-over-month; 2.8% year-over-year

GDP (Q1 final): Contracted -0.5% annualized

Despite a negative Q1 GDP revision, household spending and labor markets remained stable, helping offset broader concerns about slowing output.

Consumer & Corporate Trends

Consumer confidence declined for a second straight month, reflecting concern over prices and geopolitical headlines. However, spending on essentials and services held firm. Corporate earnings were mixed, with strength in tech and communications. Oil prices rose amid global conflict, lifting energy stocks. Tariff tensions and weak manufacturing sentiment weighed on outlooks in export-driven sectors.

Canadian Market Update

The S&P/TSX Composite rose by approximately 2.6% in June, driven by gains in energy, healthcare, and financials. Headline inflation cooled to 1.7%, and the Bank of Canada held rates steady. Manufacturing data remained soft, and unemployment ticked up to 7.0% as exports weakened under new U.S. tariff measures. Housing remained resilient in major markets, though activity moderated. Investor attention turned to Bank of Canada guidance amid mounting pressure from slowing global trade.

Outlook

In the U.S., steady employment and cooling inflation support cautious optimism, though weak growth and softening sentiment warrant attention. In Canada, strong equity performance and central bank flexibility offer stability, but trade tensions and labor softness remain key risks.

Overview

Markets in May saw a tug-of-war between optimism on cooling inflation and lingering concerns about global trade and labor softness. Early in the month, volatility picked up as bond yields rose and geopolitical headlines resurfaced. By month-end, strong tech earnings and stable central bank guidance helped lift equities back into positive territory.

U.S. Market Performance & Policy

Equities drifted lower in the first half of May before recovering late in the month. The S&P 500 closed just under 6,000, while the Nasdaq posted outsized gains on strength from Microsoft, Meta, and semiconductor stocks.

The Federal Reserve left its benchmark rate unchanged at 4.25–4.50%, while reiterating a data-dependent stance. Futures markets priced in ~50% odds of a rate cut later in the summer, reflecting signs of easing price pressures and modest growth.

Key Economic Data (U.S.)

Fed Funds Rate: 4.33% (unchanged in May)

Unemployment: 4.2% (flat vs. April) M2 Money Supply: $21.9 trillion (gradually rising)

Consumer Confidence: 95.0 (down from 97.8 in April)

Core PCE Inflation: +0.2% MoM; 2.7% YoY

Cooling inflation data supported investor sentiment, though consumer confidence showed continued sensitivity to prices and policy uncertainty.

Consumer & Corporate Trends

Corporate earnings were mixed but highlighted resilience in tech and services. Retail sales grew modestly at +0.3%, led by healthcare and housing-related categories. Buybacks continued at a strong pace, with Apple, Alphabet, and JPMorgan leading activity.

Manufacturing activity steadied at 52.0, while services remained in expansionary territory at 54.7. Both figures reflected slower but stable growth, despite wage pressures in certain sectors.

Canadian Market Update

The S&P/TSX Composite gained around 1.8% in May, closing just above 26,600. Energy stocks advanced on firmer oil prices (above $80/barrel), while financials delivered steady earnings. Technology and industrials also supported the index, offsetting weakness in materials.

The Bank of Canada held rates steady and emphasized patience as inflation continued to drift toward its 2% target. Housing activity showed resilience, with steady sales in Ontario and British Columbia despite elevated borrowing costs.

Canadian banks reported stable credit quality and strong capital positions, signaling confidence heading into the second half of the year.

Outlook

In the U.S., cooling inflation and steady labor markets point to cautious optimism, though confidence and global trade risks remain watchpoints. In Canada, firm banks, energy strength, and central bank flexibility provide a constructive backdrop heading into the summer.