Buy the US is back on trend (for now). The TPP strategy of the month....

The ‘Sell the U.S. and buy Europe’ turned around in June.

So far this year, we have seen European equities gain on the back of American losses due to President Trump’s tariff plans and a potentially ‘frothy’ U.S. equity market.

However, June saw a small reversal of this as European markets lagged behind, with nearly all making losses. It seems the fear of inflation and the economic impact of tariffs has somewhat dissipated.

As the July deadline nears, the UK and US are close to finalising a largely symbolic trade deal, which the UK is motivated to secure in light of its weakening economy. Chancellor of the Exchequer Rachel Reeves recently delivered a very tight Spending Review, sticking to previous budget plans but cutting most departmental budgets except for defence, healthcare and education.

With little room left in the budget, tax hikes could be forthcoming this autumn if productivity doesn’t improve. Meanwhile, the Bank of England held interest rates steady at 4.25% in June, signalling a possible rate cut in August to support the economy.

As mentioned, June saw a little confidence come back to the American market, seemingly unfazed by heightened Middle East tensions (which were short-lived) and the looming 9^th July deadline for the administration’s pause on reciprocal tariffs.

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Europe clearly lagged behind in June, with Iceland’s ICEX falling over 6% and Denmark’s C25 index dropping nearly 4%.

Despite an interim bout of volatility, the S&P 500 and the tech-heavy NASDAQ pushed higher, with both indices ending the month near new all-time highs. The Dow Jones Industrial Average was only slightly behind, up 4% for June.

Nine out of the 11 sectors delivered positive returns, with Consumer Staples and Real Estate lagging.

Signs of a global economic slowdown, however, continue to mount, fuelled by weak housing data, further cooling in the labour market and an unexpected deceleration in U.S. consumer spending.

Bond yields edged lower in June, with the 10-year Treasury falling to a two-month low of 4.25% as signs of economic weakness began to emerge. Adding to the positive sentiment in the bond market were comments from several Fed officials, which pushed forward the expectations for a Fed rate cut to September, one month earlier than expected.

Lower oil prices have put downward pressure on inflation in recent months, which is a positive; however, the impact from tariffs is still expected to affect prices in the months ahead. The risk of higher inflation has kept the Federal Reserve in wait-and-see mode, with policymakers holding the benchmark interest rate steady at 4.25%-4.5% in June, as expected.

While this month’s decision was easy, future policy actions are likely to become more challenging as the Fed will need to balance the risks of softening growth and a murkier outlook for inflation. The market still has two rate cuts priced in by year-end 2025.

Amid nonstop news on Iran, oil prices briefly approached 52-week highs in June after hitting a four-year low in May. With a ceasefire in place, oil prices have receded once again.

Meanwhile, China has agreed to maintain a steady supply of rare earth exports to the US, reversing its earlier restrictions – but its commitment is limited to six months. The US already mines more than enough rare earths for its domestic needs, but doesn’t yet have sufficient processing capabilities, which leaves them as a bargaining chip for China.

The large rebound in the U.S. stock market in May wasn’t enough for the Leading Economic Index to show a positive print last month. The Conference Board indicated it expects further weakening in economic activity for 2025 and 2026 under the pressure of tariffs, but is not expecting a recession this year.

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TPP portfolios had another good month and are now looking at some great H1 performances. As usual, our trackers followed their indices with heightened returns, meaning it was a good month for the US-based trackers, but with little support from elsewhere as Europe moved sideways.

We always recommend a diverse portfolio, which means having a couple of trackers, a couple of long/flats and then top it off with something more active. If you’ve got that, then chances are you will always have a few of the top monthly performers.

This month, the league table looks like this:

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As you can see, it was another good month for a number of TPP’s trading strategies. Our clients’ portfolios are having a great run so far this year, with many posting double-digit returns.

Next week, we will be posting our results for Q2 and the first half of 2025. One thing we can tell you is that the average strategy is well above its benchmark, which is what we set out to do.

TPP is a discretionary portfolio management service which uses professional traders to heighten returns. We aren’t just putting your money in the market and leaving it; we are trading it, tweaking asset allocations, increasing position sizes, and occasionally derisking in order to provide the best possible return for clients on their investments.

To put our monthly results into perspective, the Barclays Hedge Fund Return Index posted a small gain of only 2.3% which brings the YTD for the average hedge fund to a disappointing 5%.

We look to beat our index benchmarks, but we also look to beat the Hedge Fund Index, and so far in 2025, we are doing just that.

For more information on how you can have a bespoke TPP portfolio, please do contact head of trading by clicking here.

Minimum capital required for a TPP portfolio: £20,000.

Disclaimer: The views expressed in this article are the author’s own and should not be considered in rendering any legal, business or financial advice. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only.

Past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to the corresponding past performance.

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