That was not the outcome on June 17, when the Federal Open Market Committee (FOMC) held its first meeting under Federal Reserve Chair Kevin Warsh. He had emerged as President Donald Trump’s preferred choice to replace Jerome Powell, amid repeated criticism from Trump that rates were not being cut quickly enough. However, the FOMC left policy unchanged, keeping rates at a range of 3.50%-3.75%.
“It was interesting for us but not unexpected,” says Citi Wealth’s head of portfolio advisory Jeanne Sun, who had earlier forecast no rate changes at the start of the year. “This was one of our calls at the beginning of the year when the market was really optimistic about rate cuts.”
“That was not our call. We actually thought that would be difficult to justify given how high inflation has been. Since then, the market has swung in the other direction and is starting to price in some hikes. For us, we go back to following the data, and interestingly, this is what Chair Warsh had said also, that he wants people to follow the data and not try to figure out what the Fed is going to do.”
Before joining Citi Wealth in June 2025, Sun spent more than 22 years at JPMorgan. The Massachusetts Institute of Technology graduate, who earned a bachelor’s degree in finance in 2001, began her career as a strategy analyst at JPMorgan Private Bank. She went on to hold several leadership roles across the bank’s private banking and wealth management divisions, most recently serving as head of investments and advice for digital wealth at JPMorgan Wealth Management.
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Sun says Citi Wealth is not expecting any policy changes for the foreseeable future. She adds that the Fed is likely to keep rates on hold given persistent inflation, assuming there are no major shifts in the broader growth outlook.
“There’s nothing that we’re seeing in the data that suggests that inflation should come down,” she adds. “Inflationary breadth is quite high, and so we think it’s going to remain sticky, and that leaves us at least at hold.”
Instead, Sun is focused on the resilience of US growth. Despite higher consumer prices driven by inflation, she notes that growth has held up, supported in part by higher-than-usual tax refunds linked to Trump’s tax cuts. “That has actually provided some of that foundation and excess savings in cash that has helped the consumer ride through some of the inflation that we have seen recently.”
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One growth driver that shows no signs of abating is AI. Major technology companies, including Alphabet and Meta, have been increasing capital expenditure on data centres. Alphabet raised US$84.75 billion ($109.52 billion) in equity capital on June 2. The fundraising is the largest secondary offering in history.
“Near term, it is creating inflationary pressures because it’s funding a massive capex cycle, regardless of the data centres and electricity. There is also an underlying capex cycle outside of AI that’s happening as well, but it doesn’t get nearly enough attention. So, there’s good support for continued investment, which is keeping inflation elevated.”
Mega IPOs aren’t draining liquidity
Rate concerns aside, this year is also set to be a big year for IPOs. According to the London Stock Exchange Group, roughly US$169 billion has been raised from IPOs around the world in the first half of this year, a 246% y-o-y increase from what was raised over the same period in 2025.
Earlier, on June 12, Elon Musk’s SpaceX went public, raising US$75 billion at a US$1.77 trillion valuation. OpenAI and Anthropic, two of the biggest names in AI right now, are also eyeing trillion-dollar IPO valuations.
The flurry of IPOs has fuelled fears that there is insufficient liquidity in the market to absorb them, a view Sun rejects. “There isn’t any reason to suggest that mega IPOs are sucking so much liquidity out that it creates a problem for the continued growth of earnings and expansion of profit margins, or at least maintenance of already high profit margins in this space.”
“We did some analysis, and at the time of IPO, the free float wasn’t particularly large; there was enough liquidity and ability for the market to absorb the IPOs. That’s what we saw with market performance following the SpaceX IPO,” adds Sun.
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Investors are rotating, not retreating
It is easy to feel confused by today’s market. Asset classes are not behaving as expected. For instance, memory chip giants Samsung Electronics and SK Hynix are up 455% and 828% year-to-date as of June 30. Yet, both stocks have recently come under pressure, falling more than 5% each on June 29.
Fund managers themselves appear heavily exposed to equities, raising concerns that a sell-off could be on the cards. Bank of America Global Research’s Global Fund Manager Survey published on May 19 found that cash levels fell from 4.3% in April to 3.9% in May. BofA notes that cash levels below 4% are typically interpreted as a sell signal for markets.
“What we are seeing is more of market rotations rather than buy or sell,” says Sun. “It is true that when the market hits fear, you see a little bit more increase in cash allocation, and that does signal a pretty good time to buy. Conversely, when you have greed or complacency, it’s not been as strong a sell signal. Broadly, we have seen a lot of rotation towards winners, driven by relative fundamental strength and weakness.”
It is not just equities. Gold, often viewed as a safe haven during periods of geopolitical uncertainty, has also failed to post significant gains amid the Iran conflict. The metal touched a record high of US$5,500 per ounce in January but has since retreated to around US$4,035.
“Gold hasn’t been a strong performer. It has come down quite a bit, but that’s because of a couple of things,” says Sun. “One, positioning and buying going into the end of last year was quite strong, and so it was hard to make an argument about how much more someone should own. Many investors found that because gold had performed well and they had added positions, it made sense for them, in terms of a hygiene perspective, to just get it back to the right size.”
In terms of geographies, Sun prefers US equities over European ones because the latter is more vulnerable to energy shocks caused by conflicts in the Middle East. On the other hand, US large cap stocks are attractive because they have great exposure to secular growth, Sun adds.
“The US, as a country, is a little bit more independent. There’s still infrastructure build that’s needed, but you put all of that together, it has both the highest quality earnings growth, with the most visibility, and the least amount of vulnerability to some of these geopolitical shocks that could have economic flow through impact.”
Sun notes that the Chinese economy has remained relatively resilient despite its reliance on oil imports from the Middle East. She attributes this to substantial energy reserves that have helped cushion recent energy shocks. However, she cautions that investors should take a selective approach to the Chinese market.
“As an economy, China has access and exposure to innovation in AI. But unlike the US, where you can see how it’s represented in the broad market index, in China, opportunities do require you to be on the ground and be a little bit more discerning on which companies have the best earnings outlook and the least vulnerability to policy initiatives that might slow it down.”
While most investors have focused on AI, Sun argues that commodities also present an attractive area of opportunity. Heightened tensions around the Strait of Hormuz — a key maritime chokepoint — have not only influenced oil prices but also disrupted the supply of other commodities, including sulfur, aluminium and helium.
“People have associated the increases in the commodity space with the conflict, and that’s certainly been a boost, but underappreciated is that the fundamental strength from the economy was actually the first driver of where a lot of the commodity complex was doing well,” adds Sun. “The short-term gyrations of what’s happening in the Middle East is masking the fundamental strength that is supporting the natural resource complex.”
