2 minutes to read by  BlueBay Fixed Income team Jun 5, 2025

May Review

• Markets have settled in the aftermath of last month’s tariff turmoil. The S&P 500 began the month by reversing all of the previous “Liberation Day” losses as trade negotiations began and ended the month up 6.15% driven by strong corporate earnings and the “TACO” trade – an acronym for “Trump Always Chickens Out”.

• Further, investors were gifted a brief respite at the end of the month from a US trade court ruling that blocked most of the tariffs, but this was quickly appealed by the administration – adding to trade policy uncertainties going forward.

• Several negotiating countries were already granted concessions, most notably being China and the UK which both had tariffs greatly reduced. Moreover, the battered US dollar continues to be encumbered by concerns about the US fiscal outlook, bringing the currency down 0.14% for the month against a basket of its peers.

• President Trump’s proposed tax cuts from the One, Big, Beautiful Bill Act aim to extend the 2017 Tax Cuts and Jobs Act and have rattled deficit hawks. As well, a Moody’s downgrade of the US credit rating on concerns of the growing debt was the coup de grâce to its pristine triple A rating status.

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