Table of Contents

• Global Economic Shifts
• Digital Asset Boom
• Housing Market Decisions
• Private School Contributions & Classic Tax Shelters
• Key Market Indicies

Global Economic Shifts 

Moody’s downgrade of U.S. Treasury bonds underscores deepening fiscal concerns, driven by the “One Big Beautiful Bill,” which adds an estimated $3.3 trillion to the national debt through extended tax cuts and expanded spending on defense and border initiatives. This fiscal expansion has heightened global scrutiny, particularly as foreign countries now hold roughly 33% of all outstanding U.S. Treasury securities, with China and Japan together accounting for nearly $2 trillion. If these nations begin scaling back their exposure, it could trigger capital outflows, push Treasury yields higher, and further weaken the U.S. dollar, which has already declined to around 100 from a 2024 high of 110. For fixed income investors, this changing landscape calls for tactical adjustments—such as reducing portfolio duration to limit sensitivity to yield shifts and diversifying across a range of instruments including municipals, corporates, and inflation-linked bonds to mitigate credit and interest rate risks. 

Inflation eased to 2.3% in April, offering modest relief to consumers, while the unemployment rate held steady at 4.2%, signaling a relatively stable but uneven labor market. Manufacturing continues to struggle, with the April PMI reading at 48.7% reflecting contraction. Structural challenges persist: despite policy efforts like a baseline 10% import tariff and targeted trade barriers aimed at reviving domestic production, rising costs and labor shortages have hindered progress. The U.S. manufacturing workforce has declined sharply—from over 19 million in 1979 to just 12.8 million in March 2025—limiting the sector’s ability to meet reshoring goals. 

On the digital front, former President Trump’s overt support of cryptocurrency is redefining the policy landscape. His promotion of the $TRUMP memecoin, capped off by an exclusive dinner event for top coin holders, and his proposal for a national Bitcoin reserve reflect a growing political embrace of digital assets. These moves have energized retail and institutional interest alike. For investors seeking measured exposure to the space, starting with diversified digital asset ETFs can provide a strategic and lower-volatility onramp to participate in this emerging asset class. 

Digital Asset Boom 

The financial ecosystem is undergoing a significant transformation as digital assets evolve from just a speculative niche to now a recognized component in investment strategies. This “Digital Asset Boom” has been brought into the forefront through rapid innovation, increasing institutional investment and a push towards the development of regulatory frameworks.  

The recent expansion and the demonstrated resilience of the digital asset market has stemmed from several interconnected factors. The growing appetite from major financial institutions, asset management firms as well as corporate treasuries has been significant as these entities are increasingly allocating capital to digital assets. These decisions have been motivated by several factors such as portfolio diversification, profitability and the transformative capabilities of Blockchain Technology. 

The approval and launch of spot Exchange Traded Funds (ETFs) for leading cryptocurrencies like Bitcoin and Ethereum have been pivotal. These regulated pathways offer better accessibility to both retail and institutional investors. Overall, this “Boom” has led to substantial capital inflows and improved market liquidity. 

Continuous innovation within the blockchain sector is a key driver in growth. Developments in Layer 2 scaling (a protocol that works on top of the main blockchain, i.e Layer 1) have enabled faster transactions, lower costs and better efficiency, all while preserving the security guarantees.  

The expansion of Decentralized Finance (DeFi) has also broadened the utility, efficiency and appeal of digital assets. A new frontier for advancement has also made strides – the tokenization of traditional tangible and intangible assets (e.g. real estate and private equity). This process offers enhanced liquidity, greater transparency, fractional ownership and streamlined settlements all of which hold the potential to revolutionize conventional asset markets.  

Finally, shifting global macroeconomic conditions, including inflationary pressures and evolving monetary policies, have led institutional and retail investors to view certain digital assets as alternative stores of value or hedges against traditional market volatility drawing comparisons to “Digital Gold” 

The digital asset domain presents compelling opportunities for investors. Notable exposure into technological advancements including blockchain infrastructure, DeFi protocols, stablecoin initiatives and the evolving Web3 ecosystems. Digital assets have historically shown a low correlation with traditional asset classes, offering potential benefits for diversification and risk-adjusted returns.  

Housing Market Decisions 

The current housing market in the United States is in a psychological and structural “stagnation state”. Although the Case-Shiller Home Price index still maintained a year-on-year growth of 8.6% and the sales of new single-family homes also rose by 11.73% year-on-year, the sales of second-hand homes plummeted by more than 25% (see Chart 2). This indicates a clear market differentiation: developers boost sales through incentives, while the majority of existing homeowners are reluctant to sell or exchange their homes due to the ultra-low interest rates locked in from 2020 to 2021. 

Although interest rates have slightly declined, the relief is limited. The 30-year compliant Mortgage rate (Conforming Mortgage) dropped by just 1.5 per cent, and the FHA mortgage rate, which is crucial for first-time home buyers, fell by just 2.67 per cent (see Chart 1). Against the backdrop of the current average mortgage interest rate still approaching 7%, the cost of purchasing a house has risen sharply, seriously weakening the purchasing power of families. 

Confidence data further reveal market sentiment. The homebuyer sentiment index of Fannie Mae (see Chart 3) dropped significantly in early 2025, hitting the lowest point in the past year. Consumers are generally confused about the trend of house prices and the future direction of interest rates – they are both worried that they are buying too much now and afraid that they will not be able to afford it in the future. 

Structural obstacles remain obvious: tight inventory, inflation stickiness, and trading restrictions caused by the interest rate lock-in effect. These factors jointly suppressed the liquidity of the second-hand housing market. 

From a long-term investment perspective, market stagnation also breeds structural opportunities, especially in the new residential, mortgage technology and rental housing sectors. It is suggested that investors remain patient, carefully select their positions, and wait for the phased rebound after the sentiment recovers and interest rates stabilize.
 

Private School Contributions & Classic Tax Shelters 

In 2025, families striving to fund private education are increasingly turning to tax-advantaged vehicles like 529 plans and donor-advised funds (DAFs). 529 plans, now encompassing over $525 billion across 17.2 million accounts, allow for tax-free withdrawals up to $10,000 annually for K–12 tuition. However, recent market volatility has impacted these accounts, especially those heavily invested in equities, prompting some parents to shift funds to more stable options like prepaid tuition plans. Financial advisors recommend adjusting investment strategies as children approach college age to mitigate potential losses. 

DAFs offer a flexible way to support educational institutions and scholarships, providing donors with tax deductions and the ability to recommend grants over time. Notably, the total assets held in DAFs have grown to approximately $254 billion, reflecting their increasing popularity among donors. However, using DAFs for private school funding requires careful planning to ensure compliance with IRS regulations. Without a holistic approach that considers both the financial and emotional impacts, families may find themselves overwhelmed. It’s crucial to align these financial tools with overall lifestyle and long-term goals to maintain both fiscal health and peace of mind. 

To navigate these complexities, families should consider a multi-pronged strategy: 

• Diversify Education Funding: Combine 529 plans with other savings vehicles to spread risk and increase flexibility. 

• Regularly Review Investment Allocations: Adjust portfolios as children near college age to reduce exposure to market volatility. 

• Consult Financial Advisors: Engage professionals to ensure compliance with tax regulations and to develop a comprehensive financial plan that aligns with your family’s goals and lifestyle. 

By proactively managing these financial tools, families can better position themselves to meet educational expenses without compromising their overall financial well-being. 

Key Market Indicies

*Market Indices as of 5/30/2025

This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult a financial professional for your personal situation.

Past performance does not guarantee future results. Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.

Graphs provided by YCharts.

Key Market Indices according to Google Finance.

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