In what can only be described as an event-packed May, financial markets navigated a minefield of global macro developments: escalating US–China trade tensions, a surge in Japanese government bond yields, and renewed concern about fiscal sustainability across developed markets.

The Fed’s interest rate decision, economic projections, and press conference will guide market expectations on US monetary policy in H2.

We have previously examined the equity/bond allocation and asked, ‘Is 40/30/30 the new 60/40?’ Well, yes, we think it is. Our work shows a long-term correlation between equities and fixed income that is frighteningly close to 1.0. This increased correlation fundamentally alters the effectiveness of traditional portfolio construction.

Preliminary sentiment and inflation data from the US will offer fresh insight into the tariff impact on household confidence and ultimately the Fed’s policy path.

Although navigating by the stars can seem brave and adventurous, we would not recommend it on financial markets. Better be equipped with a solid compass !

The ECB and Bank of Canada will both announce monetary policy decisions. The tone of President Lagarde’s press conference will be closely monitored for signals on how gradual or front-loaded the path of cuts may be reinforcing a synchronized easing among developed markets - except the Fed.

Global manufacturers are navigating a highly challenging environment marked by tariffs, trade conflicts and new alliances, supply chain disruptions, and rising geopolitical tensions.

Markets will assess the fallout from Donald Trump’s tariff threats on the European Union. The move raises risks for global trade, inflation, and corporate margins.