Markets

Throughout the quarter, the global markets experienced extreme volatility but ended at all-time highs (S&P 500). This speaks to the importance of focusing on the economic data and staying the course when nothing has fundamentally changed. There will always be pullbacks and uncertainty. Any storm can come quickly and leave just as quickly, which is precisely what happened over the past 90 days. The economic picture started to come into focus on trade, and the worst-case scenario in Iran seemed to be avoided. The markets looked through all of the uncertainty and climbed the wall of worry to record highs.

As a reminder, the index returns above should only be used as a very broad point of reference.

Cash & Fixed Income: High-yield bonds led for all periods. Tax-free bonds lagged for the quarter, 1, and 3-year periods, while aggregate bonds were the worst performer in the 5 and 10-year periods. Cash was the worst performer over 15 years.

In April, we rebalanced fixed income with a focus on adding to municipal bonds, which had lagged. We believe this represented an opportunity due to a seasonally significant issuance of municipal bonds that flooded the market and a selloff due to the news of the Big Beautiful Bill reducing the tax-free status. This never came to fruition and represented a long-term buying opportunity.

Equities: Foreign stocks led for the quarter and 1-year, while large-cap stocks led for all other periods. Small-cap stock was the worst performer over the last quarter, 1, 3, and 5 years, while foreign equity was the laggard in the past 10 and 15-year periods.

In May, we reduced our mid and small-cap overweight allocations in favor of moving back to our long-term strategic foreign target. While we remain constructive on domestic equity, we feel the opportunities outside the U.S. have also become more attractive due to valuations and increased stimulative defense spending throughout Europe.

The economic picture is moving very quickly, which is why we continue to position portfolios in diversified, high-quality holdings that are built to weather economic storms as they arise. Volatility will likely pick up again as trade deals are announced, but the consumer remains resilient, and earnings remain fairly robust. As conditions change and the economic picture becomes clearer, we will adjust portfolios accordingly. As always, we welcome a conversation about anything on your mind, including your updated financial situation, goals, or risk tolerance.

This Commentary is provided by Spraker West Wealth Management, a registered investment advisor, and is for informational purposes only. It should not be construed as investment advice and is not intended as a solicitation of any specific product or service. Investments and/or investment strategies include risk including the possible loss of principal. There is no assurance that any investment strategy will achieve its objectives. Information provided is not intended as tax or legal advice and should not be relied upon as such. You are encouraged to seek tax or legal advice from a qualified professional.