Mid-Year Market Review: H1 2025
What a ride. The first six months delivered exactly what the Trump 2.0 agenda promised: volatility, rotation, and a decisive shift toward U.S.-centric assets.
June 2025First Half Recap
The story kicked into gear with Liberation Day in April. The broad tariff barrage—50–60% effective on China, 25%+ on Canada/Mexico/Europe—triggered supply-chain chaos, goods inflation spikes, and a sharp risk-off episode in Q2.
May's hot CPI print (core above 4%) slammed the door on Fed cuts, pushing yields higher. Equities held up thanks to AI capex momentum. Bonds took the biggest beating—10-year yields back near 5%.
The market rewarded purity: domestic revenue, pricing power, real assets. Global exposure was punished hard.
Standout Winners
- AI Infrastructure: NVIDIA and Alphabet up 40%+ YTD, hitting repeated ATHs
- Industrial Metals: Gold cleared $3,200, silver past $40, copper broke $5.50/lb
- Domestic Cyclicals: Small/mid-cap industrials, materials, banks up double digits
- Energy: U.S. producers benefited from exemptions and higher prices
Biggest Losers
- Global Multinationals: Apple, Tesla, Nike down 10–30% from peaks
- Emerging Markets: Currencies in tatters, equities down sharply
- Long-Duration Growth: Rate-sensitive names outside AI core hammered
- Bonds: Fixed income posted worst H1 in years
H2 Setup
Second half feels like more of the same, but with higher stakes. Inflation should moderate as tariff base effects roll off, but the Fed won't rush cuts—maybe one or two by year-end.
Big risks: tariff retaliation escalates into broader trade war, or inflation reaccelerates. Upside catalyst: successful negotiations soften levies.
We see the path of least resistance higher for risk assets into year-end, but only for the right names. Volatility will stay elevated.
Vector Ridge remains heavily overweight AI infrastructure (NVIDIA, Alphabet), industrial metals (gold, silver, copper miners), and high-quality domestic cyclicals.