Investors often think of health care as a “safe harbour” – people need medicine whether the economy booms or busts. But the picture in Q2 2025 is mixed. Over the past year health-care shares have lagged the wider market, leaving valuations near multi-year lows. That has caught some bargain-hunters’ eye: the S&P 500 Health Care index was flat in early 2025 while the S&P 500 gained around 7%. At the same time, the sector is home to new blockbuster drugs and AI-driven innovation. In short, health care is playing both roles – steady defensive sector and potential growth story. So which wins out?
Central banks finally look ready to ease up. After two years of aggressive hikes, rates are edging lower. The BoE has trimmed Bank Rate to 4% from 5.25%, the ECB has cut back to 2% from its peak of 4%, and the Fed followed with a reduction last week.
After two years of rapid rate hikes, central banks are finally shifting gears. The ECB has already cut its benchmark rate back down to around 2% after peaking near 4%, while the US Fed is only just starting to trim from its much higher peak. That divergence leaves investors asking an awkward question: if rates keep sliding, which side of the Atlantic has the stronger banks?
The Japanese yen is at a crossroads. After years of playing dual roles – safe-haven asset and funding currency for carry trades – it faces a turning point. BoJ is hinting at ending its era of ultra-low rates, so will the yen regain its safe-haven shine or remain the world’s favourite funding currency?
For decades, Japan has been the land of cheap money. Interest rates sat near zero, sometimes even below, while other countries offered much higher returns. That gap created what traders call the “carry trade.” The logic is simple: borrow yen at almost no cost, swap it into dollars, and invest in US bonds paying 4-5%. The difference becomes your profit.
