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DST Investment Advisors June Markets Letter

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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 Radar
Monitor 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 WATCHING
Real 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:

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 On
For 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 KNOW
U.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.

JUST CHARTS

TERM OF THE MONTH
What 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 signs of easing, and consumer sentiment has improved for the first time this year.

  • The labor market remains relatively stable, with the unemployment rate holding at a healthy 4.2%, although a recent uptick in continuing jobless claims suggests some signs of cooling. Altogether, the backdrop appears supportive of the Federal Reserve’s path toward easing. But Wall Street watchers say policymakers may need more convincing before delivering any cuts.

  • Note – Approximately 20% of global oil and a substantial share of natural gas shipments transit through the Strait of Hormuz—a critical chokepoint for global energy supply. A prolonged disruption could significantly impact energy markets, as the strait serves as the primary export route for oil from major OPEC producers including Saudi Arabia, Iraq, Kuwait, Qatar, Iran, and the UAE.

FREE RESOURCES & INSIGHTS: WORTH EXPLORING!

  • Advisor Perspectives – A reliable source for industry research, commentary, and market insights.

  • Advisorpedia – Offers actionable strategies and content designed to help financial professionals enhance efficiency and deliver value. 

CALL TO ACTION CALENDAR:

JUNE 2025

  • June 16:

    • Tax Filing Deadline for U.S. Citizens Abroad: File using Form 1040 or 1040-SR. You may request an extension with Form 4868, but estimated taxes are still due to avoid penalties.

    • Estimated Tax Payment Due: Second-quarter installment deadline.

  • June 17–18: FOMC Meeting (June) – Federal Reserve policy update.

  • June 19: Juneteenth Holiday – Bank and NYSE closed.

  • June 30: FAFSA Filing Deadline – Final day to apply for 2025–2026 federal student aid.

  • July 3:

    • Early NYSE Close

    • June Employment Situation Report released.

  • July 4: Independence Day – Bank and NYSE holiday; major U.S. spending holiday. Source: Federal Reserve System, “Holidays Observed – K.8.”

  • July 10: Tip Income Reporting Due – Employees who earned $20 or more in tips during June must report to employers.

DST Etcetera

After a 24% rally from the April lows, the S&P 500 is now up 5% since the “Liberation Day” tariff announcement. Why have investors been so eager to embrace risk and “buy the dip” despite the continued negative headlines and uncertainty over tariffs? Possibly a chart pattern the “TACO trade,” whereby “Trump Always Chickens Out” after announcing aggressive tariff policies, only to later delay, reduce, or cancel these policies. And when that shift occurs, the equity market explodes higher. See Chart #2 in JUST CHARTS.