With investor focus now squarely back on U.S. equities as new all-time highs are in sight, we dig into why strategic allocations should still consider, despite recent outperformance and multiple expansion, diversification into international equities

Chinese equities have been a major focus for investors in recent months, with catalysts ranging from DeepSeek’s artificial intelligence (AI) advancements to tariffs and trade negotiations.

Inflation’s effects on the economy, monetary policy, and the financial markets are wide-ranging. Higher inflation can constrain economic growth, tighten financial conditions, drive interest rates higher and even restrain stock valuations — higher inflation dampens the present value of future earnings and, historically, correlates with lower stock valuations.

Corporate buybacks, arguably one of the less-discussed catalysts, likely provided an additional boost to the market’s quick recovery. In this week’s Weekly Market Commentary, we explore recent repurchase activity, including who is buying back stock, how much, and how buyback companies have historically performed.

On Wednesday, May 28, the U.S. Court of International Trade (CIT) essentially blocked the majority of President Trump’s tariffs. A three-judge panel issued summary judgment against the tariffs enacted under the International Emergency Economic Powers Act (IEEPA), claiming they were unconstitutional and “exceed any authority granted by the President by IEEPA.”

In just a matter of hours last week, investors apparently decided that stocks were on sale, and it was time to buy. But nothing materially changed as consumers were still pessimistic about the future, firms were on the sidelines waiting to deploy capital amid tariff uncertainty, and the Federal Reserve (Fed) remained committed to their “Wait and See” stance.

Earnings continued to come in better-than feared, but “tariff uncertainty” continued to get flagged on most conference calls. The Federal Reserve (Fed) kept rates unchanged and stuck to its patient approach with monetary policy, despite notable downgrades to economic growth estimates and rising recession probabilities since their last meeting.

The municipal bond market faced significant volatility in April, driven by spillovers from a turbulent Treasury market. Treasury yields were pressured higher by rising inflation expectations; the Federal Reserve’s cautious policy stance, reduced foreign demand; hedge fund deleveraging, portfolio shifts toward cash, and structural illiquidity.

The softer tone toward China from the White House, President Trump’s pledge not to fire Federal Reserve (Fed) Chair Jerome (Jay) Powell, and renewed optimism about Fed rate cuts all helped drive a strong market rebound last week.

With little visibility into where tariff rates shake out and the effects on earnings, it’s hard to have much conviction in a year-end S&P 500 target. Given the high degree of uncertainty, we use scenarios and a wider range to get more comfortable with our target and to increase our odds of accuracy (though we recognize these targets are more art than science).