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Financial markets can sympathize with the sentiment of the statement above, given the recent headlines and noise around tariffs and fiscal policy. Our teams have been embracing this rapidly changing environment, adjusting positioning to take advantage of volatility, and exploring differentiated business performance between regions, industries and peers.

US-China trade tensions de-escalated midway through May when both nations agreed to a temporary reduction in tariffs, which helped fuel a rally in risk assets. Later in the month, though, President Trump sparked more headlines around tariff policy, with comments on Europe and specific industries like steel. However, the somewhat constant policy flip-flopping has led to reduced market sensitivity for now. Attention then somewhat shifted toward the House passing the “Big Beautiful Bill Act.” As this bill has now moved to the Senate and there is a pressure to pass the bill ahead of the next debt ceiling deadline, we expect more headlines surrounding this topic which has already created significant volatility within the clean energy space. Not only have we seen interesting investment opportunities as a result of this volatility, but we believe that the changes proposed to tax deductibility for manufacturing structures could lead to meaningful changes around US manufacturing capital investment and related M&A, and present even more intriguing opportunities.

We have seen upward pressure on long-end US Treasury yields as this bill has brought more expansionary fiscal impetus than was previously expected, and against a macroeconomic backdrop where tariff revenues may come in lighter than anticipated as well. It remains to be seen if the 30-year Treasury yield can sustainably hold below the 5% level, which it crossed in Q4 2023, and we have seen the uncertainty weighing on some areas like Homebuilders and Real Estate (figure 1).

Figure 1: 30-Year Treasury yields throughout the past 10 years

While markets moving on headlines around trade and US policy can generally be challenging for more medium-term fundamental investing, our relative overweight bias to non-US equity strategies has been helping us navigate these markets. We can see that the correlation between MSCI Emerging Markets and the S&P 500 has substantially declined in recent months to multi-year lows, allowing our non-US regional specialists to focus on macro and micro dynamics within their specific area, where crowding often remains a less significant factor (figure 2).

Figure 2: Correlation between the MSCI Emerging Markets index and the S&P 500 index

Our O’Connor business is also embracing change as we embody “constant readjustment to our surroundings” (see beginning quote). On 28 May 2025, �۶���Ƶ Asset Management entered into a definitive agreement to sell O’Connor to Cantor Fitzgerald, with the transaction expected to close sometime in Q4 2025. We believe this will be transformational for our business and we are excited about the opportunity for O’Connor to operate as a distinct business and as the cornerstone of growth initiatives for Cantor Fitzgerald’s alternative investment business. We are encouraged by O’Connor’s potential given additional investment in both talent and operating platforms. We also expect the move to help provide further opportunity for us to explore new investment strategies and expand our existing capabilities.

The team and I share in excitement for the changes ahead, and we thank you for your ongoing support.