Raymond James said the summer rally in global equities was underpinned by “Goldilocks” economic conditions, but warned that the three pillars, low oil prices, declining Treasury yields, and steady labour markets, “will be tested post-Labor Day.”
In a note titled 10 Lessons of Summer ’25, the firm observed that “essentially, we have been in a rising asset value environment around the world since April, with nearly every equity index at all-time highs.”
Credit spreads and non-equity assets were also at historic levels, supported by strong corporate earnings and U.S. 10-year Treasury yields trending down despite tariff-related inflation.
Raymond James highlighted ten themes investors should take from the season. Among them, the “rally off [of the] April lows continued,” initially narrow in AI names before broadening in August.
Economic data was “Goldilocks,” with full employment, accelerating retail spending, and loan growth pointing to a soft landing.
The firm noted inflation from tariffs has begun, though “it is mild so far, and the bond/equity market has not expressed concern yet.”
At the same time, “earnings improved meaningfully and broadly in 2Q,” easing management worries about tariff effects.
While some commentators have raised concerns about an AI bubble, Raymond James argued that “it just appears we have an excess of risk capital globally relative to securities available to purchase. An everything bubble maybe?”
The firm added that despite late-summer weakness in AI stocks, “capex continues to get raised at cloud companies,” financing infrastructure growth.
China’s equities also broke out to their highest since 2021, with the CSI 300 leading global gains.
Looking ahead, Raymond James said the key question is whether earnings growth will broaden beyond the “Mag 7,” a shift that “keeps getting pushed out another 90 days.”
Source :
https://www.investing.com/news/stock-market-news/heres-what-you-would-need-to-know-about-the-equity-market-this-summer-4222487
