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TD Wealth Market Insights: May 2025 Recap
Source: Morningstar, TD Wealth Chief Investment Office. Indices used include the Bloomberg US Treasury TR Index, Bloomberg US Aggregate Bond TR Index, Bloomberg US Corp Bond TR Index, Bloomberg US Treasury US TIPS TR Index, Bloomberg Municipal TR Index, Bloomberg US MBS Float Adjusted TR, ICE BofA US High Yield Constrained TR Index, S&P 500 TR Index, Russell 1000 TR Index, Russell 1000 Growth TR Index, Russell 1000 Value TR Index, Russell 2000 TR Index, MSCI EAFE NR Index, and the MSCI EM NR Index, LMBA Gold Price PM, WTexas Crude Int Oil BL. All performance is in U.S. dollars. Past performance is not indicative of future results. The indices are a tool to compare the performance of one or more indices. The volatility and performance of the indices may be greater than or less than the volatility and performance of actual investments. Indices reflect the reinvestment of dividends and income. Indices do not have fees, expenses or taxes, which would lower performance. Indices are unmanaged and not available for direct investment.
Monthly Market Brief Commentary – May 2025
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Equity Markets Reward Patient Investors: Equity markets rebounded sharply from the tariff-related April lows, recouping recent declines as trade tensions eased in May. While financial markets may have, at times, been uncomfortably volatile in the opening months in 2025, broad-based gains have helped to highlight the importance of time in the market, not trying to time the market. When it comes to uncertainty, markets can be quick to react, but investors don’t need to be. In fact, some of the very best days in financial markets have historically occurred during periods of significant volatility. Having a disciplined approach to the personal part of finance can be one of the most important aspects of successfully managing your finances, especially in today’s economy. When emotions are running high, sometimes the most valuable asset an investor can have in place is a thoughtful and well-defined financial plan.
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Progress on Trade Policy: In early May the White House announced its first trade deal, which it described as a "full and comprehensive" agreement with the UK. While this may be more symbolic than economic, it marked positive progress on global trade negotiations. Later in the month, financial markets rallied on signs of thawing U.S.-China trade relations. As part of an agreed 90-day tariff reduction, the U.S. announced it would cut its levies on Chinese imports to 30%, while China would lower its tariffs on imported U.S. goods to just 10%. Together, China, the European Union, along with neighboring Canada and Mexico, represent over three-quarters of U.S. exports and imports. Long-term trade agreements with these regions will be important to the economic outlook and path of inflation.
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Deficit in Focus: With signs of progress on trade, the deficit and budget reconciliation came into focus for many investors in May. Credit rating agency, Moody's, downgraded U.S. government debt by one notch mid-month, citing the challenge of successive administrations to effectively bring debt under control. As the Trump-administration's "One Big Beautiful Bill" makes its way through Congress, it is likely to push deficits higher, keeping investors nervous about rising deficits and a possible lack of foreign demand for Treasuries. While fixed income assets have recently come under pressure, for investors whose goals include greater income, higher yields may represent an attractive opportunity.
TD Wealth Asset Allocation Views – June 2025
INVESTMENTS, SECURITIES AND ANNUITIES |
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NOT A DEPOSIT |
NOT FDIC-INSURED |
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY |
NOT GUARANTEED BY THE BANK |
MAY GO DOWN IN VALUE |
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