Six short months ago we were ringing in a new year, swearing we were going to stick to our resolutions, and and getting ready to watch the Buckeyes in the Rose Bowl (ok, maybe that was just me).
So how do things looks now that we’re halfway through 2025? And what can we expect the rest of the way? Let’s find out.
Summer Surge: The Markets Sizzle
The month of June was a highlight of 2025 and was surely entertaining for all who followed. The benchmark S&P 500 climbed around 4.4% in June, closing at an all-time high of 6,173.07 on June 27.
That means that for the year, the S&P is currently up 5.75%. Which by itself isn’t super noteworthy – that puts us on pace for a full year return of slightly above 10%, which has been the historical average for the past 100 years. (Obvious disclaimer that many a fortune has been lost by simply annualizing a return and assuming it’ll be guaranteed.) When you think of all that’s happened in the past six months – a presidential transition, a global trade war, tariff on/off/on/repeat, a giant tax bill, war in the middle east, etc – the fact that we’re currently trending towards simply a “normal” year in the market is telling by itself.
You’ve heard me preach it before, but I’ll use this as another reminder to never trade the news or make financial decisions based on short-term emotions or panic. If you leave your money in the market you’ll (eventually) come out ahead.
Inflation Outlook: Cooling Yet Uncomfortably Sticky
May’s CPI rolled in at 2.4% year-over-year—up just a hair from April’s 2.3%—while core CPI, which strips out food and energy, held steady at 2.8%. On a month-to-month basis, prices are ticking up more slowly, but those annual numbers have shown that inflation is still stubbornly above the Fed’s 2% sweet spot. The big-ticket categories like rent and medical costs are keeping a floor under overall prices, even as energy and used-car prices ease.
All of which means policymakers can’t get too comfortable yet—they’re watching every data point for signs of a lasting slowdown. Bottom line: inflation’s cooling, but it’s not out of the woods, so expect the Fed to keep one eye locked on to the numbers before dialing back rates
The Fed’s Dilemma: Paused, but Not Passive
On June 18, the Fed decided to keep its policy rate at 4.25–4.50% for the fourth meeting in a row, while still penciling in two modest cuts before year-end. Chair Powell stressed a “data-driven” approach, noting that recent tariff shocks and a still-soft labor market mean there’s no rush to ease. Markets have since shifted, and I along with many others see a first cut as soon as September as there will be more yearly data and possibly…some more trade deals.
There’s been plenty of back-and-forth between President Trump and Chair Powell lately, which could push the Fed toward an earlier rate cut. Still, given the Fed’s commitment to a patient, data-driven approach, I wouldn’t be surprised if we ultimately see policy easing later in the year.
Tax Bill: The Dog Days Of Summer
As I write this, the Senate has just passed their version of the tax bill. It now heads back to the House, where they can either accept the Senate’s version, or provide MORE changes, which then go back to the Senate. I’m still a little skeptical they’ll meet their self-imposed July 4 deadline, but it’s certainly possible now.
Once it eventually passes you can expect an email dedicated to all the gory details, so I’ll spare you the particulars now. But we’re getting close!