Headlines Continue to Grab Investors’ Attention

Market Commentary – April 14, 2025

It’s “Tax Week” – which generally drains liquidity from the markets temporarily, but then we get a recovery as April is one of the better performing months of the year.

Equity markets remain extremely oversold, so good news could lead to rallies, but any negative news, particularly during the earnings season, can cause some volatility to the downside. Late last Friday, the Trump Administration gave us a little positive news on the tariff front with President Trump announcing exemptions for several products, including smartphones, computers, semiconductor chips, solar cells, flat panel TV displays, flash drives and memory cards. These exemptions looked like a win for Technology companies, but over the weekend more news came out, creating confusion over these exemptions. This morning, the market and Technology companies are rallying, but we need to be prepared for further updates and changes on electronics and other tariffs.

Great Inflation Data Last Week, But Rates Rose. Why?

Last week, both the Consumer Price Index (CPI) and the Producer Price Index (PPI) came in significantly better (i.e., lower) than expected, showing that pressures are easing on inflation. Normally, the fixed income market would respond by rallying, driven by expectations of lower interest rates. But this did not happen. In fact, the opposite happened: rates rose. Why? The global investment world was unsettled by the U.S. changing its policy on tariffs overnight. There are countries now that may not want to own as many U.S. assets, including stocks, bonds, and Treasuries. Heavy selling pressure in the bond market last week drove prices down, pushed yields higher, and weighed heavily on the U.S. dollar. Historically, the dollar tends to rise during periods of heightened volatility as a safe-haven asset, making last week’s pressure on the dollar a highly unusual move. We also had gold rising exponentially. President Trump’s decision to delay his tariffs for 90 days not only rallied equities but also eased the trading stresses in the bond market. This suggests to us that the Trump Administration is paying very close attention to how the capital markets are trading and that they don’t want a major event to further drive asset prices down sharply.