June was a broadly positive month for investors. Equity markets made gains, led by Asia, and bond markets delivered steady returns thanks to stable yields.
Halfway through 2025, the UK and mainland Europe continue to be the standout equity regions. The US, meanwhile, is lagging by some distance.
Here are our five key takeaways from June… which you can also download as a pdf.
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Interest rates on hold
To the dismay of Donald Trump, the Fed kept interest rates steady this month. The Bank of England (BoE) and the European Central Bank (ECB) did the same – though the ECB is well ahead in the cutting cycle.
No one is quite sure on the direction of tariffs, or when any impact will truly be felt in hard economic data - so the Fed’s wait-and-see approach makes sense. Meanwhile, the ECB are in a different spot: they have inflation under control, they see scope for tariffs to lower prices if imports shift from the US to Europe, and interest rates are close to their forecast neutral 2%.
2. Fed to lower US bank capital requirements
Regulation is a clear safeguard, but it’s often seen as a headwind to growth, restricting what businesses might do and how they might behave. Since the Great Financial Crisis, banks have faced stricter rules on how they lend money and how much they need to keep in reserve.
Now, the US Federal Reserve (Fed) is planning to loosen some of those rules for the country’s largest banks – on the grounds that those banks are in good financial shape. The move would mean the banks will need to hold less high-quality capital, which should allow greater participation in the US Treasury market.
The aim? To support a more flexible and responsive financial system – one that can better support economic growth, especially helpful in a country that relies so heavily on debt for that.
3. US steps into Israel-Iran conflict
The US moved from words to action in the Isael-Iran conflict, bombing a number of Iranian nuclear facilities. The outcome of these strikes remains unclear, with conflicting levels of success reported.
For markets, the big fear was the risk of escalation, and the potential impact for global economies. Iran’s response - an attack on a US airbase in Qatar – was, relative to other options, considered a positive outcome. Had Iran opted for blocking the Strait of Hormuz and, in turn, restricted the global supply of oil, the market reaction would likely have been worse.
A tentative ceasefire is now in place, and for the time being, markets are choosing to take an optimistic view of things.
4. US Dollar decline
The Dollar continued to weaken through June, bringing its year-to-date losses to around 8% against Sterling and 12% against the Euro. This has created a big gap in US equity market returns for American and (unhedged) global investors.
It’s unclear whether this is simply the US dollar settling back from elevated levels, or a legitimate reaction to the current policy and leadership out of Washington. Either way, the idea that the US market is the default destination for capital flows is under challenge.
We’re not seeing significant evidence of US assets being sold - but there’s a notable trend of new money being more globally diversified.
5. Section 899 removed
A controversial clause, akin to a ‘revenge tax’ that appeared in the One Big Beautiful Bill has been dropped.
Section 899 was poorly received. It looked to allow the US to tax non-US individuals and companies doing business in the US, if their home country tax system wasn’t to the liking of the President.
The removal aligns with an agreement of how US corporation tax will interact with G7 minimum global tax levels.
| Name | 1m | 3m | YTD | 1yr | 3yr |
|---|---|---|---|---|---|
| FTSE Actuaries UK Conventional Gilts All Stocks | 1.45 | 1.94 | 2.50 | 1.63 | -8.93 |
| ICE BofA Global Corporate | 1.33 | 1.88 | 3.74 | 7.05 | 13.21 |
| ICE BofA Global High Yield | 1.57 | 3.06 | 4.39 | 9.98 | 31.36 |
| FTSE All Share | 0.48 | 4.39 | 9.09 | 11.16 | 35.50 |
| FTSE USA | 3.44 | 4.83 | -2.76 | 6.68 | 51.28 |
| FTSE World Europe ex UK | 0.72 | 6.21 | 14.32 | 9.95 | 49.21 |
| FTSE Japan | 0.25 | 4.89 | 2.57 | 5.93 | 34.10 |
| FTSE Asia Pacific ex Japan | 3.85 | 5.97 | 3.69 | 6.32 | 17.99 |
| FTSE Emerging | 2.96 | 3.29 | 2.40 | 7.28 | 17.99 |
Source: FE Analytics, GBP total return (%) to last month end
This commentary is for general information and shouldn’t be seen as a personal recommendation. If you’d like to get advice on whether an investment is right for you, speak to your financial adviser. It’s also important to remember that an investment’s past performance isn’t an indicator of its future performance, and you could get back less than you put in. There’s also no guarantee that an investment will meet its objectives.