<p style="margin-left: 0px">As 2024 brought a mix of challenges and opportunities across global markets, the first half of 2025 has continued to reflect the evolving economic dynamics shaped by shifting policies, geopolitical tensions, and technological advancements. This <i>report</i> delves into the key events and trends of 2025 so far, examining their implications on various sectors. Additionally, it provides a forward-looking analysis for the second half of the year, outlining potential risks, growth opportunities, and critical factors that could define the global economic trajectory.</p><figure class="image image_resized" style="width: 640px"><img src="https://pub.pbkrs.com/uploads/2025/bac7009ca123a294d78de51dcd8b41d7?x-oss-process=style/lg" width="2615" height="928" original-src="https://pub.pbkrs.com/uploads/2025/bac7009ca123a294d78de51dcd8b41d7"/></figure><h2 id="9bgnuktk6"><u>Policy uncertainty has increased under President Trump</u></h2><p style="margin-left: 0px">Policy uncertainty has grown under President Trump, particularly around his trade agenda. His tariffs appear to serve three main purposes: to raise revenue and limit the fiscal deficit, to bring key manufacturing back to the U.S., and to contain China's rise. While many countries are likely to negotiate and find some common ground with the U.S., the outcome of this trade standoff remains highly uncertain.</p><p style="margin-left: 0px">If high tariffs stay in place for a prolonged period, they could slow global growth and create inefficiencies across supply chains. These moves have also raised questions about the U.S.'s long-standing dominance in global markets — often referred to as &#34;U.S. exceptionalism&#34; — which includes its global influence, the U.S. dollar’s reserve currency status, and the strength of its capital markets.</p><p style="margin-left: 0px">With growing policy risk and weakening confidence in U.S. leadership, some investors may start shifting away from U.S. assets. This could pressure the U.S. dollar but potentially support emerging markets, where valuations look relatively attractive and currencies may benefit from capital inflows.</p><p style="margin-left: 0px">In short, while the full impact of tariffs won’t be known until final policies are set, we remain cautiously optimistic. Many countries are likely to strike a balance between protecting their interests and meeting the U.S. demands. As long-term investors, we continue to look for opportunities in markets that offer a healthy mix of value and resilience.</p><hr/><h2 id="fr97l9wnb"><u>Federal Reserve Maintains Pause Mode Amid Elevated Uncertainty</u></h2><p style="margin-left: 0px">At its latest policy meeting, the Federal Reserve kept its benchmark interest rate unchanged at 4.25%–4.50% for the fourth consecutive time. This reflects a cautious stance as the Fed balances persistent inflation pressures with signs of economic resilience.</p><h3 id="vm6qmgc1g"><strong>Economic Conditions</strong></h3><p style="margin-left: 0px">The U.S. economy continues to grow at a solid pace, supported by stable consumer activity.</p><p style="margin-left: 0px">The labor market remains healthy, with low unemployment and steady job creation.</p><p style="margin-left: 0px">Inflation, although easing, remains elevated and above the Fed’s 2% target.</p><p style="margin-left: 0px">The Fed reiterated its commitment to achieving maximum employment and a long-term inflation rate of 2%. Policymakers emphasized that future adjustments will depend on a careful evaluation of incoming data, economic conditions, and associated risks.</p><h3 id="ted1srxjg"><strong>Economic Projections (as of June 2025)</strong></h3><p style="margin-left: 0px">GDP Growth: Expected to moderate to 1.4% in 2025 and improve slightly to 1.6% in 2026</p><p style="margin-left: 0px">Unemployment Rate: Forecast to rise gradually to 4.5% in both 2025 and 2026</p><p style="margin-left: 0px">Inflation: Headline inflation projected at 3.0% in 2025, easing to 2.4% in 2026</p><p style="margin-left: 0px">Core Inflation: Expected to follow a similar downward trend</p><h3 id="na8qrat2xp"><strong>Interest Rate Outlook</strong></h3><p style="margin-left: 0px">While no changes were made in this meeting, the Fed still projects a 50 basis point rate cut by the end of 2025, which would bring the federal funds rate down to 3.9%. However, policymakers have revised their 2026 forecast slightly, now anticipating the rate to decline more slowly to around 3.6% instead of previous projections.</p><p style="margin-left: 0px">The long-run federal funds rate remains unchanged at 3.0%.</p><hr/><h2 id="nvspv2xm"><u>2025 Second Half Outlook: Eyes on Recovery, Cautious on Risks</u></h2><p style="margin-left: 0px">With the ceasefire between Iran and Israel now in place and global markets breathing a sigh of relief, the second half of 2025 opens with cautious optimism. The resolution — though fragile — has helped ease fears of a wider Middle East war and has brought oil prices off their recent highs. This de-escalation sets the stage for a potentially stronger rebound in global risk appetite, especially in equities.</p><h3 id="fdkyao6bn"><strong>Bright Spots: US Stocks Eyeing New Highs</strong></h3><p style="margin-left: 0px">Despite a volatile start to the year, the US stock market remains resilient.</p><p style="margin-left: 0px">As geopolitical tensions ease, investor sentiment is shifting back toward growth and innovation. The S&amp;P 500 and Nasdaq are already showing signs of strength, and a new all-time high may be within reach if macro stability continues.</p><p style="margin-left: 0px">Technical charts:</p><figure class="image image_resized" style="width: 640px"><img src="https://pub.pbkrs.com/uploads/2025/b49242bbb3e0b9f097ae6d6673eba2ae?x-oss-process=style/lg" width="2198" height="1440" original-src="https://pub.pbkrs.com/uploads/2025/b49242bbb3e0b9f097ae6d6673eba2ae"/></figure><h3 id="6sb7g8ayjc"><strong>Dow Jones Industrial Average (DJIA) – As of 26 June</strong></h3><p style="margin-left: 0px">The Dow Jones Industrial Average has displayed strong upward momentum, recovering from its recent low of 36,611.78 in early May and currently trading at 43,386.84. The MACD indicator confirms bullish momentum, with the MACD line positioned above the signal line and positive histogram bars indicating strengthening buying pressure. However, the RSI stands at 73.81, which places the index in the overbought zone, suggesting a potential slowdown or consolidation in the near term. While the index is approaching its key resistance level at 45,073.63, failure to break above this level could result in a short-term pullback toward the support zone at 41,738.68. Overall, the momentum remains strong, but caution is advised due to overbought conditions.</p><figure class="image image_resized" style="width: 640px"><img src="https://pub.pbkrs.com/uploads/2025/c5ef00db5af8e7f7b1bdd6dc0fa364a2?x-oss-process=style/lg" width="2144" height="1440" original-src="https://pub.pbkrs.com/uploads/2025/c5ef00db5af8e7f7b1bdd6dc0fa364a2"/></figure><h3 id="l4vdwo5q9"><strong>S&amp;P 500 (SPX) – As of 26 June</strong></h3><p style="margin-left: 0px">The S&amp;P 500 continues to exhibit solid bullish momentum, climbing steadily from its November low of 4,510.36 to its current level of 6,141.02, just shy of its previous peak at 6,147.43. The MACD indicator shows positive momentum, with the MACD line above the signal line and consistent positive histogram bars supporting the upward trend. However, the RSI is at 77.64, signaling that the index is deeply overbought and could face resistance or consolidation soon. A breakout above the resistance level of 6,147.43 would confirm continued bullish momentum, while failure to breach this level might lead to a pullback toward the support zone at 5,884.90. Despite the strong momentum, the overbought RSI suggests caution for traders and investors.</p><figure class="image image_resized" style="width: 640px"><img src="https://pub.pbkrs.com/uploads/2025/8d8aa641b8f198d9bdf1e599a0c8c71a?x-oss-process=style/lg" width="2111" height="1440" original-src="https://pub.pbkrs.com/uploads/2025/8d8aa641b8f198d9bdf1e599a0c8c71a"/></figure><h3 id="vwa214e28"><strong>NASDAQ Composite Index – As of 26 June</strong></h3><p style="margin-left: 0px">The NASDAQ Composite Index is demonstrating robust momentum, rebounding strongly from its November low of 12,543.85 and currently trading at 20,167.91, approaching its previous high of 20,204.58. The MACD indicator reinforces the bullish sentiment, with the MACD line above the signal line and positive histogram bars confirming upward pressure. However, the RSI stands at 77.74, firmly in the overbought zone, indicating potential exhaustion of the current rally or a likelihood of consolidation. If the index breaks above the resistance level of 20,204.58, it could sustain its bullish momentum, but failure to do so may lead to a pullback toward the support zone at 18,887.14. While the momentum remains strong, traders should remain cautious due to the elevated RSI levels signaling overbought conditions.</p><hr/><h3 id="07gkl5dp"><strong>Key Risks to Watch in 2H 2025:</strong></h3><p style="margin-left: 0px">Even with positive momentum, several downside risks could still weigh on the outlook</p><h4 id="i2y53yz4s"><strong>1️⃣ Trade Fragmentation and Inflation Pressures</strong></h4><p style="margin-left: 0px">A sudden shift in global trade policies — such as new tariffs or retaliatory actions — could disrupt supply chains and reignite inflation. Persistent inflation may dampen corporate profits and household spending, weakening global growth.</p><h4 id="28ys9jdvg"><strong>2️⃣ Middle East Uncertainty Not Over</strong></h4><p style="margin-left: 0px">While the ceasefire is a welcome development, risks remain. Any renewed conflict or disruption — such as Iran’s potential closure of the Strait of Hormuz — could send oil prices soaring again. A sustained oil shock would pressure inflation and global demand.</p><h4 id="54blga1zq"><strong>3️⃣ US Fiscal Fragility and Capital Protectionism</strong></h4><p style="margin-left: 0px">Concerns over US debt sustainability are resurfacing, with federal debt now exceeding $36 trillion. If investor confidence in US assets falters, we could see higher interest rates, market volatility, and even structural changes like foreign investor taxes under Section 899. These shifts could shake the global financial order.</p><p style="margin-left: 0px">Sources: Longbridge Pro, Franklin Templeton, Reuters, Yahoo finance, The economic times, FRED, Bloomberg</p><hr/><p style="margin-left: 0px">Long Bridge Securities Pte. Ltd. (Long Bridge Securities) (UEN No.: 202111825D) is regulated by the Monetary Authority of Singapore and holds a capital markets services licence for dealing in capital market products that are securities, collective investment schemes and exchange-traded derivatives contracts, and is an exempt financial adviser.Long Bridge Securities may distribute information/reports produced by its respective foreign entities or affiliates pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. 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<p>In the first half of 2025, the global economy remained volatile amid policy uncertainty, geopolitical tensions, and technological shifts. Market concerns intensified over Trump’s tariff agenda, while the Fed maintained a cautious stance with a modest rate cut expected later this year. A fragile truce in the Middle East supported U.S. equities, though overbought signals suggest short-term risks. In the second half, attention turns to trade disruptions, energy shocks, and U.S. debt challenges.</p>

- The report analyzes the evolving economic dynamics of 2025, highlighting challenges such as policy uncertainty under President Trump and its potential impact on global growth.  
- The Federal Reserve has maintained its interest rate at 4.25%–4.50%, balancing inflation pressures with economic resilience, while projecting a gradual rise in unemployment and inflation rates.  
- Looking ahead, the second half of 2025 presents cautious optimism amid geopolitical tensions, with key risks including trade fragmentation and Middle East uncertainties that could affect global markets.  

2025 Mid-Year Review and 2H Economic Outlook: On the Road to Recovery and New Highs