Dear friends of Arcus Capital Partners,
We hope this letter finds you well. The second quarter of 2025 was defined by historic volatility and significant shifts across markets and the economy. After a sharp early-April selloff triggered by the Trump administration’s sweeping tariffs, equities staged a powerful rebound, led by strong corporate earnings and improving trade relations. While valuations remain elevated—posing risks if earnings slow or multiples compress—investor positioning remains supportive for further near-term gains, though strategic headwinds suggest a challenging decade ahead for U.S. equities. Bond markets saw extreme swings, with long-duration Treasuries ending lower amid inflation concerns and tariff-related uncertainties, while short-term rates priced in a high probability of Fed cuts by year-end. Commodities delivered mixed returns, with precious metals surging on a weaker dollar and rising inflation fears, while energy and soft commodities were volatile. Overall, cautious optimism prevails, with key risks hinging on tariff developments, inflation dynamics, and monetary policy decisions as the market navigates this complex environment.