July 01, 2025
4
min read
💬 Daily Observation
“The biggest mistake investors make is to believe that what happened in the recent past is likely to persist.” — Ray Dalio
Today is July 1, the start of a new month and the halfway point of 2025, and there’s plenty going on: global inflation hitting targets, politics unstable, wars persisting, currencies wobbling, housing flashing warning signs, oil supplies shifting and private credit surging.
We know it can be tempting to chase H1’s winners or jump into the latest hot trend, but a simple mid-year check-in, rebalancing back to your target weights, can do more for your returns than any frantic trading spree.
Patience and process, not perfect timing, keep your portfolio on course.
☕ So grab your coffee, and let’s dive into today’s fresh edition of Diversification Daily.
🗞️ Today's stories that matter (and why)
1. 💶 Eurozone inflation hits 2% target
June’s overall gauge landed on the ECB’s bull’s-eye: 2.0% headline inflation (all items) up from 1.9% in May, while “core” inflation (excluding food and energy) held at 2.3% and services costs edged to 3.3%.
Why it matters: Hitting the 2% goal makes it easier for the ECB to pause rate cuts, which can support bond prices but limit further yield declines—so holders of fixed-income and interest-sensitive equities may breathe a little easier.
Assets in focus: Fixed Income
2. 💵 Dollar index gains ground on strong job‐openings data
After May’s job openings unexpectedly rose by 374,000 to 7.769 million, the US dollar index climbed 0.09% to 96.84 on July 1 as investors scaled back bets on early rate cuts – Fed Chair Jerome Powell reiterated he’ll wait for more data before easing policy.
The dollar also pared earlier losses versus the yen (down 0.33% to ¥143.53) and Swiss franc (down 0.09% to CHF 0.7925), while the euro slipped 0.06% to $1.17815.
Why it matters: A firmer dollar can temper raw-material prices and pressure US exporters, while unhedged bond portfolios may see weaker returns.
Assets in focus: Currencies
3. 🏠 Three warning signs in US housing market
Economists point to three red flags in the US housing sector that could ripple through consumer spending and broader growth: a roughly 5% pullback in home‐price gains in certain regions, the weakest unsold inventory levels in 15 years, and a slowdown in residential construction hiring, now growing just 1.5% YoY, down from last year’s pace.
While headline home-price growth remains modest nationally, these pockets of stress highlight a market that’s no longer on autopilot.
Why it matters: Housing drives roughly two-thirds of household wealth; trouble here can ripple into less spending at shops and restaurants, trimming economic growth.
Assets in focus: Real Estate
4. 🛢 Oil rises on strong demand signals, awaiting OPEC+ decision
Brent crude gained 0.3% to $66.92, and WTI added 0.4% to $65.38, on July 1 as China’s Caixin PMI returned to expansion and Saudi Arabia signaled higher August export prices.
Investors are now focused on the July 6 OPEC+ meeting, where an additional 411 kbpd boost is expected to be confirmed.
Why it matters: Signs of resilient demand alongside rising OPEC+ supply keep oil’s near-term outlook balanced—energy portfolios should brace for continued volatility.
Assets in focus: Commodities
5. 📈 Hedge funds dive into private credit
Hedge funds such as Millennium, Point72 and Third Point are rapidly expanding into the private-credit market—traditionally the domain of specialist lenders, to tap steadier income streams and potentially higher risk-adjusted returns.
Third Point is even preparing a publicly traded private-credit vehicle, while Millennium is eyeing its first new fund in over 30 years to back less liquid loans. Point72 has been recruiting senior talent from established private-credit shops to build its capabilities.
At the same time, major corporates like Meta are lining up huge private-credit deals (e.g., a $29 billion pact for AI data‐center financing) to keep debt off their balance sheets.
Why it matters: Private credit is drawing new capital as an alternative source of portfolio income, though transparency and liquidity remain concerns.
Assets in focus: Alternatives
🌀 Diversification Score – Have you evaluated your portfolio's diversification?
Are you spread across the right risk factors—or leaning on just a few big bets?
📊 Market Movements Snapshot
Asset Classes:
- 🟢 Gold: +20.61% YTD. As investors sought safe havens amid tariff uncertainties, sticky inflation and geopolitical tensions—HSBC raised its 2025 forecast to $3,215/oz, citing persistent economic risks and central-bank buying.
- 🟢 Developed Markets Equities: +16.50 YTD. Developed-market stocks outpaced US peers as Europe and Japan benefited from earlier policy easing and attractive valuations: European dividend “Aristocrats” are up over 24% vs. 6% for the S&P 500.
For the full list, click here
Sectors:
- 🟢 Industrials: +10.96% YTD. Industrials led sector performance in H1, powered by China’s PMI rebound and reshoring trends in the US and Europe, with supply-chain resilience prompting restocking and infrastructure spending
- 🔴 Health Care: -2.90% YTD. Health care underperformed amid regulatory uncertainty, rising medical-cost pressures and profit-forecast cuts—UnitedHealth slashed its 2025 profit outlook, dragging shares and the broader insurance complex lower.
For the full list, click here
🤯 Alternative investment highlight: When a cake’s price tag hits $74 million
In 2015, British cake artist Debbie Wingham was commissioned by an anonymous UAE client to create a six-foot “Runway Show Cake” for a combined engagement and birthday party.
The design looked like a miniature fashion catwalk sculpted in sugar and fondant, yet its true value lay in over 4,000 genuine diamonds embedded throughout, including a 5.2-carat pink diamond and a 6.4-carat yellow diamond, which together pushed its worth to $74 million.
Weighing about 1,000 pounds and requiring more than 1,100 hours of handcrafting, each slice became a rough estimate of fine jewelry rather than a piece of cake. Hundreds of smaller black and white melee diamonds accounted for most of the price tag and secured its Guinness World Record as the priciest cake ever made.
More than a confection, this reminds us that extravagance often serves as a psychological statement on status rather than utility.
🧠 From the Education Center: Diversification, a Practical Guide
Diversification is powerful—but only when it’s done right. Learn how to spread risk smartly across assets, geographies, and time.
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