Deutsche Bank-Thematic Research Monthly ideas – Recovery gaps

2025 11:17:06 GMT2025 11:17:06 GMT2025 11:17:06 GMT2025 11:17:06 GMT0Deutsche Bank Research | Monthly thematic ideas: Recovery gaps | June 2025IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Deutsche BankResearchMonthly thematic ideas – Recovery gapsJune 2025Luke TemplemanThematic Research StrategistLuke.Templeman@db.com+44 207 541 0130Galina PozdnyakovaResearch AnalystGalina.Pozdnyakova@db.com+44 207 547 49941Deutsche Bank Research | Monthly thematic ideas: Recovery gaps | June 2025Executive summary: Our top ideas this monthThe S&P 500 ripped for its best May in decades last month. That was in spite of a 24bps rise in the 10yr yield and jitters about debt and tariffs at the end of the month. Yet, there is growing commentary that the reversal of the “Sell America” trade has stalled – and even reversed in recent days. So, this month we examine what actually happened to US risk assets in May and show the recovery was more narrow than many think.Is a broader rally imminent? We point to a potential rebound in economic sentiment which could lay the foundation for a recovery outside tech. If so, that would make some of the cross-asset discrepancies we highlight even more pressing. This includes the unusually strong sensitivity of US stocks to short-end yields, pricing of monetary policy expectations and falling volatility.Key market-moving themes this month:•Did ‘Sell America’ reverse? – The strong rally in the S&P 500 last month was narrow. We put it in context of other stock markets and breakdown sector leadership to highlight the gaps in US assets’ recovery.•Have ‘yield’ equities been hurt by the treasury sell-off? – Record buyback announcements were among key highlights of the Q1 earnings season, along with decent results and a lack of panic among CEOs. Yet, investors were much more excited about tech than stocks with a rising return of capital. We show the potential mispricings this created.•Tech and AI – Software emerged as a relative “haven” last month as companies selling low-margin physical goods were unpopular. We track the extent of this effect and its near-term durability.•The sentiment contradiction – Several consumer and business surveys in the last few weeks have signalled that the worst of the confidence plunge may be over. We analyse which metrics were especially hard-hit and what it says about the possibility of a broader recovery in US assets.•Cross-asset (mis)alignments – Even following the cool off in volatility seen in May, many market correlations remain upended. We point to some of the less talked about ones.Did Sell America reverse?Executive summaryHave ‘yield’ equities been hurt by the treasury sell-off?Tech and AIThe sentiment contradiction24531Cross-asset (mis)alignments 62Deutsche Bank Research | Monthly thematic ideas: Recovery gaps | June 2025Did Sell America