After a record-breaking May, markets hit pause—caught between strong momentum and growing concerns. The S&P 500 hovers near 6,000 as fading recession fears give way to fresh risks: a weakening dollar, rising long-term interest rates, and growing federal deficits. Hedge fund risk-taking hit extreme levels last week, but trading activity dropped sharply. Strategies based on company research are still trailing behind rule-based strategies like we use at LevelFields that trade using data patterns, while individual investors continue to buy steadily.
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Morgan Stanley advised investors to turn to hedge funds and active investment strategies to mitigate risks tied to macroeconomic challenges. In a recent report titled “Global Bond Yields Rising 2025: How to Invest,” published on June 5, 2025, the firm highlights the potential for higher global rates to pressure asset prices, urging investors and active wealth managers to adopt flexible and diversified approaches to safeguard portfolios.
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In response to the shifting landscape, investors are favoring large, financially strong companies and avoiding weaker, interest-rate-sensitive ones. Meanwhile, demand for U.S. government bonds from overseas is slipping, and a new tax provision—Section 899—could discourage foreign investment even further. For now, markets are still grinding higher, but the foundation feels less stable with each passing headline.

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