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DST Investment Advisors June Markets Letter Download Newsletter DST Investment Advisors June Markets Letter Whether it be unique alternative investments, creative tax savings, regular income or growth potential that you are considering, the DST Investment Alternatives platform has it. NOTE: Information and content compiled as of 4:00PM CST June 16th. THIS MONTH’S HIGHLIGHTS U.S. inflation remains contained, and the Federal Reserve is in no rush to cut interest rates. Preliminary results for June from the University of Michigan’s monthly Index of Consumer Sentiment showed a 16-percent jump in the headline index. The initial tariff shock wore off and markets recovered most of the losses incurred in the immediate aftermath of “Liberation Day”. The index does remain 20 percent below December 2024 levels – see Chart 3 below. The VIX index (Wall Street’s “fear gauge”) is holding around 20, indicating expectations of continued low market volatility. Life science real estate continues to attract investment from major pharmaceutical firms and family offices, reflecting growing long-term confidence in the sector. MARKET REVIEW & SUMMARY Crude oil prices have surged +27% over the past 30 days due to renewed Middle East tensions. Note – What Is Crude Oil, and Why Is It Important to Investors? The U.S. Dollar continues its 2025 correction, now down nearly 12%. A weaker dollar may enhance the competitiveness of U.S. exports in a volatile, tariff-sensitive global trade environment. For those tracking currency trends, the U.S. Dollar Index (symbol: DXY) offers a helpful reference. Note: A G-7 meeting is scheduled this week in Canada, where tariff discussions are expected to be a key topic. Total nonfarm payroll employment increased by 139,000 in May. The unemployment rate held steady at 4.2%, remaining within a narrow range of 4.0% to 4.2% since May 2024. Job growth was concentrated in healthcare, leisure, and hospitality, while federal government employment continued to decline. On The RadarMonitor crude oil (symbol: CL=F) and gasoline prices (symbol: UGA), as both may influence June’s inflation figures. Did You Know?Stocks are almost back into Neutral territory, historically a bullish sign, as measured by two often watched indicators: Morningstar US Market Fair Value and the Fear & Greed Index at 60. WHAT WE’RE WATCHINGReal Estate: Life Science Infrastructure. Shannon Morfin, CEO of LifeScienceX, which provides capital and growth strategy solutions for life science infrastructure and real estate, recently pointed out that a “record-breaking $53B in pharma imports has become a wake-up call for domestic manufacturing”. Historically, manufacturing was offshored by design. See Rx Reform: The Quest to Bring Pharma Profits and Production Back Home. 60–70% of branded drugs used in the U.S. are manufactured abroad. Over 80% of generic medications are produced internationally. 70–80% of active pharmaceutical ingredient (API) production occurs overseas, primarily in China and India. Despite U.S. leadership in R&D, reliance on foreign manufacturing raises concerns about cost, jobs, taxes, and supply chain risk. How Has the U.S Responded?Major pharmaceutical companies have announced a combined $158 billion in U.S. manufacturing investments, following policy efforts aimed at encouraging domestic production. Federal legislation has also been introduced to strengthen U.S. life sciences infrastructure, including: The 2022 CHIPS and Science Act BARDA funding initiatives supporting biosecurity and domestic supply chains Note: Six life sciences real estate trends to watch in 2025. Worth Reading – Life Science Real Estate: The real estate asset class of the future.With increased spending on research and development, the life science industry is expected to continue to grow at a sustained and dynamic pace. The COVID-19 pandemic was the catalyst to consider alternatives to the sourcing and manufacturing of critical drugs & vaccines. Keep an Eye OnFor real-time Middle East updates, trusted sources include BBC Middle East and the Institute for the Study of War (ISW).As of June 15, 2025, markets appear to be treating the current Middle East tensions as a regional risk. However, the situation remains fluid, particularly if Iran takes steps to restrict access to the Strait of Hormuz, a critical global shipping route for oil and gas exports. DST NEED TO KNOWU.S. inflation declined to 2.4% in May, but remains above the Federal Reserve’s target of 2%. Core inflation, at 2.8%, reflects ongoing price pressure—keeping inflation a central concern for the Fed’s policy outlook. Overall Inflation: The Consumer Price Index (CPI) increased by 0.1% in May, resulting in a 2.4% annual rate, according to data reported by CNBC. Core Inflation: The core CPI, which excludes volatile food and energy prices, increased by 0.1% in May, resulting in a 2.8% annual rate, according to USAFacts. Federal Reserve Target: The Federal Reserve is aiming to bring the annual inflation rate down to 2%. JUST CHARTS TERM OF THE MONTHWhat Is Core Inflation? Core inflation measures how prices are rising across the economy, excluding food and energy, which tend to fluctuate unpredictably. It is commonly calculated using the consumer price index (CPI) and the core personal consumption expenditures (PCE) index. KEY TAKEAWAYS Core inflation excludes food and energy prices, focusing on goods and services with a more stable pricing pattern. It helps illustrate how inflation impacts consumer purchasing power over time. The Federal Reserve favors the PCE index over CPI for a smoother view of long-term inflation trends. ONE DST POINT DST“The great Chicagoan Ferris Bueller once noted, ‘Life moves pretty fast’”Fed. Chair Powell said in a recent speech to the Economic Club of Chicago. “For the time being, we are well positioned to wait for greater clarity” on the impact of policy changes in areas such as immigration, taxation, regulation and tariffs. QUICK TAKE BEFORE YOU GO The Fed is on hold until we get a little more clarity about not only the magnitude of the tariffs and the breadth of the tariffs, but what effect they all have on inflation and what effect the tariffs and other policies, including the budget bill, will have on growth and employment. The full impact of tariffs and spiking oil prices may take time to be reflected in broader economic data. Recent data has been encouraging: inflation shows … Read more