LionGlobal Says

11 Jun 2025

Macro Movers & Shakers

Growth Inflation Policy
US Growth remained strong early in the year due to front-loaded imports ahead of tariffs, boosting jobs and manufacturing. However, business sentiment and consumer confidence declined. A temporary tariff truce eased recession fears, but uncertainties from immigration, tariffs and budget funding remain, with growth expected to slow going forward. U.S. inflation eased, with Consumer Price Index ("CPI") at 2.3% year-over-year and core CPI at 2.8%. While front-loaded demand ahead of tariffs supported growth, inflation remained subdued due to falling food prices and weak goods inflation. Tariff-related uncertainty continues to cloud the outlook. The Fed is likely to stay on hold due to tariff uncertainty and inflation risks. Powell emphasized avoiding preemptive moves to keep long-term inflation expectations anchored. The Federal Open Market Committee may act if labor market weakness becomes clear, but any response could be limited.
Europe Q1 2025 growth is supported by front-loaded demand, stronger industrial output, and ECB-driven investment. However, weak retail sales point to soft consumer spending. Trade uncertainty, a strong euro, and rising import competition from Asia could push the economy toward recession in the coming quarters. Eurozone inflation eased slightly, with CPI down at 2.2%. Despite stronger Q1 2025 exports and investment, weak consumption and rising import competition—especially from Asia—are adding disinflationary pressure. Producer prices rose 3.0% year-over-year, but core inflation is decelerating. The ECB is expected to continue cutting rates to support weak growth and boost confidence in reaching its 2% inflation target. Meanwhile, the region’s shift from planned fiscal tightening to expansionary policies will likely keep deficits elevated, adding upward pressure on long-term interest rates.
Asia China’s growth faces pressure. Manufacturing held up, but consumption and investment weakened. Trade uncertainty and weak lending signal fragile demand. A tariff truce may lift short-term growth. Further stimulus likely after he conclusion of tariff negotiations. China’s push to find new export markets is creating global disinflationary pressure. Exports rose 9.3% year-over-year, but domestic demand stayed weak. The CPI fell 0.1% and PPI dropped 2.7% year-over-year, reflecting falling prices and subdued demand. Outside of US, central banks globally are expected to be more forthcoming with policy easing, in light of recent dollar weakness. China has plenty of policy room, including easing borrowing costs and reserve requirements for banks to defend its economy.
Japan Japan, facing high U.S. tariffs due to its trade surplus, may see weaker economic data ahead despite optimism from ongoing talks. Meanwhile, Japanese firms continue structural reforms to boost governance, capital efficiency, and shareholder returns. Japan’s inflation remained elevated at 3.6%, with core inflation at 3.5%, driven by rising energy costs as subsidies tapered off. While food inflation eased, export growth was modest, and economic momentum showed signs of slowing, suggesting inflation may gradually cool in the coming months. Monetary policy normalization in Japan is expected to be maintained, driven by higher wages demand, but there is a growing concern that JPY appreciation could dampen momentum for rate hikes.
RISKS
- Trade tensions escalate as US/China fail to reach an agreement
- Sticky inflation means that the Fed must keep rates higher for longer
- Policymakers in China fail to stabilize growth

Sensible Considerations

Valuation based on Price-to book ratio.

At a Glance | General Product Suite

*This is an actively managed ETF
**CPFIS Funds: LionGlobal Short Duration Bond Fund Class A SGD (Dist), LionGlobal Singapore Fixed Income Investment Class A SGD, Infinity Global Stock Index Fund SGD, Infinity Global Stock Index Fund Class C SGD, Infinity U.S. 500 Stock Index Fund SGD, LionGlobal Asia Pacific Fund SGD, LionGlobal Japan Growth Fund SGD and LionGlobal Japan Growth Fund SGD-Hedged.
All data are sourced from Lion Global Investors as of 31 May 2025, unless otherwise stated.
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