Weekly Market Commentary April 7th to April 11th 2025
Generally, we begin these weekly write-ups discussing economic releases, and while there certainly were some important ones this week, the main story was the wildly volatile financial markets. Investors like stability and predictability but since April 3rd, the Trump administration’s sledgehammer approach to tariffs followed by retractions has caused a spike in market volatility and new warnings of a pending recession.
Following last week’s precipitous drop in the stock market, the news that most tariffs were on hold for 90 days provided the impetus for the single largest one-day increase in equity market history, although we still did not get back to the levels of early last week. The S&P 500 ended the week up 5.7% at 5,363; the Dow Jones Industrials closed up 5.0% and the battered, tech-heavy NASDAQ finished at 16,724 or +7.3%.
Bonds were equally volatile. Yields soared across the curve as investors fled from the usually safe U.S. Treasuries. Theories ranged from heavy selling of fixed income securities to cover margin calls; to falling confidence in the U.S. government’s place as the bastion of global investor safety. The yield curve steepened with the 2-10 segment widening to 0.51% and bellwether 10-Year U.S. Treasury closing at 4.47% or up 46 basis points.
As for economic releases, in an otherwise normal week the news on inflation likely would’ve been a boost for markets. Consumer prices for March, as measured by the CPI, came in well below expectations and the prior month at 2.4%. We haven’t seen a better number than that since February of 2021. Producer prices (as measured by the PPI), were even more remarkable. The March figure came in at 2.7% when 3.3% was expected and February was 3.2%. The lukewarm reception was attributed to the tariff news and the concern that inflation will simply be reignited when these tariffs take hold.
Lastly, we generally shy away from commenting on softer economic statistics, but we feel it is important to note that consumer confidence, as measured by the University of Michigan Consumer Confidence Survey, is plummeting. April saw the second lowest score since 1952, even lower than during the Great Recession of 2008. The only other time the score was lower was during mid-2022 when inflation was sky-high, and the Fed aggressively raised interest rates to slow the economy.
Key economic releases next week include Retail Sales; Industrial Production and Capacity Utilization; Housing Starts and Building Permits; and several Fed Governors will be speaking.
