Monthly report for June

The YTD return in P+ Balance was 3.2 percent at 30 June, representing a 1.3 percentage points increase compared to the end of May. 

The month's portfolio returns accounted for 2.4 percent for equities, 0.7 percent for special investments, 1.0 percent for credit bonds, 0.5 for real assets and 0.3 percent for bonds. 

June was characterized by positive trends on the financial markets, despite periods of increasing geopolitical tensions. The last month of the first half year of 2025 had barely begun before the US president, Donald Trump, announced a doubling of tariffs on steel and aluminum from 25 to 50 percent. And during the month he grew so frustrated with the pace of the trade negotiations with the EU that he threatened to impose a 25 percent tariff on European cars. Trump further engaged the US in the Middle East crisis by initiating an airstrike targeting Iran's nuclear facilities in the wake of Israel's military activities in the country. The oil prices increased, and equities showed signs of weakness, but recovered once it became clear that the US involvement was not part of a long-term campaign and was supported by Trump's efforts to secure ceasefire between Israel and Iran. 

The positive sentiment on the financial markets was supported by key indicators for the US economy which were not impressive, but also did not indicate that the global trade war was about to result in recession or uncontrollable inflation. The Fed maintained the key interest rate on their meeting in June, but with a continued slowdown in the US labour market, which in itself will reduce inflation, market expectations are that the Fed will have room to ease the monetary policy going forward. This contributed to the short and long interest rates falling during the month. In Europe, the ECB cut the benchmark interest rate by 0.25 percent which was in line with market expectations. Inflation has receded to the level of the inflation target, increasing the ECB's flexibility in a situation when the economic impacts of the trade war have yet to be clarified. 

Throughout June, Trump has attached great importance to getting Congress to pass his Big Beautiful Bill by early July. The Bill includes everything from tax reliefs to funding activities related to national security as well as social security cuts. With the passing of the Bill it is expected that focus once again will be on the trade war and potential market volatility as the deadline for entering into bilateral trade agreements meant to prevent tariff increases which was announced in early April is getting dangerously close.