Asset Management Weekly Market Commentary

Market updates for the week ending
April 4, 2025

Key observations

• U.S. stocks climbed a wall of worry in the lead-up to Wednesday’s tariff announcement as short covering forced equity prices higher, but a ‘worse than worst-case scenario’ on the trade front weighed on sentiment and led to a sharp move lower for stock prices into the weekend. The U.S. dollar fell after tariffs were announced and contributed to relative outperformance out of developed and developing market stocks abroad versus the U.S.
• It will be worth watching how our trading partners react to the tariff news; 1) will they negotiate and remove tariff barriers for U.S. imports as the administration desires, 2) will they retaliate, contributing to fears of an outright trade war, or 3) will they devalue their currencies to make their goods more appealing for U.S. importers, likely drawing the ire of the administration and potentially leading to tariffs being raised further on some countries.
• Treasuries remained in bull market mode as yields across the curve fell as a flight to safety took hold on the heels of the tariff announcement. Yields on both the 2-year and 10-year U.S. Treasury fell more than 20-basis points on the week with the rally taking prices to levels last seen in September of last year.

What we're watching

• The National Federation of Independent Businesses (NFIB) Small Business Optimism index for March is released Tuesday after a 100.7 reading in February.
• U.S. Consumer Price Index (CPI) for March is released Thursday with headline inflation expected to rise 0.1% month over month and 2.6% year over year, which compares to 0.2% and 2.8% readings in February. Core CPI, which is more closely monitored by policymakers, is expected to rise 0.3% month over month and 3.0% year over year, versus 0.2% and 3.1% readings the prior month.
• The University of Michigan’s Consumer Sentiment survey for April is released Friday and is expected to fall further to 55.0 from a 57.0 reading in March. This release has made headlines in recent months due to the sharp rise in the future inflation expectations component of the survey, so some stabilization in the 1-Yr. as well as the 5-10 Yr. Inflation Expectations piece would be most welcome.