Issue link: https://info.seic.com/i/1537679
Executive Summary • President Trump's "Libera on Day" 10% baseline tariffs took effect, while most of his proposed "reciprocal tariffs" were delayed by 90 days to allow room for further nego a ons. U.S.-China trade talks showed progress, resul ng in a temporary but meaningful reduc on in tariffs. Meanwhile, the U.S. and U.K. reached an agreement to lower import du es on select Bri sh cars and metals. However, poli cal uncertainty in the U.S. remains elevated, as Congress filed a lawsuit against the Trump administra on over the scope of execu ve trade powers. • U.S. equi es rebounded in May, with the S&P 500 and Nasdaq Composite pos ng their best monthly performance since November 2023. The rally was driven by easing trade tensions, robust earnings from U.S. large-cap technology companies, and renewed investor enthusiasm around AI-related deals following President Trump's visit to the Middle East. • The U.K. economy grew more than expected in the first quarter of the year. However, rising utility bills and housing costs pushed inflation up to 3.5% in April, from 2.6% in March — marking the highest level since January 2024. Economic Factors Interest Rates • The Federal Reserve held interest rates steady in May, citing ongoing economic uncertainty and concerns around inflation and unemployment. The Bank of England implemented a 0.25% rate cut, though market expectations for additional cuts later this year have decreased. Inflation • Inflation remained mostly steady in the U.S. and Eurozone, while the U.K. still faced some upward pressure. Tariff uncertainty continues to pose a potential risk to future price stability. Economic Growth • Global economic growth expectations remained uncertain with tariff negotiations continuously evolving. The U.K. economy grew by 0.7% in Q1'25, higher than expected, while European economic growth predictions were reduced to 0.9% from 1.3% in 2025. Tactical Views Commodities • Commodities underperformed in May, as easing geopolitical tensions lowered risk premiums and supply conditions improved in markets like oil and agriculture. U.S. Large Cap Equities • The "Magnificent Seven" U.S. technology stocks rebounded in May amid an overall rebound in equities driven by an improved earnings backdrop despite continued economic uncertainty. Pessimistic Optimistic Pessimistic Optimistic SEI Monthly Update May 2025 This is a marketing communication Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Legend SEI's Current View: Direction of movement from previous: For use by advisers of regulated intermediaries in the UK in acceptance with all applicable laws and regulations