Week in review
- China Caixin services PMI up 51.1, improved from April
- European Central Bank lowered policy rate by 25bps
- May ISM Manufacturing Index came in at 48.5
Week ahead
- U.S. May CPI
- China May activity
- Japan Apr industrial production
Thought of the week
Financial markets have experienced significant volatility in recent months, driven by seismic changes in U.S. policies, encompassing trade tensions and concerns over fiscal sustainability. The prevailing uncertainty regarding the resolution of these policies and their subsequent impact on the global economy suggests that market volatility is unlikely to dissipate in the near term. In this context, it is important for investors to construct a resilient portfolio capable of weathering through the uncertainties that lie ahead. Fortunately, historical periods of heightened uncertainty have been accompanied by low, or even negative, correlations between global equities and global debt. And it is no different this time, with stock-bond correlation having shifted in a favourable direction. As such, diversifying across equities and bonds remains an effective strategy for enhancing portfolio resilience, with this current level of uncertainty stressing a need for diversification in investment strategies.
Correlation between equities and bonds versus economic policy uncertainty
6-week correlation, USD price return
Source: Bloomberg, FactSet, MSCI, J.P. Morgan Asset Management. Data reflect most recently available as of 06/06/25.
Market data
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All returns in local currency unless stated otherwise.
Currencies’ return are based on foreign currencies per U.S. dollar. An appreciation of the foreign currency against the U.S. dollar would be positive and a depreciation of the foreign currency against the U.S. dollar would be negative.