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The shortened trading week brought continued volatility in US equity markets as perceived cooling in the trade war failed entirely to change the views of the Fed and Chair Powell. While stock gains were quickly erased, bond markets calmed somewhat after the recent rapid Treasury sell-off; yields fell during the week and high yield spreads continued to move closer to median levels. Risk-off appears to rule, but it’s different this time and uncertainty remains the hackneyed theme as global trade partners scrutinize positions in US markets and the USD bears the weight.

Economic reports pick up this week as we’ll have Conference Board Leading Indicators on Monday; Redbook YoY, Richmond Fed Indexes and US money supply Tuesday; MBA Mortgage data, S&P Global PMI Flashes, Fed Beige Book, building permits and new home sales Wednesday; durable goods, jobless claims, existing home sales and Kansas Fed composite and manufacturing indexes Thursday; and Michigan Consumer and inflation expectations Friday. Our strategists and portfolio managers cover the latest geopolitical, market and economic trends in our Insights section.

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April 21, 2025

Weekly

October 2022

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Fixed income

Canada and Mexico faced on-again off-again tariffs from the US in advance of the April 2 “Liberation Day” announcement in Washington. Mark Carney was sworn in as prime minister of Canada, replacing Justin Trudeau. Germany’s parliament approved 500 billion euros of funding to build up the country’s defense forces. China announced a program to encourage consumer spending in a bid to jumpstart the country’s economy. Oil prices edged modestly higher, while gold continued to rise to all-time highs.

Tariffs, economic growth and consumer sentiment were among the worries occupying investors’ attention in March. The hard data indicated continued growth, but soft data (such as sentiment) painted a different picture. The Atlanta Fed’s GDPNow tracker showed negative growth for the first quarter. Bond yields inched higher but remained well below their January highs. Mortgage rates declined modestly in March. The US dollar index fell to its lowest level since the autumn.

Economies

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December

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Job Openings and Labor Turnover

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Consumer Price Index

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Standard and Poor's

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Institute of Supply Management

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Emerging Markets

US economy

International economy

US Equity

The FTSE 100, Euro Stoxx 50 and the Nikkei all declined, while the MSCI ACWI ex-USA and the Shanghai Composite were flat on the month.

March was a difficult month, with US equities entering a 10% correction from their all-time highs set in February. Uncertainty was the word of the moment, as investors awaited the unveiling of President Trump’s “Liberation Day” tariff plans. Within the S&P 500, Energy, Utilities and Health Care outperformed most, while Consumer Discretionary, Information Technology and Communication Services fared worst.

International Equity

Investment grade bonds returned -0.04% in March as measured by the Bloomberg US Aggregate Bond Index, while remaining positive for the first quarter of 2025 with a 2.78% return. The Bloomberg US High Yield 2% Issuer Cap Index was lower -1.03% for the month, as high yield spreads to US Treasuries widened, reflecting investor concerns about slowing growth and looming tariffs. The US 10-year Treasury yield ended the month only one basis point lower for March at 4.23%, before continuing to fall during the first few days of April.

Liquidity

Equities

Economies

Liquidity

Fixed Income

Equities

Economies

April 2025

Monthly

The March Federal Open Market Committee (FOMC) meeting noted uncertainty in the economic outlook. The Federal Reserve (the Fed) kept the fed funds target range unchanged at 4.25-4.50%, and the Summary of Economic Projections (SEP) showed a narrowing range of forecasts for this year. The Fed’s economic and inflation projections worsened, with gross domestic product (GDP) estimates for 2025 falling and core personal consumption expenditures (PCE) rising, indicating potential stagflation. However, during the post meeting press conference, Fed Chair Jerome Powell downplayed the rise in long-term inflation expectations while reintroducing the term “transitory” when discussing inflation and potential tariffs. To avoid funding pressures, the FOMC decided to reduce the pace of its balance sheet reduction starting in April. As the Fed continues to “balance inflation risks against growth concerns” we have moved up our expectations for the next Fed interest rate cut to June, while remaining less certain than the market on the total for the year.

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Chief Information Officer

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second quarter

US fixed income

International

The Bloomberg Aggregate Global Total Return Bond Index produced a 0.62% total return in March. The Index’s positive gain was almost entirely due to U.S. dollar weakness; a substantial portion of the bonds within the index suffered losses in local terms. As measured by the Bloomberg U.S. Dollar Index (BBDXY), the USD lost -1.84% during the reporting period. Emerging market bonds returned -0.76% as measured by the J. P. Morgan EMBI Global Diversified Index.

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Artificial Intelligence

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December

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