Weekly Market Commentary

April 14, 2025

The Markets

All eyes on the bond market.

The scale of the tariffs introduced by the administration shocked investors, sparking a roller coaster of a week for stock markets. Last week, U.S. stocks:

• Rallied on a rumor.
• Fell when the rumor was recognized as a rumor.
• Rose when President Trump paused reciprocal tariffs on most countries for 90-days.
• Fell as investors considered how the remaining baseline tariffs (10 percent on all countries, steel and aluminum tariffs, and 100%+ tariffs on China) might affect companies and economies.
• Rallied after the Federal Reserve assured investors it was prepared to step in, if needed.

“Economic angst enveloped every corner of Wall Street as U.S.-China trade tensions escalated, sparking a slide in stocks, the dollar and oil, with liquidations in U.S. assets pointing to disorder in the financial system,” reported Rita Nazareth, Isabelle Lee, Denitsa Tsekova, and Vildana Hajric of Bloomberg.”

Disorder in the financial system

Some of the disorder was found in the United States Treasury market where yields were moving higher when many expected them to move lower. Investors who are concerned about risk and sell stocks tend to seek financial shelter in investments that are perceived to be steady in a storm. For many years, United States Treasuries have been a “safe haven”.

So, last week, there was an expectation that, as investors sought shelter from the tariff storm, rising demand would push Treasury yields lower. That wasn’t the case. Investors sold U.S. Treasuries, pushing yields higher, reported Sydney Maki and Carter Johnson of Bloomberg.

“Billed as so rock-solid safe they’re risk-free, US Treasury bonds have long been the first port of call for investors during times of panic. They rallied during the global financial crisis, on 9/11 and even when America’s own credit rating was cut…But this time may be different. As President Donald Trump unleashes an all-out assault on global trade, their status as the world’s safe haven is increasingly coming into question…Yields, especially on longer-term debt, have surged in recent days while the dollar has plunged,” reported David Rovella of Bloomberg.

The Federal Reserve (Fed) soothed the market

On Friday, Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins both discussed ways the Fed can “manage a dislocation, or pricing disruption, in the Treasury market…[the moves] are instruments designed to keep markets running smoothly by making sure there is enough liquidity, meaning financial institutions have access to the short-term funding they need to operate,” reported Nicole Goodkind of Barron’s.

Markets were soothed by the assurance that the Fed stands ready to “keep financial markets functioning should the need arise,” reported Stephen Culp of Reuters. By the end of trading on Friday, major U.S. stock indices were in positive territory. Yields on longer maturities of U.S. Treasuries also finished the week higher.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

WHAT DO YOU KNOW ABOUT MONEY? The United States began using paper money in 1690. The Massachusetts Bay Colony paid soldiers fighting military campaigns against the French in Canada with paper notes. “This was an emergency measure, but it turned out to be a solution to the long-term problem of building an economy without large reserves of precious metals. Eventually, all of the other colonies issued their own bills,” according to Smithsonian Education.

See what you know about the history of American money by taking this brief quiz.

1. Ben Franklin printed money for Pennsylvania, Delaware, and New Jersey. He often included images from nature, such as intricately detailed leaves. What was the primary reason Franklin included nature prints on notes?
   1. The visually pleasing notes attracted customers
   2. The prints symbolized the growth of the nation
   3. The prints symbolized money circulating through the economy
   4. The prints made Franklin’s notes difficult to counterfeit

2. When did the era of “lawful money” (the modern era) begin?
   1. In 1792, when the US mint was created
   2. In 1893, after a bank panic
   3. In 1913, under the 1913 Federal Reserve Act
   4. In 1936, when Fort Knox was built

3. United States currency is held as a reserve, and for trade, by many other countries. What percentage of our currency is held outside the United States?
   1. One quarter
   2. One third
   3. Two thirds
   4. Three quarters

4. Some denominations of U.S. paper money wear out faster than others. Which denomination has the shortest lifespan?
   1. A $1 bill
   2. A $5 bill
   3. A $10 bill
   4. A $20 bill

Weekly Focus – Think About It

“I find television very educating. Every time somebody turns on the set, I go into the other room and read a book.”

 –Groucho Marx, Comedian

Answers: 1) d; 2) c; 3) c; 4) b